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How Ford Can Save Billions And Have A Marketing Victory

Jan. 13, 2021 8:56 AM ETFord Motor Company (F)
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  • Closing the Brazilian operations will cost close to 5 billion.
  • Creating a worker owned guild to fabricate their vehicles could save bilions.
  • The Guild could save Ford billions and also maintain an ability to have vehicles made at far lower fixed costs.
  • A marketing win for safe guarding the fate of former employees which could be a model for NA operations.

How Ford Motor Can Salvage Their European & OTHER Operations and Gain A Global Marketing Bonanza Mar. 15, 2013 >updated today Ford Motor Company (F) If I were an exec at Ford which obviously I'm not, I would try to enable worker owned co-operatives be setup as an auto assembly guild whereby the workers themselves owned the facilities and voted on their methods to work.

Sounds crazy ? The Mondragon worker owned co-operative makes engine blocks for Mercedes Benz and another of Mondragon's co-operatives beat out Siemens for an automation upgrade for BMW's Dresden plant. Indeed, one of Mondragon's units produces buses. The Mondragon worker owned co-operative started with 4 members in 1956 by a cleric who had been directed to improve the fate of his people in the Basque region of Spain rather than rising as a member of the Vatican. He reluctantly took on this task but rose to the challenge and ultimately came up with a viable plan that was neither corporatist nor communist and tapped into the inherent desire of people to do good work.

They currently have 120 000 members making on average 60 000 euros/yr and having average equity of 50 000 euros. They have their own health network and have their own technical university that is run as a co-operative with no fees. A worker owned assembly operation would be about the infrastructure costs being spread out and when there are big gains the workers themselves could gain those. It would mean that this guild/co-operative could bid on assembly projects for any and all auto companies thus enabling companies to have a presence in the market without having to maintain a massive presence so that when demand goes into freefall, they would not have high fixed costs in a place like Europe whereby rigid labour rules prevent agile manouevering by entities such as Ford.

Some day, ideas such as this which in the past would be thought of as very much on the fringe will be considered as the only way forward for the sake of survival. The same plant, with clever engineering, can be used to produce vehicles from totally different brands and thus keep the same plant going 24/7--365 days a year and maintaining the same workforce assembling vehicles of whoever needs to have vehicles made. If such a worker owned Auto Assembly Guild were provided with say a five year non profit status by their respective governments and instead of practically giving away a building of a mothballed plant as is typical, then when there is a shutdown would instead be given to such an Auto Assembly Guild, then there would be a global goodwill towards whatever company that was so forward thinking for society as well as themselves that they would reap great rewards overall as well as provide a greater measure of control over the futures of these communities and their workers to those former employees. They would not be getting permanently let go but be getting setup to be a guild which could then bid on assembly projects to whatever company has a need which shifts from time to time. DATED INFO but essentially the same deal> Ford has lost 1,75 billion in 2011 in Europe, 2 billion in 2012 and will lose likely 2,5 billion in Europe for 2013 with a possible profitability returning by 2015 if all goes well. Part of the costs are the costs of severance packages of 150 000 euros each. The buildings will likely be sold at a steep discount if not given away for 1 $ as is typical. I state that this is bass ackwards as I would give the workers >>1/3 of their severance package, provide a guild with the building and facility for free provided that they give reasonable assembly quotes and facilitate their setting up auto assembly guilds that would bid on auto assembly of whoever needed it.

DATED INFO but now it's the Brazilian operation> That would mean Genk (Belgium) and Dagenham (UK) NOT being shut down but being turned over to what I refer to as and AUTO assembly Guild / Worker owned Co-operative. The cost benefits to Ford would be substantial as they would vastly reduce their fixed costs and only have to deal with the variable costs that would come about when they have assmebly to be done. The would retain ownership of the tooling but the Guild would retain ownership of the infrastructure and on site machinery. This would also drastically cut the costs of the downsizing and restructuring as well as vastly improve PR on these continents if not globally by dealing with the former workers as partners in effect rather than the typical top down corporate dictatorial setup. The downsizing didn t go well as some Ford Executives had been held against their will and there have been all manner of disruptions. I make this suggestion as it approaches the situation from a completely different perspective.

The Ford corporate approach is to simply stop the bleeding, the viewpoint of the workers is maintain more than just income but a way of life. This is the difficult to grasp aspect of work that eludes many white collar types as they see workers often as extensions of machinery that need to be used to get products mfd. The perspective of the man on the floor up to and including the engineer is one of overcoming a challenge and achieving and objective namely a quality job that is done right and quickly to everyone's satisfaction. The shutting of a factory such as an auto plant is very dislocating on a social level as well as economic in that the large number of workers creates a social network whereby an important aspect of the workers identities are tied up.

The ALTERNATIVE:>https://www.youtube.com/watch?v=zaJ1hfVPUe8

This is why on a philsophical, spiritual and economic levels this could resonate very well with these people and it can even be economical if correctly packaged and pitched. The potential for a truly massive win win win situation is at hand but it requires thinking on an entirely different plane. The facilities can then be used to assemble Toyota vehicles and or Hyundai's etc.... The same facilities can be used by the Guild to assemble windmills or tractors when there is a long multi month downtime. The towns themselves could organize these operations. The reality is that it is too difficult and costly for even car companies to maintain an independent presence in Europe or South America and formerly Australia due to the rigid labour regulations and high fixed costs. In summation, I believe that a radical approach to the situation from both sides can enable an entirely new structure that would be far more efficient and yet maintain the possibility of mfg in Europe, SA etc... rather than the inevitable dislocation to the PR China etc.... http://www.mondragon-corporation.com/ENG/Co-operativism/Co-operative-Experience/Co-operative-Culture.aspx Mondragon Cooperative Part One The Mondragon Experiment 1/5 Modernized craft guilds as a way to revive Detroit and help first Nations develop economically My economic philosophy.

Disclosure: I am long FORD. Additional disclosure: I have been a shareholder of Ford Motor off and on for roughly 14 years. Ford has been losing money in Europe and SA for more than a decade and it is unlikely to improve. I believe this radical solution could work and even the competition of Ford would likely see the benefit of outsourcing their assembly to a Modernized Guild.


Analyst's Disclosure: I am/we are long F.

i'VE been a shareholder of Ford on and off for 14 years

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