The world of large business enterprises is a harsh and fiercely competitive jungle. Any failure to keep your claws sharp enough and your teeth exposed enough may result in finding two sets of those deep in your neck.
Ford Motor Company (NYSE:F) recently recalled nearly 12 thousand of its 2013 Escape model with 1.6 liter engines. The reason for the recall is a potential danger of the compartment under the hood catching fire due to a problematic fuel line. The company stock, which was already performing very poorly over the last three months, picked up on the news and plunged even lower.
The company is facing other issues in addition to the recall blunder. In June market and customer satisfaction research company J.D. Power and Associates downgraded Ford 22 spots in their quality poll. Mr. David Champion of J.D. evaluated Ford’s touchscreen controls as “slow” and “difficult to use”.
Ford has been slowly expanding into China as well. The company’s progress there is partly hindered by their late arrival compared to competitors Volkswagen and General Motors who hold respectively 19% and 10% of the local car market against 2.4% for Ford. The company is targeting the relatively poorer inland regions but is not yet offering cars that are cheap enough.
Reports filed by Ford look a little worrying as well. Their latest 10-Q speaks of “lower operating results” and the numbers are not too pretty:
- first half net income down $2.5 billion against first half of 2011
- projected loss of over $1 billion for Ford Europe
Things are not all bad with Ford. The company is planning to finish a production plant west of Shanghai by 2015 and start producing locally, relieving cars costs of about 25% import duty charge. This could enable Ford to sell its cheaper vehicles to targeted customers in the inland regions. Wall Street seems to have faith in Ford with estimates steady but positive.
Gone are the days when being a mastodon in the jungle was enough to keep predators at bay. Ford seems to have learned its lesson the hard way and is now growing its teeth and claws to be able to keep its competition on edge.
