Mr. Amitav Dutta, an Indian resident, was unpleasantly surprised one morning when he found out the manufacturer of his car, a Ford Figo, was recalling his vehicle for repairs of potentially dangerous parts.
Our Mr. Dutta is a fictional character but 140,000 Ford Figo and Classic owners felt the same way. Ford Motor Company (NYSE:F) is carrying out, through its Indian subsidiary, what is probably the largest car recall in India, encompassing almost 140 thousand of its autos. The vehicles are being recalled because of manufacturing defects, some of which go back as early as 2008.
The faulty components include a rear beam that can interfere with braking and a hose that could potentially leak oil and produce harmful fumes. In addition to the recalls in India, Ford is also pulling out about 10 thousand vehicles shipped to South Africa. Luckily, there have been no injuries resulting from the defective components.
The company’s previous recall of 12,000 Escape 1.6v cars is dwarfed in comparison to this huge cross-continental hiccup. Ford’s current problems don’t end here.
The company is negotiating concessions with its Canadian workers in an effort to cut costs. The U.S. employees of Ford have already agreed to the saving measures and now the trade unions of Canada are entering negotiations with Ford, along with the other two big U.S manufacturers. With the Canadian dollar strengthening its position against the U.S. currency, Ford have frozen wages for higher ranking employees and reduced benefits and payment for their new workers in the USA.
With Ford facing some ugly numbers in their books and first half of 2012 net income down $2.5 billion against the respective period of 2011, such unpleasant moves to reduce costs are more or less expected. The question is, how far can the company push before the U.K. employee strike from June repeats on a much larger scale.
The company is trying to claw its way out of the ditch it got itself into with yesterday’s close at $9.44 but only the future will show if it can recoup its losses and rise back to early 2011 levels.
