Essay About Corporate Evolution Of The Ford Motor Company And Ford Canada’S Progress

From Independence to Integration: The Corporate Evolution of The Ford Motor Company of Canada
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Dimitry AnastakisFrom Independence to Integration: The Corporate Evolution of the Ford Motor Company of Canada1904 – 2004[pic 1]Anastakis outlines: Ford Canada’s progress from a relatively independent entity with strong ownership and its own overseas subsidiaries to a fully integrated part of Ford’s North American operations The Era of the Automotive Pioneers: Ford of Canada’s BirthFMCC was formed in 1904 by Gordon McGregor in Walkerville, Ontario, after he met Henry Ford and agreed on a deal that provided FMCC access to Ford’s technology and product linesStart-up: 48 investors took the chance and on August 17, 1904, FMCC was incorporated for $125,000Success of FMCC by the 1920s: employed 4,000 workers and produced more than 50,000 automobiles annually“Not a Branch Plant”: Ford and the Political Economy of the Canadian Auto Industry Reasons for FMCC’s success by 1930s:Henry Ford’s success among failures ensured FMCC’s survivalHigh tariffs kept foreign-made cars out of the Canadian marketConnections to the British imperial trade systemPerfect location to take advantage of the nearby Ford-USA operation in DetroitRight timing in terms of McGregor securing his agreement with Ford before Ford’s operations really took off in the 1910sThe “Problem” of Ford’s Canadian Ownership Henry Ford did not pay much attention to the Canadian firmHis lack of interest endangered the family’s control over the firm “Voting trust”Original terms and agreements between Ford Canada & Ford stated:Ford company’s rights to nominate the Canadian board Clause was obsolete; nominees were members associated with FordDecline of Ford’s financials[pic 2]GM had more sales than Ford for the first time Stock market crash Ford unable to adapt to the changing industryGM offered variety of cars and styles versus Ford’s “Tin Lizzie” The Era of Organizing Men: Ford Gains Majority of Ownership and Organizational Control of Ford-CanadaAfter Edsel Ford’s death in 1943, Ford-USA bought all his voting shares – gaining  52% of FMCC’s voting shares by 1948 FMCC lost all of its advantages and was forced to obey to orders from Detroit. Changes include: New arrangement of changes in general commercial assistance, the supply of material and the furnishing technical Fees paid for Ford’s engineering and technical expertiseDecisions regarding finances, production, expenditures, labor relations, management appointments, pricing and credit policies as well as annual budgets were to be reportedThe Era of Continental Integration: Ford-Canada and the Auto-Pact RegimeThree sides to the Auto Pact: 1. U.S.A: Desired a continental free trade agreement for the autos2. Canada: Worried that such a plan would wipe out Canadian auto production3. Auto companies: Wanted to take advantage of North American economies of scaleFord-USA heavily supported the 1965 Auto Pact, which allowed Ford to rationalize its North American operations. The Auto Pact: Lead to reorganization of FordCreated significant changes for Ford-Canada’s operationsThe deal was highly successful for Ford as the late 1960s and early 1970s were the most productive in their historyFord of Canada in the North American Auto Industry FMCC prospered in the 1980s and 1990s before the company was privatized in 2004With privatization, FMCC: removed costs, eliminated redundancies and discontinued the publishing of annual reportsConditions of the North American industry: oil embargo and energy crisisflood of Japanese importsrestructuring of the industry in the last 1970s and early 1980s arrival of foreign transplants in USA and Canada Canada-USA Free Trade NAFTA agreementChanges in the industry:NAFTA was created in 1993Ford reorganized its North American concerns into the North American Automotive Operations (NAAO)Why is Ford Canada’s history important?Portrays the ever-changing and constant flux nature of multinational enterprisesIllustrates the competitive challenges and shifting corporate, political and economic landscape faced by companies Allows for an assessment of Ford’s long-term business strategy to bring Ford-Canada tightly under its controlEmphasizes the changing international automotive environment through the Auto Pact and other trade pacts such as NAFTA