Transcribed Image Text: He states that as production moves outside of the U

Transcribed Image Text: He states that as production moves outside of the U.S. to
low-wage countries, American workers suffer at home. This
is a serious issue for the company, but it is projected that
UAW members will see their wages grow domestically. This
will make Ford’s move to Mexico even more advantageous for
the company. Moreover, top management at the company
explained that over the next few years, Ford will spend more
than $9 billion in the U.S., which is expected to create or
maintain 8,500 jobs.
Increasing its presence in Mexico is not the only initiative
Ford is implementing. As a part of its strategic “Óne Ford”
plan the company has allocated billions of dollars to expand
its global production capabilities in places like Spain, Germany,
China, the Middle East, and Africa. While Ford’s improves its
financial outlook, how will it deal with the negative attention
generated by moving jobs outside the United States? Is it pos-
sible for the company to increase its profitability and reduce
its dependence on foreign production? In the current political
dimate should the company rethink its plans?
You Make the Call
2-35. What is the decision facing Ford?
2-36. What factors are important in understanding this deci-
sion situation?
2-37. What are the alternatives?
2-38. What decision(s) do you recommend?
2-39. What are some ways to implement your recommen-
dation?
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OMinap cmad Ar 13, 0 Transcribed Image Text: Marketing in Action Case Real Choices at Ford
Ford Motor Company has committed to investing $1.6 billion
to construct a small car plant in the San Luis Potosi State in
Mexico. This will result in the creation of more than 2,800 jobs
in the country. The Center for Automotive Research states that
U.S. automotive labor costs average around $30 per hour and
are substantially higher than those in Mexico which average
around $5 per hour. This means that moving production to
Mexico will allow Ford to lower its cost for small cars and make
Ford more competitive in the global auto marketplace. The
move will, in turn, allow Ford to reallocate its U.S. facilities to-
ward larger vehidles with higher profit margins, like SUVS and
F-Series trucks. Furthermore, Mexico has the necessary trans-
portation infrastructure to efficiently export the cars back to
the U.S. and other markets.
Mexico has been a part of Ford’s manufacturing history
since 1925 when the company became the first automobile
manufacturer in the country. According to Gabriel Lopez, pres-
ident and CEO of Ford of Mexico, “Ford of Mexico is the fourth
largest producer of vehicles, the fourth largest producer of en-
gines and the second country in the global auto parts supply
company facilities.” Over the past 90 years Ford has provided
more than $8 billion to build and develop its production capa-
bilities in the country. Currently, Ford has two assembly plants,
two stamping plants, and an engine plant in Mexico. Increas-
ing production output in the country is consistent with Ford’s
long-term manufacturing plans.
The additional investment in Mexico is not without its crit-
ics. The issue of jobs leaving the country has always been a part
of political debate in Washington, D.C. The announcement of
Ford’s plans was made during the most recent presidential
campaign and created dissent among the candidates. One can-
didate called for increased tariffs and penalties for U.S. firms,
like Ford, that choose to relocate manufacturing to foreign
markets to lower costs. Ford has reacted with a vigorous de-
fense of its business practices. As per CEO Mark Fields, “more
than 80 percent of our North American investment annually is
in the U.S., and 97 percent of our North American engineering
is conducted in the U.S.”
Dennis Williams, President of the United Auto Work-
ers (UAW) union, is another voice of dissent to the move.

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