Ford`s Outsourcing Problem

Ford Motor Company is an automobile Multinational Enterprise established in Detroit in 1903. Ford has been sustaining heavy profit losses in its European operations due to the economic downturn affecting most of Europe. The “company now expects Ford Europe’s pre-tax loss for full year 2012 to exceed $1.5 billion” (http://media.ford.com/images/10031/3Q2012_Financials.pdf, 2012).
“Business refers to any type of economic activity in which goods or services are supplied in exchange for some payment” (J. Morrison 2010) and in this case Fords European vehicle sales market has been saturated through less demand for its products. Ford said European car sales across the industry were the lowest in 20 years (BBC News, 2012). The main losses are being sustained within Europe in which Ford operates in 51 different European markets.
Ford`s strategy is likely to be offshoring manufacturing of the Transit Van, meaning the closure of its South Hampton Factory with immediate redundancies of 500 employees with closing parts of the Dagenham Plant which will push redundancies to 1400. Although is this likely to be the answer? What will be the effect upon the microeconomic factors? Especially the level of job losses of stakeholders, including suppliers and employees, further down the chain.
Is it ethnical of Ford to simply offshore production to a cheaper labour area such as Turkey or is this just a simple case of how Britain’s Manufacturing industry is further declining? Will this damage Fords brand image? More critically, will demand fall for Fords products in Europe during this crucial time in an industry where competition is fierce? This would outweigh any potential saving anticipated by Ford, potentially leaving Ford in more of a financially adverse position than they are currently facing.

Offshoring

“Offshoring requires careful