Ford Motor Company

Ford Motor Company

Tracy Duran

ECO/561

Kjersten Pashall

Ford Motor Company

The United States has been in recession, the worst since The Great Depression that gripped the country in the late 1930’s to mid 1940’s. The economic downturn has created a record housing foreclosure, lenders have dissolved, and repossessions of vehicles. Amanda Wallace defines the economic downfall:

A very real downfall of a windfall is that, by definition, it is noncore, nonrecurring and unreliable as a future revenue source. An added risk exposure is associated with the widespread use of special purpose entities-of infamous pedigree since the Enron debacle- for securitizations and associated borrowings tied to promises of future payments from legal settlements. Moreover, incentive effects of these fund sources merit attention, as do various economic consequences of diverse approaches being taken more generally with monies received from regulatory sanctions and associated settlement processes.

(Wallace, 2003) The economic windfall has credited a weakened confidence by consumers' and distrust in the financial markets. Through it all, Ford Motor Company will succeed to become profitable.

The auto industry has suffered as consumers’ budgets have to adjust. Rising costs in labor, assembly of vehicles, underfunded pension plans, coupled with the large decline of sales for the United States, manufacturers were forced to ask the government for assistance. Ford Motor Company decided to restructure internally instead of accepting the guideline loans Chrysler and General Motors accepted. As the auto industry comprises 4% of the United States GDP and consumer spending down by the same 4%, add to the rising and lowering effect of the job rate, recovery is predicted to be a slow process.

Vehicles are a long-term investment, with technology increasing the usage, so...