“If I had asked people what they wanted, they would have said ‘faster horses.”Henry Ford
There is something that Ford Motor Company forgets to tell people. They are the BOSS. Ford invented transportation as we now know it. The Model T took America on a road trip that has lasted for over 100 years. However, in 2018 Ford announced news that would shake the auto industry to its core. Ford announced that it would phase out nearly all the cars it sells here in the United States, except for two models. The iconic Mustang will survive, along with a yet to be disclosed model.
What looks like the end of a legacy to some, I see as an opportunity. Ford has taken bold steps in the past, and maybe they are ready to do it again. I wonder though, are they willing to take it to the next level? It’s a leap. How would it feel to be one of the most successful car companies in the world, and arguably in history, knowing that the automobile market is dying beneath your feet?
“You can’t learn in school what the world is going to do next year.”Henry Ford
The former vice chairman of GM Bob Lutz said, “ It saddens me to say it, but we are approaching the end of the automotive era.” It saddens me to hear it, but as I write continuously, popular opinion and future projections are miles apart from one another. The average citizen can not fathom a future without cars, much less, that time could be rapidly approaching.
GM for example, in 2018 saw a 2.7% drop in fourth-quarter sales. Meanwhile, Ford posted an 8.8% drop in December of 2018. To their credit, reduced car sales are driving down overall numbers, while truck and SUV sales are ticking upward. These also happen to be historically more profitable categories. Corporations such as Ford and GM do not have the luxury of ignoring data. They must see what lies down the road because it can mean the success or failure of there businesses. Huge and critically integrated companies that are vital to our economy.
“The only real mistake is the one from which we learn nothing.”Henry Ford
Cars are not going to disappear right away. However, automobile ownership is going to take a very different face in the future, automobile manufacturers know this, and it terrifies them. Driverless cars, car subscriptions services, and various other forms of transportation are poised to transform car buying. That is if very many of us buy vehicles soon at all. New ways of transportation wait to fill the void that a massive reduction in car ownership will leave and that whole will be a gaping chasm. Unless new infrastructure has been laid, if so, maybe the transition will be seamless. Indeed, the architects will be distinguished, and unthinkably profitable, seemingly in perpetuity.
The prospect that any automobile company will be able to remain profitable selling only autonomous vehicles and fleets is absurd. It may be a slow death, but in that scenario, we will watch companies cannibalize each other until one barely profitable winner remains. Ford had already declined from 25% US market share in 1997 to 14% in 2016. Unless someone is willing to make a seriously bold move a war to the bottom will soon ensue. This opportunity is first come first serve, but the winner will take home control of future pedestrian and commerce transportation. This entity will also without question become the largest employer in the entire United States and or North America. Their reach and influence will be substantial.
The automobile industry is already dominant. Powerful enough to reach into the convoluted mess that is Washington and push through change. Very few enterprises, individuals, or groups can touch decision makers like automobile industry executives. Who will step up to the plate?
Ford. I am rooting for you. I hope you hear my call. You did it once, and you can do it again. You transformed transportation, and we are ready for you to do it again. Here is what you should do; it is bold. No guts, no glory.
“If you think you can do a thing or think you can’t do a thing, you’re right.”Henry Ford
Ford should liquidate everything here in the US except for the Mustang, and Truck production. Maybe even dealerships are a thing of the past for the new Ford. They will cease to be the Ford car company that we knew. The Ford Motor Company would now transition to becoming the future leader in ground transportation. Public transportation and cargo transport. Ford would attempt to buy one or more American railroad companies. Negotiate the privatization of Amtrak, or an agreement to manage. Finally, Ford would negotiate the privatization of one or more of the big five city transportation systems, Chicago, New York, Boston, D.C., or San Fransisco. Ford would then move to amend its engineering department to manufacture engines and other products for their public transportation systems.
“I am looking for a lot of men who have an infinite capacity to not know what can’t be done.”Henry Ford
Though the system would run on a privatized model, it is possible that there could be additional government funding for such large public works projects. The initial buildout could be funded, or subsidized by the government. A sweetheart deal like this could bring a player to the table. Subsequently, creating one of the largest corporations in US history, the largest employers in US history, the most significant public works projects in US history, and an environmental and structural change for our society that will usher us properly into the next century.
Individual transportation brought us here. Public transport will deliver us into the future. Over the road trucks for transport will be a thing of the past. They would carry goods from train stations short distances, but that is all. OTR trucking would die, Ford would pick up the pieces, and own medium and long-range ground cargo shipping. A daunting undertaking, with inconceivable financial implications.
“The highest use of capital is not to make more money, but to make money do more for the betterment of life.”Henry Ford
Simplicity is the key. Sometimes the simplest solution is the best solution. Hyper tunnels and high-speed rail makes sense. It may not be the sexiest technology, but it is far more sustainable, and arguably more efficient than our current practices. Our modern automobile infrastructure is antiquated, inefficient, overly resource intensive, dangerous, and in need of billions of dollars of upkeep and repairs, yesterday. Rail is efficient and effective, and Hyper tunnels are just a variation of rail systems. We have done it before, and we can do it again. However, this time with our modern manufacturing techniques, technology, and hopefully NASA like durability.
The automobile industry was exceptionally productive at generating huge profits, and over nearly ten decades it has contributed unimaginable sums to our economy. We would not be who we are today without the automobile industry. Not only has America fallen in love with the automobile, but that love created a sector that fed and clothed American families for decades. Hundreds of thousands of jobs, millions of families, and generations of workers have given their entire lives to the automobile industry. The automobile made us better as a country, and the Ford Motor Company, established in America, is a large part of what makes us Americans.
“To do more for the world than the world does for you – that is success.”Henry Ford
The environment has not been quite so lucky. Even electric cars have their negative impacts. If batteries are recharged through solar, sure it’s helpful, but it is not the end all be all clean car that we wish it were. Electricity arrives from somewhere. More often than not it is sent from a coal power plant, which makes your green car, a little gray. The battery needed to power that car still contains rare minerals. These minerals are limited and nonrenewable. Even when these scarce resources are available demand can create prohibitively expensive inputs. Cobalt, for example, has tripled in price to $80,000 per ton, and 60% of its supply comes from a single region in Africa.
Additionally, many other necessary raw materials come from outside the United States. Some other countries have been actively working on securing the rights to regions that contain these essential raw materials. Unfortunately, we have not positioned ourselves as favorably.
Cars are out, and the Ford Motor Company knows it. They are preparing for a long term strategy, but is it bold enough. Is it bold enough for them to remain the leader, the pioneers, as they were once known?
“The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.”Henry Ford
Ford Motor and Transport Company. Ford should leap, and become the leader in US public transportation. They have the connections, the capital, the leadership, and, they have the story. A story that captivates us all and we don’t want to close this book just yet.
Ford can bring the United States, and more likely all of North and South America into the next transportation revolution. Ford could own the future of transportation. Business strategists know that in the future there will be even fewer winners in all economies. Today’s tech industry comes to mind. There are a whole lot of little guys in tech. But, there are very few big winners. Profitability for a time was secondary to many tech firms. Tech represented an oddity in business that we rarely ever see. We watched tech firms operate without being profitable for years. It was crazy, and you know what, in some cases, it worked. It turns out focusing on building an infrastructure, with a cautious disregard to cost, was a winning strategy for many companies.
“A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.”Henry Ford
Facebook for example operated for years with little or no profit at all. They grew their customer base vigorously and focused on platform creation. Fast forward to fourth-quarter 2018 when their revenue was $16.91 billion, a 30% increase over the previous year at that time. First, confirm that the customers exist, but once that was established, they built it out. They built infrastructure for their tech businesses like they were mad. Build the Taj Mahal, and let the foundation support the market that is certain to follow. That was the model of some of our largest tech firms today.
This is uncomfortable, but a necessary model for any business that wants to own a future sector. Build it, and they will come. We know they will come because we know what they are coming from, and we know what it is that they are seeking. Affordable, convenient, safe transportation, and cost-effective logistics.
The transportation industry of the future will have a single winner. That winner will be built out, and ready for the moment when it arrives. If that entity is powerful enough, they may even tip the board so that moment arrives sooner than later.
“One of the greatest discoveries a man makes, one of his great surprises, is to find he can do what he was afraid he couldn’t do.”Henry Ford
Public transportation will move us into the future, but someone has to own that future. Ford happens to be in the position to capitalize. The next generation of transportation will be responsible for moving everything. Goods, services, and people. It is possible that our future communication systems or power systems may even be built directly into the same tracks that carry pedestrians and goods. How will the future be built? Who will build it, and will it be “Built Ford Tough.”