Chapter 5 – the Turnaround at Ford

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1. What factors have contributed to the large-scale labor surplus at Ford?
2. Ford has decided to pursue employee buyouts and attrition in an attempt to shrink its workforce to match its productivity demands. Why do you think Ford is using these two tactics? Do you think these are the best options for Ford to achieve its goals?
3. What are the downsides of these two approaches? Are there any other approaches you might recommend to address its labor surplus?

1) During the twentieth century ford is one of the successful company in the automobile industry. Ford introduced the assembly line to reduce the price of the automobile. In 2006 the company was suffered from the labor surplus. The demand of the ford automobile is decreased so the company cannot afford to produce more automobile. The profit is decreased and they gone on debt. There was 54, 000 US employee, 23,900 salaried workers in North America and about 12,000 US worker eligible for retirement. The company was paying them their salary and other benefit. The labor cost has increased but the value added in the company by the employee is decreased. There is no match between the organization demand and the labor they had. Ford Company cannot afford the same number of employee even they did previously because the work is decreased then previous.
The cost structure of Ford Company has contributed to financial lost. The company pays a lot of money to their employee but the demand of automobile continues shrink. In this case the company even there is no productivity in the company the ford company has to pay salary for large number of employee. The greater the labor cost the lower the profitable ability of the company. Ford Company faced the labor surplus because of its high cost structure and decreased in the demand of automobile. There is no work for all employees in the company but the ford paid salary and…...

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