Page 104 - Accelerating out of the Great Recession

EVEN IN THE WORST OF TIMES

Chrysler was managed by a powerful leader. But Walter
Chrysler had also built a strong team around him. And it was
this bench strength that allowed the company to advance so
effectively on so many fronts.

■ FORD: HURT BY HIGH COSTS ■
AND INFLEXIBILITY

As the automobile company that had pioneered high volume
and low prices, Ford should have been well positioned for the
Great Depression. However, its indecisiveness and inflexibility
resulted in declining sales and a 12 percentage point loss in mar-
ket share. Ford moved from being a contender for market leader
to a weak third place. As the most vertically integrated company
in the industry, Ford bore the full financial impact of the decline
in sales because of its high fixed production costs. Ford’s lax
accounting and poor business management made cutting costs
difficult. In fact, since it was unable to control costs, Ford tried
to increase its prices in the midst of the Great Depression.
Ford also fell afoul of a new reality of the Great Depression—
one that shows signs of returning today. Unlike GM, which pur-
chased foreign automobile manufacturers so that it could pro-
duce entire cars in the country of sale, Ford manufactured parts
in the United States and then shipped them overseas to be
assembled. This practice made Ford vulnerable to the rise in pro-
tectionism. Ford was hit with tariffs of nearly 100 percent on
certain parts.
To add to its difficulties, Ford—caught short by Chevrolet’s
introduction of a V6 engine in 1928—found itself behind the
innovation curve at the start of the Great Depression. In an

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