Ford Motor Company, which has been reeling with declining sales and loss of market share has announced that it will reveal its much ballyhooed restructuring plan on January 23rd. Ford, like GM, has been hurting in the highly competitive domestic automobile market. During the late 1990s Ford (and GM) was flying high, but those days are gone and the company is again feeling the pain. It is hoped that in this restructuring plan, Ford will take steps to stop the hemorrhaging and return to profitability. This will not come to pass unless Ford abandons a host of failed policies, which have led to this debacle.

Most financial analysts expect Ford’s restructuring plan to center on job cuts and plant closings. If it does, Ford is doomed. Job cuts and plant closings will not solve Blue Oval’s woes. Ford isn’t reeling because it has too many plants and not even because it has too many employees. Ford is reeling because it has not been paying attention to the market. There’s a reason, for example, why fellow Big Three automaker Chrysler isn’t facing financial woes. In the first place Chrysler didn’t shift its entire focus to the manufacture of inefficient gas guzzling SUVs in the 90s. Chrysler focused on a more diverse offering of products, with an eye toward market appeal. This gamble has paid off generously for Chrysler, which is performing better than its sister company, Mercedes-Benz.

Ford, and GM, must think out of the box, as the over used saying goes. Ford must become diversified. Yes SUVs and heavy trucks do have a place in the automobile market, but they shouldn’t be the sole source of economic growth for a company. Furthermore, Ford should read the writing on the wall and follow the path of Toyota and Honda and accelerate the production fuel-efficient and hybrid vehicles, particularly in a volatile gasoline market. Exactly why is it that Honda can design, test, and mass produce new hybrid engines in less than 18 months, while Ford takes years to produce one hybrid vehicle, which is of sub par efficiency the moment it comes off the assembly line?

Ford should take steps to combat the erroneous perception of a quality gap, by offering hesitant consumers an incentive to purchase their vehicles, such as extended warranties and maintenance packages, a program Chrysler recently introduced for its vehicles. Ford must also take steps to produce more efficiently, thereby reducing overall costs per vehicle. This can be achieved through a greater investment in automation and providing incentives for workers to work safely and efficiently. Finally, Ford must pay closer attention to the market and know their customer. Companies that produce products for which there is no market are destined to fail, such as Pickup trucks with a 12 mpg fuel rating when gas cost over $3/gallon. Yes some customers want trucks, but others want minivans, small and midsize cars or station wagons and they want these vehicles to have appeal, innovative aesthetics as well as all the bells and whistles which make owning a car exciting. As along as Ford (and GM) fail to understand this, they will continue to misstep, loosing both money and market share. http://msnbc.msn.com/id/10698291/