Influence of technological change in Ford.

Influence of technological change in Ford

Generally speaking, technological changes have an enormous impact upon business, resulting in new products and markets and new methods of production and distribution. Ford Motor Corporation, which is the largest motor manufacturing company in the world, is huge influence by technological change that impacts upon Ford’s investment, innovation and leads to uncreased employment.

On 2 Oct 2001, the Ford motor company announced that it would increase its share of ownership from 13.5 to 19.5 in Ballard Power System, which is the world’s leading producer of fuel cell components; this will increase the company’s commitment to the development of advanced powertrain fuel cell systems. Investment is the increase in the stock of capital over time, which is the second input into the production process after people; investment will serve to increase the productive potential of the firm. According to Wayne Booker, vice chairman of Ford Motor Company, their investment in fuel cell technology was extremely important to the future of the Ford Motor Company, and they had a history of investing the resources needed to develop environmentally responsible products and bring them to market in the fastest, most effective way. Therefore investment is important for the firm as it is a mechanism for growth and it is an important part of the innovation process which showed that Ford invested more in advanced technology instead of normal fuel vehicles. And what is more, this satisfies customers’ desires for fuel cell vehicles and related technology. Because technological change in new type of vehicle can bring extra profits, Ford will continue to maintain a significant interest in the advanced electronics and powertrain systems, as Booker said. Consequently investment can form the basis for improvements in technology which bring about new ways of producing goods and will lead to greater investment.

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The impact of technological change does not only show in Ford’s investment, but also in innovation. In January 2001, Ford Motor Company announced that new technology, 42-volt electronic system, which accurately controls fuel injection, would be used in Ford’s new sport vehicles in 2004. It will replace the 14-volt standard that has reigned since 1955. It shows that product innovation, which technological change leads to, is the development of new product, which will have far-reaching effects on business. New product impacts upon the product of company, as new product grows and old product disappears. Product innovation also has an impact on the level of competition in the market. As evidence showed that Ford wasn’t alone in trying to revamp the internal combustion engine with electromechanical components. In order to have stand room in new electrical vehicles market, motor companies, such as General Motor, DaimlerChrysler and BMW is also developing the technology, which is new electrical systems and batteries. Process innovation is also a result of technological change at Ford motor. Ford will use Oculus CO to better connect design teams located in multiple sites that are using different operating systems and applications. With the help of this new technology, Ford will save between $5 million to $15 million per vehicle design program, according to John Goodman, fuel economy implementation manager at Ford, and this technology has a tremendous impact on Ford’s automobile design process. As Chris Williams, president and CEO of Oculus said, this technology can help Ford and others explore more solutions faster, therefore process innovation can promote product innovation, a product launch a great number of process innovations are occurring to create the right product for customers.

Technological change is efficient in investment and innovation, on the other hand it can lead to high levels of unemployment in industries that are in decline. Ford has 5000 information-technology workers, handing duties like data storage, e-commerce projects and deciding what software and PCs the automaker needs. However approximately 60 to 70 percent of those IT workers are not Ford employees and are employed by other IT companies such as IBM Corporation, Compuware Corporation. Because of importance of those IT workers and reason of cost cutting, Ford is converting thousand of IT contract workers into full-time Ford employees. According to Pete Olsen, Ford IT spokesman: Ford is looking to save money, but the big thing is to bring some intellectual capital back in as Ford employees, an job security would stop the best technology contract workers jumping to other companies and help to retain technology workers. Studies of the impact of IT on organisation point to very little job displacement in manufacturing caused by innovation in the production process (Campbell, 1993). Job losses from structural change have much more impact across all occupations than losses from technological change. Production and professional workers have mostly not been badly affected. New technology favours better quality labour, though there is a small net negative loss when considering jobs in both technology providers and adopters. In other words, although job loss can occur by technological change, new jobs are required in companies making and supplying new technologies, and this will lead to a reduction in the level of unemployment.

To sum up, technological change has significant impact on a manufacturing company. Technological change leads Ford motor to invest more money in advanced technology instead of normal technology, because of the benefits of technology itself. Besides, technology brings Ford product innovation and process innovation, which are related. Although it is true that technological change does lead to loss of jobs, yet it can lead to uncreased employment in industries in decline, as new technology requires more people with particular skills. In a word, technological change is promoting Ford’s development.

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