Ford - The Foreign Investment Strategy

Introduction

In recent years, economic activity has been characterized by a dramatic increase in the international dimensions of business operations. National economies in all parts of the world have become more closely linked by way of a growing volume of cross-border transactions, not only in terms of goods and services, but even more so with respect to financial claims of all kinds. Reduced regulatory barriers between countries, lower cost of communications as well as travel and transportation have resulted in a higher degree of market integration.

As a consequence, investment opportunities are no longer restricted to domestic markets, and financial capital can now seek opportunities abroad with relative ease. Indeed, international competition for funds has caused an explosive growth in international flows of equities as well as fixed-income and monetary instruments. Emerging markets, in particular, as they have become more and more accessible, have begun to offer seemingly attractive investment alternatives to investors around the globe.

Foreign direct investment (FDI) or foreign investment refers to the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. It usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares. FDI is one example of international factor movements.

About Ford

Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK. Ford's former UK subsidiaries Jaguar and Land Rover were sold to Tata Motors of India in March 2008.

Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010. At the end of 2010, Ford was the fifth largest automaker in Europe. Ford is the eighth-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion. In 2008, Ford produced 5.532 million automobiles and employed about 213,000 employees at around 90 plants and facilities worldwide. During the automotive crisis, Ford's worldwide unit volume dropped to 4.817 million in 2009. In 2010, Ford earned a net profit of $6.6 billion and reduced its debt from $33.6 billion to $14.5 billion lowering interest payments by $1 billion following its 2009 net profit of $2.7 billion. Starting in 2007, Ford received more initial quality survey awards from J. D. Power and Associates than any other automaker. Five of Ford's vehicles ranked at the top of their categories and fourteen vehicles ranked in the top three.

Ford’s Foreign Investment Strategy

In 2011 Ford announced more than $9 billion in global investments for future growth, including: $4.5 billion in North and South America; $2.9 billion in Europe; and $1.7 billion in Asia Pacific Africa.

Ford’s 2010 full year net income of $6.6 billion, or $1.66 per share, was an increase of $3.8 billion, or 80 cents per share, over 2009. For the full year, excluding special items, the pre-tax operating profit was $8.3 billion, an increase of $8.3 billion from a year ago. This increase reflects the profits made in every region of the world, led by strong performance in North America. The progress made improving the core Automotive business worldwide allowed Ford to significantly strengthen the balance sheet in 2010, even as it made substantial investments.