Economics in the Workplace

Ellen Hughes-Cromwick, Senior Economist at Ford Motor Company describes what makes industry an exciting place to be for economists.

The application of economics in a business setting couldn’t be more exciting and invigorating. The role of the economics group is closely aligned with the Company’s consumer business groups. These consumer business
groups have a geographic and product mix at their core. Our agenda stretches in new ways every year to anticipate emerging demand on the automotive business. Central to our mission is the development of vehicle stock and sales models that allow us to generate 10-year forecasts to
support business and product planning for all markets.

The economists’ comparative advantage is that we are able to examine structural changes in underlying demand for automotive products and services in the Company’s major markets. For example, improved data sources in the U.S. and Europe have allowed our team to improve models of trend vehicle sales. Examples of these data are estimates of vehicle stocks by country. These models provide a better underpinning for product program
decisions that extend out 5 to 10 years.

Another area of research is the development of vehicle stock models for emerging markets. Since these markets are expected to grow at a faster rate than the U.S. and Europe, it is critical for us to assess how fast these markets are able to grow. This provides useful input for our internal customers’ assessment regarding geographic and product focus over the business planning horizon. Using a multi-market database including per capita income, transportation infrastructure, population, and vehicle data, this modeling effort was able to identify key thresholds for changes in the growth of the vehicle stock at different stages of economic development.

This approach to economics in the workplace is somewhat different from economists who practice in the financial services industry. In the latter, there is likely greater emphasis on short-term, indeed, daily movements in key variables and implications of these changes for portfolio and other valuation metrics. In contrast, a consumer company like Ford needs to assess long-run dynamics that are key ingredients to product investments. To be sure, our industry expertise is also used to provide an early signal on near-term changes in the auto industry environment, and that requires sound analysis of consumer fundamentals.

Our interest in a key macroeconomic issue is very keen: If U.S. productivity growth can be sustained at a higher rate, then what does this imply in terms of the growth in spending for more and better features in a vehicle?

Finally, we are always searching for ways to use technology in order to enhance our customer service for the day-to-day information demands. Our internal website has given us tremendous scope to do just that. All of our forecasts, publications, and research studies are posted on a routine basis.
Our customers from St. Louis to Bangkok can access our products and receive updates instantly.

It’s an environment chocked full of learning and growth.We stay fresh with training, keep connected with our customers, and enjoy the enterprise!

 

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Business and Economists...
Mutual Benefits Abound

KEY POINTS
• Connecting with the business is critical
• In terms of scope, our comparative
advantage is to undertake research on
underlying demand for automotive
products and services in the Company’s
major markets
• Using technology efficiently to assist
internal customers with day-to-day
queries about the external environment
is crucial