Ford Motor Co. will completely revamp its product lineup by 2010, announced the automaker's new CEO, Alan Mulally, during a pre-Detroit auto show meeting with reporters.
Getting Ford's oft-maligned product program back on track is one of four top priorities the former Boeing executive outlined in the course of a wide-ranging discussion. Despite its recent financial problems and continued slump in sales, Mulally asserted that Ford's urgent turnaround program is "on plan."
But his chief lieutenant and president of Ford's North American operations, Mark Fields, acknowledged that the company has slipped on at least one key metric: it has yet to staunch its sales and share slide in the core U.S. market. Unless things improve at home, Fields emphasized, "everything else is for practice."
The degree of change required to turn things around is significant, the two executives agreed, Fields acknowledging, "We know that, to one degree or another, our business model was broken."
Part of Ford's new strategy is to earn money on lower sales in North America. To get there, the company is trimming roughly a third of its white- and blue-collar workforce and racing to globalize its product development team. In the future, the underlying components and platforms of U.S. products will, to a large degree, be shared with Ford's overseas operations. That should improve economies of scale and speed products to market.
By 2008, Mulally said, 80 percent of the Ford lineup will be either new or significantly revised. By 2010, every model in the U.S. lineup will be revamped. The company is also expected to move out of some unprofitable segments, such as minivans, while expanding into potentially growing niches, such as minicars.
Ford's revised product development process is being closely modeled upon the system in place at Asian partner Mazda Motor Co., one of the world's leanest and fastest, according to Derrick Kuzak, Ford's new global product development director. "Our intent," he said, "is to get to Mazda levels of efficiency by 2010 or 2011."
Product alone won't solve all of Ford's problems, the three executives conceded, and Mulally said the company has already begun talking with its lead union, the United Auto Workers, about ways to make Ford factories more efficient.
"I respect the union as an institution. (But) the only thing I care about is the competitiveness of Ford," stressed Mulally, adding that he believes UAW President Ron Gettelfinger, "absolutely understands the situation we're in. I don't know of anybody that cares more about Ford than Ron Gettelfinger." The union, Ford's CEO suggested, has been extremely supportive of Ford's restructuring plans.
Observers, both inside and outside Ford, have been impressed by the pace at which Mulally has moved since joining the automaker last autumn. He has also delivered some surprises, such as his recent meeting, in Tokyo, with Toyota Motor Co. Chairman Fujio Cho. That event led to speculation Ford might be seeking some sort of alliance with the giant Japanese maker.
During his conversation with journalists, Mulally revealed he has also met with senior executives from General Motors, DaimlerChrysler, BMW AG, and the U.S. arm of Toyota.
"I really want to connect with each of the players in the industry," Mulally explained, "and I want to do it quickly. We have so many things in common that we're dealing with," such as government regulations, fuel prices, and free trade.
Generally open in his comments, the former aerospace executive turned coy on several subjects, including the future of Ford's numerous vehicle brands. There have been numerous calls by industry analysts to eliminate either or both the troubled Lincoln and Mercury nameplates. Mulally would only say that he is "evaluating all of our portfolio." But he did confirm that the plan is to complete the proposed sale of the high-line Aston Martin division sometime this year.
Though senior Ford officials have acknowledged 2007 will continue to see more losses, Ford of the Americas President Fields insisted things are showing "incremental progress."
"It's like building a house," Fields said. "We built the foundation last year. But you don't see the house. You see a hole."
But like Mulally, Fields took pains to insist the sense of urgency is real, and that this time, Ford's management knows it is running out of time. "Nothing focuses your mind better than knowing that if you don't deliver on this plan, the banks will end up owning the business."
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