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Ford Sees Progress Beyond Costs


July Sales Sigh of Relief at Ford (8/5/2002)


DETROIT--
Ford may be woefully behind in its quest to cut costs, but CEO Bill Ford says progress that will soon be paying dividends is happening throughout the company.

“Our quality is getting back on track, our launches this year for the Expedition and Navigator have gone well, and our dealer and employee morale are way up,” he says.

Though he admits cutting costs is tougher than he thought in the short term, “All those things I said we had to get going on, we have gotten going on,” says Ford who took over from the ousted Jacques Nasser last October.

He may be right. And the task of turning morale at Ford around shouldn’t be underestimated.

Fear in the ranks

One Ford engineer said she recalls that in early 2001, some so-called “Six-Sigma” engineers, at the order of Nasser, appeared on Ford’s internal TV network to talk about what the quality problems were. “They would only go on with their faces blurred out like they were anonymous sources on 60 Minutes because they were so afraid of being honest,” said the engineer who says she is glad to leave the Nasser era behind.

“It was dominated by fear up and down the ranks,” said the engineer.

Bill Ford has baked in credibility as a leader, but he tries not to assume that people will follow him.

“One of Bill’s quotes has been, it doesn’t do any good to try and take a hill if the troops aren’t behind you,” said communications chief Jim Vella during a briefing with reporters last week.

The CEO is appearing in a new round of TV ads featuring him talking about Ford product heritage. The first round of ads broke earlier in the year. After initial derision around Detroit for being ineffective, both CNW Research and USA Today have reported that the ads perform above industry average based on surveys.

Perhaps most surprising, noted USA Today’s survey, is that the ads play well with young consumers in their twenties, as well as a strong positive reaction from women.

The reluctant CEO changes

Bill Ford’s lack of accessibility to the media, compared with General Motors CEO Rick Wagoner and Chrysler Group CEO Dieter Zetsche, has prompted descriptions of Ford being a “reluctant CEO.”

“He does come across that way often,” says Dr. David Cole, director of Center for Automotive Research.

“Maybe I’m seen that way because I was never running for this job,” says Ford.

The opposite of Nasser, whose late workdays were legend, Ford admits he often “disappears out of here (Dearborn) back to Ann Arbor,” about 30 miles from Ford headquarters where his home is.

Ford is not a fan of his own celebrity, and left the Ford family compound near Grosse Point two years ago for Ann Arbor where he sends his children to public school.

“Maybe I don’t act like a lot of CEOs who try and draw the spotlight,” says Ford, who admits starring in the company’s ads is a conflict with his instinct. But, he says, he agreed to appear in ads because he was convinced by his advisers and the company’s longtime ad agency that speaking directly to customers was right for the company’s current hard times.

Profits elusive

Ford posted a profit in the second quarter. But Goldman Sachs auto analyst Gary Lapidus notes that more than half the profit came from Ford Motor Credit, and more than 100 percent of profits in the third and fourth quarter are expected to come from the credit arm.

Ford somewhat awkwardly changed an incentive program it launched in early July a day after it made its announcement in order to match most of General Motors zero-percent offers. It made Ford look like a follower, and not seizing the leadership opportunity and shorting the advertising of the program cost it sales in July.

Ford barely squeaked out a 1.5 percent sales gain while GM roared with a 24-percent gain.

Perhaps not surprisingly Ford has been turning to old Ford hands with whom he feels comfortable as former Nasser hands have moved on: Allan Gilmour recruited in from retirement to be Chief Financial Officer, and informal advisor Robert Rewey and Ross Roberts, both of whom had retired.

“We were arguably the best company through the ‘90s, and we had a lot of talent, and that talent not only was professional, but they understood the Ford system and the culture and what made us great,” says Ford.

PAG profits

It’s tough to argue with those selections. The jury will be out for some time, though, on Mark Fields who replaced Wolfgang Reitzle as head of Premium Automotive Group. Fields was hardly at Mazda long enough to make much of an impression. And he is untried at managing luxury brands that will have to share parts and pieces more and more without losing brand identity.

Ford plans to get 33 percent of its profits from PAG brands by mid-decade. Reitzle was fighting for a unique platform for Lincoln and a new exclusive platform for Jaguar, concerned that too much obvious parts-bin engineering would corrupt the Jaguar, Land Rover and Volvo brands over time.

Frustrated by budget cuts on such programs and having to answer to COO Nick Scheele, Reitzle left. His credentials running BMW product development were unimpeachable. The same can’t be said of Fields who, among other tasks, will oversee a transformation of Land Rover products using shared chassis from Ford trucks.

Having worked in most parts of the company for 18 years before taking over as CEO, Bill Ford is thought to have good instincts about people and product. If he has one shortcoming say Ford watchers, it may be that he takes too many opinions from his advisors before pulling the trigger.

Perhaps in the short term he is overcompensating for Nasser’s style of not taking enough advice before ramming another program down Ford’s institutional throat.

“He has surrounded himself with very good people,” says David Cole. “When you do that, you can accomplish a lot.”

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