Ford Confirms Mexican Plan by Joseph Szczesny (6/18/2006)
Company will invest heavily in three plants to cut production costs.
William Clay Ford probably saved the Ford Motor Co. when he fired Jac Nasser as president. So he has my admiration. But Fords shouldn't actually run the automaker. They are like kings. Their job is to find a leader, a prime minister, or a Lee Iacocca or a Phil Caldwell, and let that man actually run the company.
It's just that they aren't engineers and even if they've spent decades working at the company, they aren't experts on cars or the business. They are headstrong, too, and think they know more than they do. We recall how William Clay's uncle, Henry Ford II, wouldn't build the minivan—even had the designer, Hal Sperlich, fired—so the designer went to Chrysler and helped save that company.
Fords just aren't that good at operating the machine. They often just don't understand the nuts and bolts of the business, even if the Ford name is on the building. But the family members do love their company and all
William Clay's efforts to be “green” make the point. He has blundered badly, flip-flopped, has wasted time and effort and still doesn't seem to understand how to get green into his cars.
Six years ago Mr. Ford said the company would get a 25-percent fuel efficiency improvement in its sport-utility vehicles in five years. It was technically impossible to do, and if you know anything about cars and engines, this was clear when he made the promise. An all-out effort to put diesel engines in every SUV might have done it, but since Ford didn't make diesel engines here, and diesels have pollution problems, that wasn't in the cards.
There's nothing wrong with wanting to improve fuel efficiency. Honda has vowed that every new car will be better than its predecessor. That's a fine goal and Honda will do it. Mr. Ford just made a fool of himself and the company.
Next he got the hybrid bug and said it would build 250,000 hybrids a year by 2010. He started by putting a hybrid system in the Ford Escape. This is a good learning experience—but how many people are going to pay $5,000 extra to get 5 miles more per gallon? If you want volume with a hybrid, you've got to get a big mileage figure—40, 50 or 60 miles per gallon—and a relatively low price. Maybe he could have done that by putting a hybrid system in Ford's smallest car, the Focus. But he didn't put the hybrid system in the Focus but in bigger cars. So his hybrids—again, good experience learning to build them and make them work—have flopped.
One more thing: The other day a very, very rich New Yorker asked me for advice. He wanted to buy a car that makes an environmental statement, a hybrid really. He had four cars already, and money was no object. So I gave him some advice, but the point is he wants to make a public point. That's the thing about the Toyota Prius. It stands out. Do Ford's hybrids stand out? Not at all, but they could. Why not a special paint for the hybrids, or a special stripe, green, something that would send a message?
So that 250,000-a-year hybrid goal is gone, too. Again the company and Mr. Ford are embarrassed.
Now he is onto the flexible-fuel vehicle, promising to build them by the millions by 2010, but this is looking more and more like another plan without understanding.
Flex-fuel means using ethanol, or grain alcohol, E85, which is 85 percent ethanol, 15 percent gasoline. Cars must be tuned to accept E85, a minor cost in the $100-$200 range, but a cost. The trouble is there are only 600 or so fuel pumps for E85 in the nation, and it costs money—$30,000 to $100,000—to equip a gasoline station to pump E85.
But you can put up to 10 percent ethanol in gasoline without any extra cost to the car or extra cost for pumps or storage. And you get the same overall reductions in gasoline use or reduction in earth-warming carbon dioxide if the ethanol is just mixed in the gasoline (up to 10 percent) with less cost, or used, as E85 is expensive. So why even bother with E85? Why not just mix ethanol with gasoline and save the extra costs?
It's because corn growers, ethanol makers, and their representatives in Congress like the idea because it makes them money. And automakers get fuel efficiency credit for flex-fuel cars. This means the government credits their cars with fuel economy that they don't actually get, if they build those flexible fuel cars, even if no one every uses E85 ethanol in them. One day this will embarrass Ford, too.
What should Mr. Ford really do?
Mr. Ford's aim should be to find the best leader for the Ford Motor Co. Right now he's picked Mark Fields. Tell Mr. Fields what he wants and let Fields and the team figure out how to do it.
For all Mr. Ford's efforts it looks as if General Motors will do better than Ford in fuel economy. GM is pushing engine cylinder cutoffs, so that eight cylinder engines run on four cylinders at cruising speeds, and they are planning a cylinder cutoff for one of the six-cylinder engines. In addition GM has a new hybrid system that will start going on big SUVs this fall. Ford has no cylinder cutoff and no hybrid systems for the big SUVs.
Again, Mr. Ford should have a goal, like Honda—fuel improvements on every new model. He should let his engineers figure out how to do it. There have been enough embarrassments at Ford.