Ford Turns a Profit Again (7/22/2002)
With its turnaround plans in place for six months now, Ford is making an extraordinary effort to show that it really is making progress on what the company's executives promise is a product-led comeback.
"We're here to dispel the notion that the product pipeline is empty," assorted Ford execs told a group of journalists during a two-day deep backgrounder showing off a variety of new products due from the end of the year through the end of 2004. The products – including new full-size trucks, sedans and crossover vehicles – are what the company believes will help restore the blue oval to profitability in the wake of the Firestone tire debacle and misrule of Jacques Nasser's tenure as Ford chairman. (They’re also hidden from public view – Ford has asked journalists not to reveal details of some of the upcoming products shown, including the ’04 CrossTrainer crossover and Five Hundred sedan, nor publish pictures.)
The recovery this time is far different from the one the company faced in the early 1980s. Where its products left much to be desired when the company was in deep trouble back in the early Reagan years, its current product line is excellent and provides the company with a strong base from which to evolve the new product line, company execs said.
Ford's dealers are excited about the company's future plans, said chairman William Clay Ford Jr., in a prepared video. Ford recently prepared a couple more television spots for the advertising campaign in which he speaks directly about the company's heritage, products and future. Surveys show the ads are helping boost the company's image and the spots will probably run almost continuously right up until Ford's Centennial next year.
2002 Ford GT40 Concept
2002 Ford GT40 Concept
Theodore later acknowledged Ford had let costs on several new products such as the new Explorer and Expedition get out of line, and with incentives high, hasn't been able to recover all its costs. The company was coming off a terrific run during the 1990s and had lost some of its edge in dealing with the cost-related issues, he noted.
The company, however, is now systematically dealing with the problem. Since the first of the year it has had more than 600 engineers working on programs to take cost out of existing products and the program is already paying major dividends, noted Dan Marinaro, one of the engineers in charge of the effort. The goal of the value engineering effort is to offer customers maximum value at minimum cost. "It's not really decontenting,” said Marinaro. The process involves finding another way to do the same thing better, he said.
Allan Gilmour, Ford's chief financial officer, however, also acknowledged the effort is going slower than Ford had expected and the company has to look at other ways to cut costs. "Perhaps we were a little naïve," said Gilmour, who estimated the effort was probably six months behind schedule and will require going back, via value engineering, over even the company's newest vehicles.
The company's designers also have become more cost-conscious, particularly in packaging the interiors of new vehicles. Designers, for example, were able to give the instrument panel of one carry-over vehicle a complete facelift for $8.
Mike Arbaugh, chief designer on the interiors for the 2003 Lincoln Navigator and Ford Expedition, said the company's objective for interiors is to blend tradition, smart design and new technology into one package. The new Navigator, for example, takes some of its design cues from the 1961 Lincoln Continental as well as heated and cooled seats. "We want to be the leader in interiors. This is something we can do now," Arbaugh said.
Arbaugh also confirmed Ford's new full-size pickups, which are coming next year, will come with multiple interiors. "We can differentiate between the brands," said Arbaugh, who noted Ford's pickup buyers are segmented by demographics and the way they use the truck. One of the interiors will definitely be more luxurious, he said. "The Lincoln Blackwood didn't fail because of the interior. It failed because it was late to market," Arbaugh said.
Ford also is preparing several new features and several special limited editions, including a special James Bond version of the Ford Thunderbird. Buyers, for example, will be able to order the 2003 Lincoln LS with an elaborate new sound system built by THX Ltd., the company founded by filmmaker George Lucas to help theaters get the sound track for Star Wars just right. The optional system will feature 10 speakers, four 50-watt amplifiers to power the door speakers and two 32-watt subwoofer amplifiers for high output. Too, the 2003 Mustang can be ordered with a Mach MP3 Music System or Mach 100 Audio System, which was available only in high-powered aftermarket systems.