The Way Forward: What's Behind the Pyrotechnics?

January 24, 2006
Article Image

Ford Motor Co.’s "Way Forward" plan came off like Jerry Bruckheimer -- heavy on the pyrotechnics but short on plot and dialogue. There were all the standard fireworks, 14 plant closing, thousand of jobs axed and plenty of executives walking around in sack cloth and ashes. Bill Ford, even boldly told off Wall Street, suggesting he wasn't going to play their game any more, nor offer annual guidance about the company's profits -- or lack thereof. Mark Fields talked about sharpening the brands, countering critics who’ve insisted Ford must kill Mercury. Fields even promised Ford would build a new, ultra-modern, ultra-efficient factory somewhere in North America to deal with the markets swing back to cars - particularly small cars, sales of which are expected to grow by 40 percent. This part of the plan is good and suggests Fields has already separated himself from the truck-obsessed executives that have run the company for the past 15 years. It also suggests there really is hope in Dearborn.

One tactical mistake by Ford's quarterback was in not showing off any of the new small cars the company obviously has in its product pipeline. I've heard all the arguments against letting the product cat out of the bag too soon. But this was the time to break the rule for Ford to offer a reason to root for the home team again. Hybrids alone just don't cut it. The plan was very thin on other details about product. Fields, for example, refused to discuss what's going to happen to the old Lincoln Town Car. Are they just going to dump and abandon the segment altogether? Ford didn't really offer any answers.

The rest of the plan, like one of Bruckheimer plots, (think Con Air), seemed to require a suspension of any inclination to disbelief. I doubt anyone on Wall Street was very impressed by the suggestion that Ford's North American Automotive Operations won't make a profit until 2008 or that the company's cash reserve will drop during 2006.

John Murphy, the auto analyst for Merrill Lynch, said in a note to the firm’s clients that while the plan is a step in the right direction any assumptions that Ford will be able to maintain its current market share are suspect. The $6 billion in material cost reductions also sounded a whole lot like the old fashioned squeeze-the-supplier formula, even though COO Jim Padilla asserted he’s simply looking to eliminate waste and build a new relationship with “partners.”

Brian Johnson, an analyst with Sanford Bernstein in New York, who attended the Ford briefing in Dearborn, said a lot of observers were expecting more details and said one of the key things Ford didn't address is how the company plans to get everyone in the organization moving in the same direction. Having a small team come up with an action plan is great exercise. Getting everyone to put it into operation is a whole different issue.

Another concern is that the Way Forward seemed to ignore is the impending debut of new trucks from Toyota and GM. The plan seems to assume these vehicles won't have much of an impact on Ford's business model but there is good chance they will, Johnson said.--Joe Szczesny

The Car Connection
See the winners »
The Car Connection
Commenting is closed for this article
Ratings and Reviews
Rate and review your car for The Car Connection
Review your car
The Car Connection Daily Headlines
I agree to receive emails from The Car Connection. I understand that I can unsubscribe at any time. Privacy Policy.
Thank you! Please check your email for confirmation.