Ford Shakes it Up Again

Talk about Ford's executive shuffle in the TCC Message Boards!

The other shoe has dropped at Ford Motor Co.

Just weeks after a massive realignment of senior management, the number two automaker has announced a second high-level shake-up. This one creates a new Office of the Chairman and CEO, a shift in the tenuous power-sharing arrangement put in place three years ago when family heir William Clay Ford Jr. was named titular chairman, while day-to-day authority was handed to CEO and President Jacques Nasser.

Publicly, Ford officials strove to spin a happy face on the new arrangement, suggesting it makes it easier for the company’s top two executives to work together—and to delegate power. But with Ford reeling from a series of setbacks—including slipping market share, declining profits, quality snags, and this Spring’s embarrassing and costly recall of 13 million Firestone tires—there have been growing questions about Nasser’s grip on power.

Several insiders have suggested the Lebanese-born Australian may not remain with Ford much longer. That is a very real possibility, said Dr. David Cole, director of the Center for Automotive Research in Ann Arbor, Michigan, though he wouldn’t predict the timing of any further changes in top management.

Bill Ford “is a very competent young man,” Cole asserted. “He needs more experience, but realistically, he’s going to be leader of this company at some point in his career.”

Nasser has not been one to sit still. An unabashed workaholic who considers four hours of sleep the equivalent of sleeping in, he often travels abroad on national holidays so he can remain on the job. Nasser has attempted to drive change into his organization at an unprecedented pace, pushing Ford into an array of new businesses—ranging from recycling to e-commerce. He has also made it clear anything but the best is unacceptable from those who wish to remain part of the Ford workforce.

“Jac is an incredibly hard worker, a visionary, and the level of energy he has is almost unique,” said Cole. But that can be a plus and a minus. “It is very difficult for people to work for that kind of an individual because you can’t match up to the way that person lives.”

The organization Nasser surrounded himself with is unusually flat at the top, with more than a dozen top managers reporting directly to the CEO. That has its advantages, but has also hindered Ford’s flexibility, some insiders argue, noting that when Nasser is unavailable, even minor decisions often have to be postponed until he can be tracked down.

While Nasser was responsible for day-to-day operations under the old management system, Bill Ford was far from powerless. He had a critical role on the Ford Board of Directors, and could ultimately steer—or block—key decisions, though his approval was often sought only as a final step.

It was an open secret inside the company that the young Ford wanted more of a say in daily management, and that appears one of the key concessions made under the new agreement. But Nasser also could benefit from the latest shake-up. Sharing power with the 44-year-old Bill Ford could make things operate more smoothly, some insiders believe, by letting Nasser spin off activities that needn’t concern him, and concentrate on Ford Motor’s core operations.

The affable young Ford is the great-grandson of company founder Henry Ford. (And in an ironic twist, he is also a great-grandson of tire company founder Harvey Firestone.) When he was first named chairman, Bill Ford became the first family member in 18 years to sit at the helm of the automaker

Thursday’s announcement thrusts him front-and-center for the first time in months. Where Nasser often seeks the media spotlight, Ford has never sought much publicity for himself. And he virtually disappeared from view in August 2000, when Ford Motor Co. launched the first recall of Firestone tires—which have so far been linked to as many as 203 deaths, most of the fatalities involving Ford’s popular Explorer sport-utility vehicle.

“He had nothing to win by staying out in public,” said a source close to both the Ford heir and the Ford Motor Co. “All that might have done was tarnish his image and the family’s image.”

As the carmaker struggles to regain its footing, Bill Ford’s squeaky clean image could prove helpful. Unlike Nasser, whose go-for-the-gut approach has generated extensive opposition from many members of management and the rank-and-file, the young Ford appears to benefit from a tremendous reservoir of employee loyalty. He’s worked hard to embellish his image as an environmentalist, going so far as to question the morality of building gas-guzzling SUVs.

On the other hand, some analysts and investors fear that if Ford’s power base were to expand, he might make decisions that could hurt profitability—such as cutting back on the production of the automaker’s highly profitable light trucks. Others are concerned that deep down, Bill Ford might be more interested in running the other family business—the Detroit Lions NFL team—than making cars.

“These changes increase the potential for management distraction at a bad time for Ford,” cautioned automotive analyst John Casesa, of Merrill Lynch. “The company is not out of the woods on Firestone, Japanese (carmakers) are mounting an attack on the U.S.
truck market, and GM's is making gains in some areas.” Despite his concerns, Casesa is bullish enough to recommend that investors expand their Ford holdings.

The decision to create an Office of the Chairman and CEO came in response to a request made by Ford’s increasingly nervous board during its regular July meeting. During that session, the board approved a series of promotions, transfers and retirements meant to resolve recent problems. Among the key steps taken, Ford of Europe Chairman Nick Scheele, a man known internally as “Mr. Fix-it,” was appointed head of North American operations. Some suggest that makes him the most likely successor as CEO, should Nasser decide to leave—or be forced out.

If the chief executive did make his exit, it wouldn’t be the first time an outsider fell victim in a power struggle with the Ford family. Perhaps the most famous example occurred in 1978, when Lee Iacocca was dismissed by Henry Ford, II. In way of explanation, Ford told Iacocca he “just didn’t like” him.

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