Looking ahead
As the tight economy forces Ford to cut costs by as much as a half-billion dollars, the CEO hopes innovation, rather than lopping off heads, can do the job. And here, too, Ford seems to take heart in the founder’s restless tinkering. Henry Ford experimented with early ethanol blends by growing soybeans. Ford, himself, has unleashed 1,800 full-time problem-solvers, called Black Belts and trained in the vaunted Six Sigma quality-manufacturing process, to lead customer-satisfaction projects.
"In the past, the conventional wisdom was that improving quality cost money," Ford said last year at a Morgan Stanley Dean Whitter investment seminar. "But Six Sigma has proven the conventional wisdom was wrong."
The savings to Ford Motor Co. is an estimated $200 million in two years from that initiative alone. Meanwhile, the company devotes more than half of its R&D budget to environmental projects.
Ford Motor Co. has also proved it’s ready to bite the bullet to catch up to Japanese competitors, which have an edge in delivering hybrid technology (a combination of gas-powered and fuel-cell engines) at affordable prices. Last year, it announced it would sell its small hybrid SUV, the Ford Escape, dubbed by some as a "guilt-free SUV," at a loss while it continues to try to slice costs.
Early results are encouraging: In April, a test in Manhattan revealed the vehicle got 576 miles on a single tank of gas, or 38 mpg in the ultimate city driving.
Ford recognizes as well that part of this equation involves continuous changes in the way the unions interact with the company. It’s a lesson he learned back in 1982, when he took part in an historic round of contract talks that reshaped the way unionized auto workers and their employers related to each other.
"I was on the team during the breakthrough 1982 Ford-United Auto Workers labor talks, which launched the employee involvement movement that revolutionized the industry," he says. "I’ve always believed that people are a company’s greatest asset. During those talks I saw first-hand what can happen when you get people involved and give them a personal stake in your overall success."
So after three-and-a-half years at the helm, Ford might be forgiven for pausing to catch his breath, now more than halfway through his five-year turnaround plan. The general sense in the auto industry is that the company has stopped the bleeding and that the patient has at least stabilized.
But there are plenty of storm clouds on the horizon, in the form of high gas prices, which threaten to end a decade of easy profits on SUVs and large trucks, and rising interest rates, which will end low-rate financing deals that drew millions of customers in recent years, temporarily swelling profits.
Analyst Keller sees plenty of remaining challenges for Ford Motor Co., from a new-model product pipeline that’s thinner than she’d like to the possibility that the ailing Jaguar and Aston-Martin brands could still bleed money and make it harder to protect the core company’s health.
The Darwinian global auto market doesn’t provide many chances for exuberance these days, she says, only an occasional sense that one has staved off disaster for now.
"Operationally, is the company better (since he took over)? Is the morale improved, does he have a good team?" Keller says. "I think the answer is yes. I’d give him an A minus. I think he’s done a good job, given the enormity of the problems."
Auto researcher David Cole sees plenty of signs of progress thus far but thinks it’s too early to tell how Ford should be graded. Says the former academic: "I’d give him an incomplete."
Ford is more optimistic. In January, at a meeting in New York with investors and senior management, he outlined his plans for 2005 and beyond.
"Last year, our reinvigorated cycle plan kicked in, and we introduced more new vehicles around the world than at any other time in our 100-plus years," he said. "Looking ahead, just stabilizing our business isn’t enough. Our objective is to win. For 2005 and beyond, we’re going to build great products, a strong business and a better world."
And if history is any judge, Ford aims to make good on that pledge.
HOW TO REACH: Ford Motor Co., (800) 392-3673 or www.ford.com
