Ford Death Watch 47: The Man With the Plan
In a recent article, The Economist wondered if Detroit's automakers would win their "race against time." In other words, will Ford, GM or Chrysler return to profitability before their cash conflagration throws them into the Chapter 11 burn unit? At the risk of providing a piercing glimpse into the obvious, The Big 2.8 need to change course or flame out. STAT. The Economist rightly suggests that Ford is the only carmaker of the three with a coherent strategy for escaping C11. For contrast, let's recap GM's and Chrysler's plans…
GM's roadmap: pare structural costs out of its bloated North American installed capacity until they can replace high profit light trucks with… something. To that end, The General's axing people and factories like they're going out of style (which they have), costing the company billions. The overarching problem: GM's market share and revenues are falling faster than the cuts. GM might be able to scrounge additional capital, but that's merely delaying the inevitable.
Chrysler's plan: become a distributor of cars made by others. Someone. Anyone. Aside from the fact that it won't work– branding still counts for everything– the outsourcing effort can't happen soon enough to save the company. Chrysler's product-related income stream is evaporating faster than a Texas rain puddle, and owners Cerberus have no hope (and no intention) of raising (or providing) sufficient capital to transform Chrysler into a viable carmaker, rebadged products or no.
In a nutshell, GM's still in denial, bleeding a slow death (in North America), while Chrysler is running around like a headless chicken, running out of money.
Meanwhile, Ford's been executing a focused, determined and sensible new new turnaround plan since the arrival of the aluminum-winged savior from Boeing.
Alan Mulally's strategy: transform Ford into a smaller, more nimble company by leveraging its global resources (which are mostly smaller vehicles in Europe) to reduce platforms and costs. Build quality products in North America (as done by Ford Europe today) offering excellent fuel economy and class-competitive value for money.
It doesn't sound crazy, and it might just work. But there are more than a few hurdles Mulally and his Blue Oval Boys must jump before they can beat their cross-town rivals to the "no C11" finish line.
First, Big Al must break down Ford's bloated bureaucracy and legendary in-fighting. No more individual unit fiefdoms. Intra-national waste and duplication of effort must be ruthlessly eliminated. Consolidation must be pursued without fear or favor.
Big Al's got to look outside Ford for expertise where needed. This he's done, hiring marketing whiz Jim Farley from Lexus and Ken Czubay (U.S. Sales and Marketing Chief) from Southeast Toyota Distributors. The more top-notch outside talent brought on board Ford, the better.
Second, Ford's got to jettison those parts of the company that don't fit to the global strategy. Throwing Jaguar/Land Rover and Aston overboard was the right thing to do. Volvo can't be offed soon enough.
Third, Ford's got to develop a profitable product plan for North America.
Ford's newfound commitment to smaller cars, more efficient engines and better design makes perfect sense. The new Fiesta and Euro Focus are overdue, but they will be welcome. When the company restyles the Taurus and drops the Freestyle, we'll know they're getting their you-know-what together. Turbocharged engines also make sense: more horsepower, better fuel efficiency. No wacky bets on unproven electric go karts.
Finally, Ford must challenge the entire organization to perform to stated goals. They must energize the engineers, design staff, factory workers and dealers with their plan. And when I say Ford, I mean Alan Mulally.
The importance of leadership in a crisis can never be overstated. GM's got the same old tired financial guy trying to make it look like he's addressing the problem without really solving the crux of the matter. Chrysler's in the hands of the Home Depot despot– a proven cost-cutter who lacks any feel for the customer experience. Only Ford's Mulally has the skills– and credibility– to successfully energize his troops. Kind of like the way he brought the B-777 to fruition.
Even so, there's no getting around the possibility that Ford may, indeed, run out of time. They may not get the small car products they need to the North American market soon enough. (Not to mention the possibility that those hecho en Mexico products may not be popular enough to generate those now-elusive profits.) The fact that Ford has withdrawn its "return to profitability" deadline is worrying.
But at least Ford has its eyes on the prize. Mulally may not know exactly when the ship will stop taking on water, but he knows Ford's got to get rich or die trying. He's laid out a viable plan, and he's sticking to it. Every Ford employee, supplier, and dealer knows the plan. We know the plan.
John Lennon observed that "life is what happens when you're making other plans." But genuine progress is only possible when you realize that you must adapt or die.
Toxicroach on Aug 18, 2008
IMO the whole fall of American industry, to the degree it is true, is a result of WW2. Most of the world was a mess; Europe in ruins, Asia a mess, Africa is Africa. The only country that wasn't a bombed out wreck was America, and so time were good; no serious competition around while they rebuilt. So we made all kinds of arrangements that were great at the time, but were predicated on there NEVER being any competition. The competition came, and the death of the unionized industries by slow strangulation is the result today because nobody wanted to be the first to jump off the gravy train. So I think its a historical problem, but not one that an American car company founded today would have, as long as it fought off the UAW with flamethrowers and mustard gas.
Shiney on Aug 18, 2008Runfromcheney : August 13th, 2008 at 4:04 pm Actually, it is blatantly obvious that Ford is going to be the only one who will cross “no C11″ finish line. This is mainly because while Ford is running the race, GM is sitting at the start line going “We don’t need to run this race. We’re fine.” while Chrysler is running around in circles and screaming just beyond the start line. And right behind the start line is Toyota, loading a shotgun……… That is my Quote of the day!!!! Great Post!
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