By on August 13, 2008

Al! Al! He\'s our man! If he can\'t do it, no one can!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.

Get the latest TTAC e-Newsletter!

54 Comments on “Ford Death Watch 47: The Man With the Plan...”


  • avatar
    ex-dtw

    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

    Completely agree. Ford does seem to be the only one executing a reasonable strategy at this point.

    GM is doing a decent job of faking it.

    ChryCo: It just makes me feel like crying. I want to root for these guys. Many at the company are smart, talented, driven, etc. but the boys in the head office just don’t/can’t/ won’t get it together. It’s beyond sad. The company is so broken on so many levels.

  • avatar
    trlstanc

    If they keep doing a good job, and I hope that they do (or anyone in the US at this point), can we start a Ford Life Watch?

  • avatar
    ex-dtw

    Case in point about ChryCo.:

    They just announced that they would be replacing the Grand Cherokee with a car-based ute. What was that about brand essence again?????

  • avatar
    thalter

    In the end, Ford’s efforts to avoid C11 may not matter. Once GM and Chrysler emerge from C11, they will have such a competitive advantage, having shed debt, dealers and labor contracts, that Ford will have no choice but to follow.

  • avatar
    toxicroach

    I’m pretty excited about Fords prospects. There cash position is actually better than GM and their cash flow situation is much better. They have proven top-notch product coming in, and their quality is decent now. If anyone can make it, they will. And once GM croaks, all the buy American guys and truck buyers will be headed to Ford dealers since ChryCo is so totally screwed.

    Thalter: I don’t think its a given that Chrysler and GM will make it out of a C11. They are already in a precarious position. If GM waits much longer, the sales drop that is going to happen when GM files will kill it, debt relief or no. C11 & a bailout is probably the only answer.

  • avatar
    ex-dtw

    That’s assuming they will survive C11 as more than a nameplate.

    My money is on Chrysler to go C7 and GM to go C11. But shedding the labor contracts is not as easy as it sounds, even with C11. Just ask Delphi.

  • avatar
    Lee

    Wait, doesn’t Volvo actually make money though? Why would they get rid of it? Other than to raise cash of course.

  • avatar
    taxman100

    I don’t see where rebadging your European products is any less desperate than what GM is doing. Stripping your North American operations is now considered genius?

    What is more “domestic” – a Ford designed in Europe and built in Mexico, or a Honda built in Ohio?

  • avatar
    Runfromcheney

    “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.”

    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………

  • avatar
    Steve_S

    I think the only definition of domestic anymore is do the profits go to an American company. No matter how many American’s Toyota employees teh profits still go to Japan.

    Good for Ford, I think they will make it. I hope somehow GM is able to make it as they actually have a couple of cars I’m interested in now.

  • avatar
    mikey

    No! None of the above.First Chrysler will cease production and be parted out.A much smaller GM and Ford will step into fill the gap.

    Nobody goes belly up

  • avatar
    toxicroach

    The irony of Ford is that it is, dare I say it, a dominant brand in Europe. With small cars.

    Bringing them here beats the hell out of duplicating the effort to R&D up good small cars, especially in a hurry, and they are good cars that Ford can genuinely, no-bullshit, be proud of. None of this almost as good crap; they are top of the line, fuel efficient cars. They need that badly.

  • avatar
    Bunter1

    Time for…

    Ford Staus Watch?

    Ford Recovery Watch?

    Bunter

  • avatar
    50merc

    “Build quality products in North America (as done by Ford Europe today) offering excellent fuel economy and class-competitive value for money.”

    Operational economy, and value for money. Which is pretty much the original credo that in twenty years made the Ford Motor Company one of the most successful companies in history. It seems Ford has decided to go back to “Plan A.”

  • avatar
    Rix

    Volvo doesn’t need to go. It won’t fetch much in the current environment and is probably close to breakeven. It’s being starved for product, but that is the right strategy. Fix what is big first. My money is on Ford to be the domestic leader by 2012.

  • avatar

    Is not simply rebading euro spec cars that makes it a good idea so much as it is the us focus is a rebadged escort.. they havn’t updated it at all really. the euro cars have tended to be more up to date.

    Also.. going chapter 11 may rid you of old debts and weights to some degree but it’s not exactaly good for image. Its not like most other industries.. its more like politics.. the comman man has to believe your new and good, it really doesn’t matter as much if you are (hence american cars still sold well in the 70s-80s)

  • avatar
    Gardiner Westbound

    Too bad Ford required a near-death experience to realize quality products are a key to success.

    Perhaps integrity will be the next big thing.

  • avatar
    yournamehere

    i also vote for the Ford Resurrection Watch.

  • avatar
    Robert Schwartz

    “Once GM and Chrysler emerge from C11, they will have such a competitive advantage, having shed debt, dealers and labor contracts, that Ford will have no choice but to follow.”

    GM and Chrysler’s real problem is that they cannot figure out how to design cars that anyone wants to buy. C11 can solve contractual problems, not IQ problems.

  • avatar
    jaje

    GM’s strategy is quite similar to the underpants gnomes.

    Step one: (collect underpants) or pare down their entire NA operations.

    Step two: ???

    Step three: profit!

  • avatar
    cdnsfan27

    Ford is on the right track and Bill Ford looks like a genius for hiring Mulally. They have to get the Euro Fords here soonest and stop bleeding money. C11 is not an option for the Ford family as they would lose their special voting shares. Not only will Ford be the last man standing but they will be in a position to challenge the Japanese big 3.

  • avatar
    Redbarchetta

    GM and Chrysler’s real problem is that they cannot figure out how to design cars that anyone wants to buy. C11 can solve contractual problems, not IQ problems.

    That is the best line I have seen all week, and very true. And one of the reasons I don’t think either of them are going ot come out of Ch. 11 when they finally go into it. Actually with Rick burning cash at both ends for GM they will probably be forced into Ch 7.

  • avatar
    P71_CrownVic

    Funny, all of this “work” that Ford is doing to try and make some money with new products and wild claims…and their most profitable platform is the Panther platform. The oldest, most outdated, fleet only platform, makes them the most money. Amazing.

  • avatar
    cleek

    Future Question of the Day:

    Does Ford have the balls to actually bring over a full compliment of euro diesels as well as the ICE versions?

  • avatar
    Dynamic88

    I think the only definition of domestic anymore is do the profits go to an American company. No matter how many American’s Toyota employees teh profits still go to Japan.

    But the paychecks stay here, and the paychecks are more than the profit.

  • avatar
    "scarey"

    I’ve said it before, Ford is killing the Ranger just when it needs it once again. The Ranger is still the answer to the question asked in 1979, “I need a pickup, but where can I get one that won’t kill me with high fuel costs ?”.

  • avatar
    Runfromcheney

    scarey: Ford is replacing the current Ranger with the much better South African version last time I heard.

  • avatar
    menno

    Dynamic88, you’re right. Besides, with the 2.801 building so much of their stuff in Mexico, (and in the case of GM, also in South Korea – Aveo), it’s gotten difficult to discern just what is a “domestic” car vs “foreign”.

    After all, Hyundai, Honda, Toyota, BMW, Mercedes, soon Volkswagen, possibly also Audi, soon Kia, Nissan, Mitsubishi and Subaru all manufacture (not just assemble) cars in the United States.

    As you say, the paychecks stay here. Engineering and design work is done here. Those paychecks stay here. American managers and managers living in the US from other countries get paid in dollars and live here.

    In the meanwhile, Chrysis Motors plans to bring in cars from Communist China (Chery and possibly two other manufacturers), Mexico (Nissan), their fabled Hemi V8 is manufactured in Mexico, their once well thought of 300 and Chargers are built in Canada (with Mexican V8s or US V6s), and GM is busy closing down capacity in North America and adding Daewoo – whoops I mean “Chevrolet” capacity in Mexico alongside South Korea, for the NA market. The new Chevy/Daewoo plant in Mexico just churned out it’s first Aveo this week.

    As for Ford, they’re moving a lot of production (especially of small cars) to Mexico, too, so they don’t get a pass.

    But at least they are looking like they might survive to fight another day.

    I don’t think GM will last (as in – survive at all), I’m darned sure Chrysis won’t. I hate to say it, but the incompetents in charge of General Messup have their heads so far up their anuses, that they can’t see the proverbial handwriting on the wall in the stall. Once they finally are FORCED to go Chapter 11, I suspect they’ll either die on the vine after a few years of struggle, or the Judge will look at the (cooked) books and declare – game over. Chapter 7, not 11. Buh-buy.

  • avatar
    Usta Bee

    Back when the Ford GT and the latest Mustang body styles were coming out everyone was getting all excited about the new “retro” look of these cars. I took one look at all the other cars they had in their lineup and realised these guys have finally run out of new ideas. Rehashing designs from the 60’s was the best their designers could come up with ?!. Everything they have in their sedan lineup is utterly forgetable, even MORE generic and vanilla than the Camry. If you don’t have style, or quality, or reliability why should people buy your cars. At least the Italians got away with selling crap cars reliability wise because they had STYLE, and people were willing to put up with their problems.

    Cars are basically like women, everybody wants to be seen with a good looking one, and you’re more likely to put up with high maintenance issues if you’ve got a good looking one. After awhile though if she/it keeps breaking down all the time you’ll eventually get sick of her/it, and get yourself a more bland, but more reliable, model.

  • avatar
    P71_CrownVic

    Usta Bee:
    Back when the Ford GT and the latest Mustang body styles were coming out everyone was getting all excited about the new “retro” look of these cars. I took one look at all the other cars they had in their lineup and realised these guys have finally run out of new ideas. Rehashing designs from the 60’s was the best their designers could come up with ?!. Everything they have in their sedan lineup is utterly forgetable, even MORE generic and vanilla than the Camry. If you don’t have style, or quality, or reliability why should people buy your cars. At least the Italians got away with selling crap cars reliability wise because they had STYLE, and people were willing to put up with their problems.

    It’s like…my brain has created a screen name all on it’s own…

    Could not have said it better my man!

  • avatar
    cheezeweggie

    “No wacky bets on unproven electric go karts.”

    Amen brother. Just design a well built $15,000+ smallish 4-banger car that doesn’t look like a beer can with a bowtie.

  • avatar
    sean362880

    Ken –

    Respect for the Fred Tuttle reference. Although in the movie “Man with a Plan”, he won his senate race after spending $16 on his campaign.

    http://en.wikipedia.org/wiki/Fred_Tuttle

    Anyone think Ford can pull off a similar feat?

  • avatar
    Stu Sidoti

    Like many of you, I agree that Ford has some great products overseas they can utilize to swiftly have the right kind of vehicles in the NA market for today and the near-future costs of fuel.

    With that said, even if they suddenly had those vehicles in the showrooms tomorrow, I don’t believe they can turn a profit on these vehicles. Why? Ford is not a premium brand in this country, even with Lincoln and Volvo as possible premium brands in their stable, I just do not imagine that they will be able to charge a comparable price to what those vehicles command in Europe. As for bringing the European models in as Mercuries? Right…Mercury is a nearly invisible brand…again I just don’t see that working.

    For example, the Ford Galaxy MPV nicely equipped is 29,200 Euros which converts into $43,550. Uh-huh…for a mid-size MPV/Minivan. For comparison, according to the MSRP, a Lexus RX 350 AWD SUV retails for $39,100 and with options goes up from there… A BMW X3 4X4 SUV starts at $38,600-now the odds are the dealer will add on another $5000 or so in options, but still for comparison purposes, the FWD Galaxy MPV at $43,550 is no match in the cache’ department for the $40,000 Lexus or the $39,000 BMW. I imagine that most Americans, spending their own money-remember leasing is going away folks, no more giveaway sweet leasing deals to move the pricey high-dollar metal anymore-people will be buying more and leasing less soon and given the choice between a Ford MPV versus a nice, reliable Lexus or BMW with excellent resale values and a lot more cache’, I really doubt if too many Americans will spend their own money for the Ford…I just don’t see it. Maybe you and I yes, but we are enthusiasts, the vast majority of Americans are not, and if they DO know ‘a little something about cars’, they would probably be attracted to the BMW or Lexus, again for the cache’ value…Not too mention if they are shopping for a minivan the Chrysler minivans which have the great Stow&Go seats which the Galaxy does not are also less money, more room etc…Plus you have the Honda Odyssey, Toyota Venza, Sienna, Buick Enclave, Hyundai Entourage all very good offerings in the people-mover segment and most would seem to be less expensive than the Galaxy…so IF Ford wants to sell the Galaxy and other Euro-Fords here, they will have to lower the retail price to be competitive with some other offerings in the Galaxy’s segment and others that may be cross-shopped. If you lower the price too far, you wipe out any chance of a profits, so on the face of it, it seems like losing proposition.

    Keep in mind too that the Euro-Fords are priced where they should be based upon their content-they are really nice vehicles because Ford quite simply puts more content in them and they have been working hard over the decades to maintain a marketing position that allows them to build such vehicles and sell them and such prices-you cannot simply build for example, the Galaxy in the US for less money-not gonna happen…If you want the Galaxy to have all the same ‘stuff’ it has in Europe, you are going to have to charge the $40,000+ just to pay for the content…there are no free lunches on this deal…if you decontent the vehicles then you are right back to the same problem…non-competitive NA offerings that do not have the same value as ToyoHondHyunNissCo products…not too mention the aforementioned Lexus and BMW at around the same price as our $43,000 Ford Galaxy…

    The dollar to Euro exchange just KILLS the whole notion of importing Euro-Fords…why do you think BMW, Mercedes, Alfa, FIAT, and others are currently scurrying about the US South looking for a place to build a plant?!? Because compared to Western Europe, the US is a low-cost country right now. Now-IF Ford thinks they can just suddenly start assembling Euro-Fords here, that might not work either as most of their supply chain for these vehicles is overseas and so most of your parts costs are still in Euros not dollars. So maybe you build the parts over there and ship them over here for final assembly? Same problem now compounded by expensive shipping costs. You could conceivably have US suppliers build your parts here and assemble the vehicles here too but that would take 2-4 years to tool up, source, sequence, convert old plants etc. I don’t know all the details, but I have to admit that from my feeble understanding of their plan, I just don’t see how they can expect to charge a premium BMW/Lexus price for a not-well-regarded Ford nameplate over here and expect to sell a lot of vehicles. I also don’t easily see how IF they lower the retail prices to more closely meet US consumers expectations for what a Ford automobile should sell for in this market today, how are going to make money on the Euro-Ford line over here ?!?! Somebody enlighten me…

    As much as I would like to see those great vehicles in the European Ford line-up selling over here asap, I just not certain that they can make any money on them.

  • avatar
    BigBucksT

    I think the Ford Death Watch will end very soon. Mullaly is an incredibly competent individual with a talented group around him. As long as they stick with their Euro strategy, they will be fine.

  • avatar
    cpmanx

    I just do not imagine that they will be able to charge a comparable price to what those vehicles command in Europe.

    As many people have pointed out in TTAC, a direct conversion of Euro prices to US prices is misleading; it has nothing to do with how cars are actually priced here. A case in point: A VW Golf 1.6FSI retails for about 16,000 pounds in the UK. So that means a US Rabbit should cost about $30,000. Clearly VW could never sell that car here–yet they do, and the company is clearly not losing $15,000 on each sale.

    Also note that Ford has no intention of importing Euro models. The vehicles will all be assembled in North America, with the exception of the Turkish Transit Connect.

    I think the Ford plan makes a ton of sense. For years I cringed at the company’s haphazard product planning, antique engineering, glacial reaction times. It’s exciting to see that one of the US automakers finally seems to have woken up. I just hope it has happened in time.

  • avatar
    eggsalad

    One more thing…

    Ford should go back to building honest work trucks. Killing the F-100 was a dumb idea. Basic trucks (including a replacement for the Ranger) designed simply around the concept of hauling things from place to place.

  • avatar
    Dimwit

    Ford is fine for their trucks. The market has come back to the normal levels after that wild party that it’s had for the last 10 years.

    Killing the F100 makes sense IF they are keeping the Ranger. At $30K for a F150 and $15K for a Ranger there’s room for another model but after putting all that money on the hood to move iron F150’s are going out the door at $18K. Even at $13K there’s no room between the Ranger and the 150 for another model, especially one built on the same platform as the F150. Sorry, no joy.

    The big deal is what does GM do? Will they have enough resources to redesign the Silverado in 2 years now that Ford and Chryco have redone their trucks?

    Can anyone tell me, if 2 co. get a competitve advantage in the market through C11, can the third get the same relief? Doesn’t seem fair if Ford has the play by the old rules by themselves.

  • avatar
    John Horner

    Thank you cpmanx, you saved me a lot of trouble!

  • avatar
    jerry weber

    A couple of products are mentioned in this editorial and comments that bear expanding on.

    First the Jeep cherokee is not a truck based suv ala durango, and tahoe. It is a uni-body midling sized vehicle that was said to drive like a car. The big gig was that it used fuel like a pickup sized body on frame suv.

    Chrysler like the others has to get the weight out, and this won’t come cheap. What do they need something like a subaru forester (the new one) with a four cylinder lot’s of space and less than 4000 lbs empty weight. Chrysler has no good frame to build this on so here goes another billion plus the developement time (that they may not have even if they got the money).

    Now on the plus side a commenter talks about the Ford Galaxy minivan. I rented one two years ago in Germany. It is almost as big as a full sized American van but from there is gets better. It drives wonderfully on curved mountainous roads and the turbo diesel kept on pulling with 4 adults and two kids in the car.

    Also after my over 500 miles odyssey, the tank was at 1/4 and probably did clsoe to thirty mpg. Would that sell here? I think so and Ford doesn’t have to design it from scratch. So again Ford has stuff that works right now in the old country, can they federalize it and get it here soon?

    I think they have a better chance than Chrysler who has no overseas products of their own.

  • avatar
    Mark MacInnis

    Stu Sidoti….you raise a number of interesting points.

    I have been a TTAC reader for many months, and have read repeatedly in this series, and everyone seems to acknowledge, that Ford in Europe builds world-class vehicles.

    My question, and maybe it has been addressed before and I missed it, is why can they be world-class in Europe and Third-class in NA? What are the cultural/corporate/market issues which have resulted in this paradox? I don’t see ToMoCo or Honda having the same problem, or anyone else for that matter. What is it unique about Ford which gives rise to such a product perception gap between NA and Ford of Europe? If anyone can answer the question here or link some articles explaining why, I’d like to know what ya’ll think…

    Please just don’t fall back on the tired rhetoric of legacy and union labor costs…..US plants are more efficient than Europes, by most measurements I’ve seen, and according to Stu, the gap between the price for NA Ford’s and European Fords more than covers the legacy labor cost gap. So, why?

  • avatar
    lewissalem

    I think one of the smartest decisions by Ford lately is to change the Explorer to unibody construction, and offer a 4-calender engine for it.

  • avatar
    brettc

    I too think Ford has a pretty good chance to survive. The Fiesta looks like a nice car, and the Euro Focus looks great too. Plus they’re bringing over the Transit Connect. I can imagine a lot of contractors and courier companies using the Transit. I see a ton of Sprinters driving around, and I think the Transit will probably do well too even though it’s smaller. It’s just too bad they’re not planning on offering diesel options. But even just with gas engines, their future offerings look much better than what either GM or Chrysler have for the future, which is basically nothing.

  • avatar
    Stu Sidoti

    Okay…I want to believe they can make this work and I would love to see the Mondeo, Galaxy, S-Max, Fiesta, Verve? come here…I really do-so someone please explain this comment in more detail.

    cpmanx :
    August 14th, 2008 at 12:12 am
    As many people have pointed out in TTAC, a direct conversion of Euro prices to US prices is misleading; it has nothing to do with how cars are actually priced here. A case in point: A VW Golf 1.6FSI retails for about 16,000 pounds in the UK. So that means a US Rabbit should cost about $30,000. Clearly VW could never sell that car here–yet they do, and the company is clearly not losing $15,000 on each sale.

    Like I wrote, please enlighten me, I want to understand how such a wide gulf between these two price points translates into profits in both markets? You reference a $17,000 Rabbbit that sells as a Golf in England for 16,000 Pounds which translates into $30,000 US. So is the $15,000 difference made up of taxation and fees we don’t have here in the states or is it that the lower US Market price is being subsidized by the higher retail price in other markets? Or are the Brits getting the shaft to the tune of 7500 Pounds?

    Again…anyone who can explain this, I want to understand- I’m not an economist, so type slowly so I can understand ‘the numbers’!!

  • avatar
    Pch101

    Again…anyone who can explain this, I want to understand- I’m not an economist, so type slowly so I can understand ‘the numbers’!!

    Aside from the fact that European prices are quoted with the taxes included, the issue is simple — Americans insist on paying less for cars.

    The American market is more price competitive, and everybody who does business in the US has to charge less. That’s especially true for Ford, whose brand gets no respect in the US that can’t even charge for their cars as much as Honda or Toyota, let alone BMW.

    That makes importing Mondeos, etc. a losing proposition. It makes no sense to pay for high European labor and component costs, only to sell them in the US for a fraction of the price.

    They’re better off selling those cars in Europe for money, and finding a cheaper product suitable to us. The key is that it has to be something that we would want, instead of the alternatives from the transplants that we tend to prefer. Making cheap second-rate product is not an option.

  • avatar
    Stu Sidoti

    Mark MacInnis :
    August 14th, 2008 at 9:29 am

    ” My question, and maybe it has been addressed before and I missed it, is why can they be world-class in Europe and Third-class in NA? What are the cultural/corporate/market issues which have resulted in this paradox? I don’t see ToMoCo or Honda having the same problem, or anyone else for that matter. What is it unique about Ford which gives rise to such a product perception gap between NA and Ford of Europe? If anyone can answer the question here or link some articles explaining why, I’d like to know what ya’ll think…”

    Mark…While I may not understand the financial side as shown above, I am well aware of the answer to the question you are asking…The SIMPLE answer is ‘Not Invented Here Mentality’ on the part of Ford NA…Look it’s like this…If a Ford NA manager, director, VP admits that the Euro-Ford product is a ‘better solution’ for the US Market than the solution you and your stateside team has come up with…then why do you and your team need to exist? It’s simple protection of one’s turf…so long as Ford NA can convince Ford Corporate that ‘we’ in the US understand the US Market better and can create a product better tailored for said US Market than our cousins in Europe, they will be granted a budget, staff, buildings, people…a little empire to run-and people in Ford NA love their little empires and darned well do not want to give them up and admit that sometimes, the overseas product is the ‘better answer’ to the question of ‘what product in our worldwide lineup is best suited for today’s US Market?’

    The LESS SIMPLE answer is that in both GM and Ford, the overseas divisions are run and structured more like independent companies…Toyota, Honda, VW, BMW are run more like one large company with branches all over the world. For example, Holden, Opel and even SGM are expected to stand on their own for engineering, design, budget etc, thus they have a lot of different platforms…whereas for example, VW/Audi has very few platforms that they build a LOT of different cars off of for differing markets…people like Lutz and Mulally are trying to change these independent structures and make their world-wide operations sync together better. Let’s hope so.

    Well…people like Mulally don’t see things the ‘old way’ …thus he is shaking things up and it looks like for the better…painful for some yes, but a healthy Ford with less employees is a lot better for all Ford folks than No Ford At All. Go Alan Go!!

  • avatar
    jurisb

    Ford ain`t different from the rest of Detroit fakers. The same desperate strategy of using other foreign engineering to sustain bleeding organism. not a single non-SUV platform created in last years. All they have got is tentacles sucked around mazda 6 and 3 platforms, which then are sligthly adopted and then called global.the same reliability nonsense. the same rebadge cancer. When was the last time mercury had its own model? Today it`s even worse. Mercury is not even a rebadged american car, it is rather a japanese floorpan stuffed with japanese Aisins and then a ford magic tin is stucked on, which later is churned out as a mercury or even lincoln.Makes sense? For you sure does. Not for real car companies.In what way can Boeing serve us as a role model? Just because Boeing mustered a fast plan for last minute launch of a 777, of which the most complicated wing parts were stamped and engineered by Fuji Heavy anyway, doesn`t mean Mullaly could be considered a role model.Boeing looks similar to Ford, or any Us precision manufacturing. poor model diversity, abundancy of promises and CGIs, long overhaul cycles, increasing foreign input.Boeing as well, promised to build hypersonic bla bla bla, then single decked 214 jumbojet, then 747-400x, and so on bla bla bla. And I don`t see how a Ford turnaround plan could save them. remember Ford P2000 program. The way Ford sucks out Mazda platforms, Chrysler does with Mitsu and Merc, and Gm does with Opel and Daewoo.Just because you do a different advertizing to the sinking ship, doesn`t make a difference. The total abyss.

  • avatar
    Dave

    I agree with Stu Sidoti – I think a lot of FoMoCo’s problem has been the empire building of the NA managers – have to have something to do to justify their positions (and benefits). Don’t get me wrong, it’s probably been the same in the European mgt team as well, the difference now is the Eurocars are what’s needed in the US. From the outside, it looks like Mullaly has the balls to tackle that issue head on, and has won!

    BTW – to repeat a question I posed on an earlier post – what makes anyones think that GMs Ch11 plan will be any more successful than all their earlier plans?

  • avatar
    whatdoiknow1

    The question we need to ask ourselves is why are all of the current US automakers are making uncompetitive products and have been doing so for a very long time.

    The problem is not that GM or Ford or Chysler are bad car companies but the fact that GM, Ford, and Chysler are ALL bad automakers.

    Is this a company problem or a country problem?

  • avatar
    parimento1

    If they go into chapter 11, which supplier in their right mind would want to supply parts for them knowing they have been burned once. Their credit ratings will be shot and no one will want to do business with them. The chinese may be the only ones willing to take on their production. If GM and especially if Chrysler files chapter 11, GM might survive relatively intact, but Chrysler is going the way of AMC and Studebaker. If that’s not bad enough think of all the customers that will be left high and dry with warranty claims, especially chrysler with their so-called lifetime powertrain warranty. I would be seriously peeved if I had just bought a car for 30 grand only to find out my warranty wouldn’t be honored because the company has filed for C11. I would never buy from that company again and I am sure many people feel the same way. C11 is not the panacea that everyone seems to think it is. Some companies recover, many die.

  • avatar
    erikhans

    So, If Chrysler and GM go Chapter 7/11…who do we see racing in to fill the empty space? FIAT, Peugot and the rest?

  • avatar
    Honda_Lover

    jurisb:

    Good point. What innovative designs are coming out of Ford NA? None and that’s the elephant in the room nobody wants to talk about.

  • avatar
    parimento1

    I think Ford has some nice products but nothing ground breaking. The Edge is a nice vehicle- very well executed, but it has a been there done that sort of appeal to it, much like the Japanese brands. I recently drove a Ford Fusion V-6 and I can safely say that this is an excellent car in every respect except interior design. The Explorer, yes I said Explorer, is also a great truck. Roomy, quiet and refined. However due to the high gas prices no one will look at it. I think with the new Focus in the pipeline, the refreshed Fusion, the redesigned Taurus in the pipeline, as well as the new Ford sub-compact the Fiesta I guess will be the name, Ford will have some nice products going. I think it is unfair to say that Ford does not have any innovative products. GM on the other hand you can say that. What do they have besides the new Malibu. The Impala and Cobalt and the other clones like Pontiac G5, G6, etc are for the most part outdated. I will have to say that GM does the most with what it has, such as getting excellent gas mileage from ye olde 4 spd auto and 3.5L engine. Ford trumps them with 6 speed automatics in many of their vehicles or 5 speeds. The 4 speeds are only reserved for their Focus and recently discontinued crown vic.

  • avatar
    toxicroach

    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.

  • avatar
    shiney

    Runfromcheney :
    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!

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • 28-Cars-Later: I think you’re paranoid.
  • Jeff S: I will not buy a Tesla product either. As much as I don’t like GM and Ford I would trust either of them...
  • Jeff S: I don’t have faith that people will share. Ideally we should share but human nature being the way it is...
  • Sid SB: If these companies are storing chips, that is a questionable move because that tech is moving fast. I would...
  • dal20402: That’s all the cars I’ve owned since 2009! Not all current.

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber