Ford's Roadmap For Survival.

Sprint XR8 · 13-11-2008, 11:29 PM

The inside story: Ford's roadmap for survival
Bryce G. Hoffman / The Detroit News
DEARBORN -- For the last six weeks, Ford Motor Co.'s top executives met almost daily to craft a plan to keep the company solvent in the face of the worst financial crisis in decades. Surrounded by black-and-white photographs of Henry Ford and the Model T in the Thunderbird Room on the 11th floor of Ford's world headquarters, they waged a battle to decide Ford's future.

CEO Alan Mulally and his leadership team worked through lunch, taking quick bites of Caesar salad as the global credit crisis deepened and automobile sales collapsed. With gasoline prices falling, some argued that Ford should abandon its costly plan to retool North American truck factories to produce smaller, more fuel-efficient cars from Europe. Others pushed to curtail future investment in key products like the F-150 pickup that have seen sales drop off dramatically in recent years.

Global product development chief Derrick Kuzak -- backed by Mulally -- countered: If Ford has a future, it depends on delivering a new generation of class-leading cars and trucks that people actually want to buy. They fought off every challenge to one of the most ambitious product plans ever put together, albeit at the cost of thousands of jobs.

"We're only going to be in business if we create products that people really do want and value," Mulally told The Detroit News in an exclusive interview Tuesday. "This is the essence of creating a viable Ford."

Unlike rival General Motors Corp., which has curtailed its investment in some new vehicles to conserve cash, Ford is betting the business on new cars in a make-or-break bid to turn the company around before time runs out.

Ford's latest launches have done little to arrest its decade-long decline in U.S. market share, and it is far from certain that the cars and trucks in Ford's pipeline will be enough to turn the tide. Yet, Wall Street analysts such as Eric Selle of JPMorgan say this is the only way forward for an automaker that has wasted too many years producing lackluster products that barely covered its costs.

"The status quo is no longer acceptable," he said. "Abandoning the product plan would have been a bad move."

Ford has demonstrated that it can make money off its small cars in Europe, Selle said, adding that the concessions it won from the United Auto Workers union last year should allow Ford to do the same thing in this country.

Crunching the numbers
In Mulally's Thursday morning meetings, already the stuff of legend in Detroit, Ford's top executives review the company's progress on the turnaround plan. By the end of September, the full magnitude of the global credit collapse was becoming all too apparent to Ford and the company needed to take urgent action to shore up its liquidity.

The weekly meetings became daily sessions. Mulally summoned the leaders of Ford's Asian and European operations to Dearborn. Along with Ford Americas President Mark Fields, Kuzak and other key executives, they began looking for ways to conserve Ford's liquidity.

Each time, they would emerge from the Thunderbird Room with orders for their respective teams, which would then work long into the night crunching numbers and running models.

They worked Saturdays and Sundays, poring through the company's business plan looking for places to shave more costs. But the discussion always returned to the product plan.

Vehicle programs are a huge expense. Cutting one is an easy way to balance the books. GM is postponing new investment in its pickups to save money. Chrysler LLC canceled part of its product portfolio earlier this year. Some at Ford wanted to do the same thing.

"It was like, OK, which one do you want to cut out? Which one do you think we don't need? Remember, this is to stabilize our position in the marketplace and actually grow. We're not going to stabilize anything" if we keep cutting, Mulally said. "You have to allow that debate to happen, because we had to still come up with all of the hard actions."

Kuzak told The News that he saw little point in preserving cash at the expense of Ford's lineup.

"Outstanding products are the heart of any turnaround of our business and its future success," he said. "The whole intent from the beginning was to protect the product plan and the capital spending and engineering that goes with it and look for every other element of cash that isn't directly tied to the products."

Mulally's turnaround plan is based on consolidating Ford's worldwide operations to better leverage its global scale. Kuzak said many elements of that plan are ahead of schedule, and he challenged his department heads around the world to study their budgets to determine what could be eliminated in light of these newfound efficiencies. Other executives did the same.

Bonuses, advertising cut
They also began a careful analysis of Ford's most efficient operations, like its new joint-venture factory in Nanjing, China. Chinese partner Changan had introduced some cost-saving tooling practices there that Ford rushed to implement at other facilities around the world.

As part of this effort, executives decided to cut another 10 percent of the company's salaried payroll in North America. Benefits, including the bonuses paid to Mulally and other senior executives, are being cut. So is advertising.

Ford was already on track to cut at least $5 billion in annual operating expenses because of its earlier restructuring actions. These new cuts, announced Friday, are expected to save another $8 billion to $9 billion.

At the same time, Ford is transferring money from its lending arm, Ford Credit, to the parent company and will continue debt-equity swaps to raise additional capital. These actions, combined the possible sale of assets like its stake in Japan's Mazda Motor Corp., are expected to raise another $6 billion to $8 billion through 2010, when the full benefits of the new UAW contract kick in.

The product plan remains largely intact. In the end, Ford only delayed one new product program -- a European crossover that had not even been announced. It is also postponing plans to offer a diesel version of the F-150, as well as the freshening of a few of its poorer sellers in the United States.

Because Ford's plan assumes no help at all from the federal government, some of these actions could be reversed by a federal bailout. And Mulally said Ford's approach should help make the case for government assistance.

"Whoever is going to invest or loan us money wants to know we're taking the actions to create a viable company going forward," he said. "We are absolutely taking the appropriate actions. We've demonstrated that we're making progress."
http://www.detnews.com/apps/pbcs.dll...811130413/1148

ArTeesT · 13-11-2008, 11:39 PM

Sounds like good news. Atleast they are going to give it a shot.

zetec · 14-11-2008, 12:01 AM

God Bless Alan Mulally for trying, but most importantly God Bless Ford through these tough times. I don't want to GM struggle either, but I hope Ford can not only survive, but come thorugh stronger than ever with great product and a lot of momentum.

Falc'man · 14-11-2008, 12:33 AM

They need the FG over there... I'm sure it'll outsell the err... uhm... what's the name of their large sedan thing that has had the same platform since the days of the XC? Ah yes, Queen Vic. Or is it the Crown Vic? :togo:

Anyway, it seems as though they're making a fight out of it.

Swordsman88 · 14-11-2008, 12:57 AM

Yeah an FG would help out sales in the US for sure Falc'man.

The important thing here is that Ford is making the tough decisions RE employees and ancilleries to ensure it has the product going forward. What GM and chrysler are doing will hurt them for years to come - Ford may have to close factories but at least it is going to have good product in the future.

Also worth noting that the GRWD was not binned, despite being an expensive project one would think. Ford has to invest in the future if it is to surive and no doubt they will at least have a proper shot at surviving in their own right, even if they have to sell off alot of good brands (land rover/jag gone, mazda, volvo?). The importnat thing is that One Ford leads to a range of relevant, profitable quality cars built on world class platforms with top shelf tech. This is what it is all about in the end and i am sure Ford Aus engineers will have their role/s to play in it. Long live Ford, in whatever form it is.....

MethodX · 14-11-2008, 01:26 AM

They have the Taurus there too.

JG66ME · 14-11-2008, 09:51 AM

There is no Crown Victoria anymore. Just have a look here.

http://www.ford.com/vehicles/vehicle-showroom#/ford

Now, apart from the Mustang, there is not one car they have that I would own. They are all

: . Even their version of the Focus sucks.

And whats this thing about trucks?

Unless they start to build cars that look good and are nice to drive, just like my FG XR6, they don't have a hope.

Even Ford Europe has better cars. If I have to have a front wheel drive I would pick a Mondeo XR5 or a Focus XR5 over that horrid Taurus thing.

All they need to do is follow the links on their own website to ford.com.au, fpv.com.au and ford.co.uk to find the answers.

My 2 bobs worth.

AusM · 14-11-2008, 10:52 AM

Quote:

Originally Posted by JG66ME

Even their version of the Focus sucks.

Not long now and they'll be on the 'global platform' like everyone else. Besides the US versions just being plain fugly, it makes economic sense. Supposedly the demand for Euro styling there has been on the increase too...

JG66ME · 14-11-2008, 02:38 PM

Quote:

Originally Posted by PFdesign

Supposedly the demand for Euro styling there has been on the increase too...

You are right. I think the demand for Mercs, BMW and Audi have long proved that to be the case.

Jayden · 14-11-2008, 03:10 PM

Its also an image thing, ever met someone who hate Ford or Holden because of negative stereotypes attached to some of the people that drive them. You must have.

Well in the US half the population would be punishing US automakers for things like axing EV cars, selling way too many massive unnecessary trucks like HUMMER, irrelevant NASCAR related activities, cost cutting small vehicles, gimmicks that will haunt you if you ever bought one of their cars (like door chimes). Muscle cars (I love them, but its amazing and quite sad how many people just dont get them).

Things a lot of people are fine with really most other people who are quite happy to wander into a Mazda dealer and solve all their problems. And thats before you get to how behind in the handling department they are.

In short the big three should stop being so American. They failed and only a complete revamp with a different approach to the US market can save them now if anything.

They should have built and entered a US made rally car. rally cars fit all the requirements for a high volume selling car like the Euro Focus.

irlewy86 · 14-11-2008, 03:38 PM

Can only mean good news for the Falcon for about 1Billion AUD it yields:
Sedan
Utility
Wagon
Tall Wagon
LWB Sedan

Surely thats got to count for something at Dearborn

**Fordman1** · 14-11-2008, 03:59 PM

Quote:

Originally Posted by irlewy86

Can only mean good news for the Falcon for about 1Billion AUD it yields:
Sedan
Utility
Wagon
Tall Wagon
LWB Sedan

Surely thats got to count for something at Dearborn

IMO it won't happen unless it's a global platform. No chance.

We should prepare for the manufacturing of C & D class cars designed overseas (IF there is manufacturing here in 6 years time).

phillyc · 14-11-2008, 05:02 PM

Sure, times are very tough. But the action aready taken by Ford and the conviction shown by Mullaly and Kuzak are just what Ford needs right now.

Chrysler and GM have cut their noses off, by delaying their new vehicle lines.

Ford NA's widespread adoption of the high quality volume selling and profitable Euro models is the right step. Great to see the vehicle development budgets weren't slashed.

Hopefully, they are also learning just how good Ford Aus does things for so little!

XRtowcar · 14-11-2008, 05:41 PM

Can't believe how many ugly cars that Ford USA produce.
Maybe they should start with the styling first.

Wretched · 14-11-2008, 06:16 PM

They need to also look at getting alternative fueled products out there.
They did have the hybrid Escapes and the Bio Diesel F series trucks. They need to expand that, while the green effect is minimum it will help to sell.
Goodluck and I hope they make it through. Mulally has the experience and know how to do it.

Bossxr8 · 14-11-2008, 10:34 PM

Quote:

Originally Posted by JG66ME

There is no Crown Victoria anymore. Just have a look here.

http://www.ford.com/vehicles/vehicle-showroom#/ford

Now, apart from the Mustang, there is not one car they have that I would own. They are all

: . Even their version of the Focus sucks.

And whats this thing about trucks?

Unless they start to build cars that look good and are nice to drive, just like my FG XR6, they don't have a hope.

Even Ford Europe has better cars. If I have to have a front wheel drive I would pick a Mondeo XR5 or a Focus XR5 over that horrid Taurus thing.

All they need to do is follow the links on their own website to ford.com.au, fpv.com.au and ford.co.uk to find the answers.

My 2 bobs worth.

Isn't the Crown Vic only available in the US for taxis and police vehicles, and not on sale to the general public?

Ford US will be making the Fiesta in Nth America very soon and the US Focus will be the same basic vehicle as the Euro versions, so they are moving in the right direction with small cars. Ecoboost V6 and 4 cylinder engines help the green credentials.

Paxton · 14-11-2008, 10:42 PM

Quote:

Originally Posted by Bossxr8

Isn't the Crown Vic only available in the US for taxis and police vehicles, and not on sale to the general public?

Yes, they are.

Probably the best thing to do for the Crown Vic. As far as I know, the Town Car is still available to the general public. For a 2008 car, it makes less power and torque from its 4.6 V8 than the I6 does in a BA Falcon.

StealthAu · 14-11-2008, 10:59 PM

Would anyone really notice if the axed a few of the 4WD trucks and wagons off the Ford US line up? If cutting models would help Ford financially thats where they should be looking.

**Luke Plaizier** · 15-11-2008, 09:10 AM

For those who don't know what the 'Town Car' is, it is a Lincoln. http://www.lincoln.com/towncar/home.asp

Didn't it used to be called the Lincoln Continental?

With a 4sp Auto and lethergic V8, it looks like something Hyundai would sell, although the Hyundai would outgun it.

Lukeyson

Lukeyson

Gobes32 · 15-11-2008, 09:18 AM

One thing that never ceases to amaze me is Americans taste. They but some truly awful looking cars. The Focus is a good example. The euro Focus is a very smart looking car and yet the American version is awful. If you were to give Americans the option of choosing the US or the euro version, would they actually pick the US version?