Layoffs and plant closings won't save the No. 2 automaker.
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Layoffs and plant closings won't save the No. 2 automaker.
I guess it's better not to assume that everyone in the world has the same taste in automobiles and has the same needs, but on the otherhand it's smart to share components that no one can see.
from www.cnnfn.com
from www.cnnfn.com
Ford's fight for survival
Layoffs and plant closings won't save the No. 2 automaker.
Here's what analysts are looking for.
By Alex Taylor III, FORTUNE senior editor
January 20, 2006: 10:27 AM EST
NEW YORK (FORTUNE) - When Ford Motor announces its North American restructuring plan on Monday, the headlines will be about the number of plants closed -- as many as ten -- and the number of people who will lose their jobs -- up to 30,000 over the next five years -- if published reports are correct.
But the layoffs and the plant closings are just the beginning of a needed overhaul at Ford.
To begin with, those cuts are merely a reflection of a reality that already exists. Ford needed to get smaller yesterday. It has been losing market share for ten years, and sales of some of its most popular vehicles from the past like Taurus and Explorer have slumped so alarmingly they will probably never recover.
Analysts and others will try to peek below the surface to see what else the automaker is doing to stem the need for more downsizing in the future. Here's one effort already underway that has gone unnoticed: Ford is making significant changes in its global organization and product engineering that should make new model development far more efficient and economical.
What's happened is that Ford has almost completely reversed the shifts made in the radical reorganization a decade ago called "Ford 2000." The brainchild of former chairman and CEO Alex Trotman, Ford 2000 attempted to adjust to the increasing globalization of the auto business by eliminating regional organizations in Europe, Asia and South America and replacing them with five vehicle centers. Each of the five centers would be charged with developing a single class of vehicles -- large rear-drive sedans, small front-drive econoboxes -- and marketing them around the world.
Ford 2000 looked good on paper but really messed things up. A lot of local market knowledge disappeared with the elimination of the regional organizations, and lots of experienced managers went out the door too. Then, under Trotman's successor, Jac Nasser, the vehicle centers stopped sharing common components like air conditioners and shock absorbers and began developing their own, causing an explosion in costs.
Now Ford has recentralized product development and engineering to enforce an economical sharing of platforms and components across product lines. So engineering for a new small car platform known as C1 will serve as the underpinnings for cars marketed by Ford, Volvo and Mazda.
Observers will also be watching for signs of increasing responsibility being handed to 44-year-old Mark Fields. Fields, whose French-cuff shirts and doo-wop haircut set him apart from the company's other executives, was given the keys to North America just four months ago after stints in Europe and Japan.
Yet Chairman and CEO Bill Ford has left him virtual carte blanche to devise the North American turnaround plan despite his lack of experience. Jim Padilla, Ford's ostensible number two executive and the man to whom Fields reports, has stayed out of the way, too.
Whatever else he is good at, Fields has proved himself a gifted phrase maker. His turnaround plan has been dubbed the "Way Forward," and Fields describes the company's new car philosophy as "red, white and bold."
"Bold" certainly couldn't be said about Ford's vehicles in the past. Despite internal complaints that its new models were boring and looked too much like their predecessors, everything coming out of Dearborn looked like it had been warmed over, not redesigned. The 2005 Ford Five Hundred was so nondescript that it almost vanished from sight, while the 2006 Ford Explorer looks almost identical to the older model it replaces.
Finally, observers will be looking hardest for some sense of plan, direction and persistence from Chairman and CEO Bill Ford. The company has seemed almost rudderless over the past five years with numerous management changes -- Field's job seems to turn over on an annual basis -- and a sense that even lumbering old General Motors was moving more smartly and aggressively in the marketplace.
Earlier in January, Bill Ford declared that it was time for Ford to stabilize its market share after its long decline. Monday will be the first chance for him to demonstrate that he actually means it.
Layoffs and plant closings won't save the No. 2 automaker.
Here's what analysts are looking for.
By Alex Taylor III, FORTUNE senior editor
January 20, 2006: 10:27 AM EST
NEW YORK (FORTUNE) - When Ford Motor announces its North American restructuring plan on Monday, the headlines will be about the number of plants closed -- as many as ten -- and the number of people who will lose their jobs -- up to 30,000 over the next five years -- if published reports are correct.
But the layoffs and the plant closings are just the beginning of a needed overhaul at Ford.
To begin with, those cuts are merely a reflection of a reality that already exists. Ford needed to get smaller yesterday. It has been losing market share for ten years, and sales of some of its most popular vehicles from the past like Taurus and Explorer have slumped so alarmingly they will probably never recover.
Analysts and others will try to peek below the surface to see what else the automaker is doing to stem the need for more downsizing in the future. Here's one effort already underway that has gone unnoticed: Ford is making significant changes in its global organization and product engineering that should make new model development far more efficient and economical.
What's happened is that Ford has almost completely reversed the shifts made in the radical reorganization a decade ago called "Ford 2000." The brainchild of former chairman and CEO Alex Trotman, Ford 2000 attempted to adjust to the increasing globalization of the auto business by eliminating regional organizations in Europe, Asia and South America and replacing them with five vehicle centers. Each of the five centers would be charged with developing a single class of vehicles -- large rear-drive sedans, small front-drive econoboxes -- and marketing them around the world.
Ford 2000 looked good on paper but really messed things up. A lot of local market knowledge disappeared with the elimination of the regional organizations, and lots of experienced managers went out the door too. Then, under Trotman's successor, Jac Nasser, the vehicle centers stopped sharing common components like air conditioners and shock absorbers and began developing their own, causing an explosion in costs.
Now Ford has recentralized product development and engineering to enforce an economical sharing of platforms and components across product lines. So engineering for a new small car platform known as C1 will serve as the underpinnings for cars marketed by Ford, Volvo and Mazda.
Observers will also be watching for signs of increasing responsibility being handed to 44-year-old Mark Fields. Fields, whose French-cuff shirts and doo-wop haircut set him apart from the company's other executives, was given the keys to North America just four months ago after stints in Europe and Japan.
Yet Chairman and CEO Bill Ford has left him virtual carte blanche to devise the North American turnaround plan despite his lack of experience. Jim Padilla, Ford's ostensible number two executive and the man to whom Fields reports, has stayed out of the way, too.
Whatever else he is good at, Fields has proved himself a gifted phrase maker. His turnaround plan has been dubbed the "Way Forward," and Fields describes the company's new car philosophy as "red, white and bold."
"Bold" certainly couldn't be said about Ford's vehicles in the past. Despite internal complaints that its new models were boring and looked too much like their predecessors, everything coming out of Dearborn looked like it had been warmed over, not redesigned. The 2005 Ford Five Hundred was so nondescript that it almost vanished from sight, while the 2006 Ford Explorer looks almost identical to the older model it replaces.
Finally, observers will be looking hardest for some sense of plan, direction and persistence from Chairman and CEO Bill Ford. The company has seemed almost rudderless over the past five years with numerous management changes -- Field's job seems to turn over on an annual basis -- and a sense that even lumbering old General Motors was moving more smartly and aggressively in the marketplace.
Earlier in January, Bill Ford declared that it was time for Ford to stabilize its market share after its long decline. Monday will be the first chance for him to demonstrate that he actually means it.
Last edited by johnsocal; Jan 20, 2006 at 10:39 AM.
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From: Yadkinville, NC USA
Re: Layoffs and plant closings won't save the No. 2 automaker.
It's sooo easy for us all to armchair QB these companies like Ford and GM, but the real truth is that it is a very touchy and sensitive thing to do. Wrong calls can cost Billion$ - with a B. It's risky, and there are not many 2nd chances at getting things right.
The one thing I will most staunchly agree will help both Ford and GM get out of their financial conditions is better product - period. If one car company offered the 2006 Z06, C6, Mustang GT, GT500, 300C, Charger, Cobalt, Fusion, Tahoe, Explorer, Escape, CTS, and Focus... there would be no competition - it would be like a Wal-Mart of auto suppliers that would kill opposition at will because they control so much of the sales market.
If Ford and GM will simply put out more "gotta-have" vehicles, the money will come back. Then, they have the chance to earn loyalty from the market by making those vehicles dependable, durable, and reliable along with good customer service. Hence, the return customer.
If the decision for the customer is bland with good quality versus bland with a shady past.... we all know which appliance the customer will choose.
I just hope we see some more risky, head-turning, insirational designs from Detroit and Dearborn in the next few years. DCX seems to have found that out already.
The one thing I will most staunchly agree will help both Ford and GM get out of their financial conditions is better product - period. If one car company offered the 2006 Z06, C6, Mustang GT, GT500, 300C, Charger, Cobalt, Fusion, Tahoe, Explorer, Escape, CTS, and Focus... there would be no competition - it would be like a Wal-Mart of auto suppliers that would kill opposition at will because they control so much of the sales market.
If Ford and GM will simply put out more "gotta-have" vehicles, the money will come back. Then, they have the chance to earn loyalty from the market by making those vehicles dependable, durable, and reliable along with good customer service. Hence, the return customer.
If the decision for the customer is bland with good quality versus bland with a shady past.... we all know which appliance the customer will choose.
I just hope we see some more risky, head-turning, insirational designs from Detroit and Dearborn in the next few years. DCX seems to have found that out already.
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Posts: 2,712
From: Ontario
Re: Layoffs and plant closings won't save the No. 2 automaker.
Funny to think that about five years ago, many analysts were saying that Ford was doing so well that it was poised to overtake GM as the world's top automaker.
It's scary how fast things can change.
It's scary how fast things can change.
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Re: Layoffs and plant closings won't save the No. 2 automaker.
Automakers need to realize the the "BOLD" designs don't sell cars, but attactive ones do. In reality the Aztek was BOLD but it was ugly and it didn't sell and thats true for alot of things.
BOLD is a nice double-speak PR term that makes it sound like you are saying something when you are really not. If they actually came out and said they need to design attractive cars they would be inadvertantly admitting that their current ones are either ugly or so boring they might as well be ugly.
BOLD is a nice double-speak PR term that makes it sound like you are saying something when you are really not. If they actually came out and said they need to design attractive cars they would be inadvertantly admitting that their current ones are either ugly or so boring they might as well be ugly.
Last edited by johnsocal; Jan 20, 2006 at 03:25 PM.
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Re: Layoffs and plant closings won't save the No. 2 automaker.
Originally Posted by Threxx
Number 2?
I thought the current lineup as of a year or two back was GM > Toyota > Ford?
I thought the current lineup as of a year or two back was GM > Toyota > Ford?
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From: Crystal Falls, MI USA
Re: Layoffs and plant closings won't save the No. 2 automaker.
Originally Posted by Threxx
Number 2?
I thought the current lineup as of a year or two back was GM > Toyota > Ford?
I thought the current lineup as of a year or two back was GM > Toyota > Ford?
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From: Saginaw, Michigan
Re: Layoffs and plant closings won't save the No. 2 automaker.
That's too bad. I hate to see either GM or Ford doing poorly. 
With Ford, this was a long time coming I'm afraid. GM got all the press last summer with the talk of bankruptcy, since Delphi claimed bankruptcy. Ford was under the radar, but I was wondering how they really were doing, since I felt they were worse off than GM.
Dan
With Ford, this was a long time coming I'm afraid. GM got all the press last summer with the talk of bankruptcy, since Delphi claimed bankruptcy. Ford was under the radar, but I was wondering how they really were doing, since I felt they were worse off than GM.Dan
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From: Annapolis Md. USA
Re: Layoffs and plant closings won't save the No. 2 automaker.
If the decision for the customer is bland with good quality versus bland with a shady past.... we all know which appliance the customer will choose.
I just hope we see some more risky, head-turning, insirational designs from Detroit and Dearborn in the next few years. DCX seems to have found that out already
I just hope we see some more risky, head-turning, insirational designs from Detroit and Dearborn in the next few years. DCX seems to have found that out already
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Posts: 13,713
From: The Golden State
Re: Layoffs and plant closings won't save the No. 2 automaker.
Though Ford 2000 is getting alot of the blame in this story, nothing is ever that simple or straightforward. Consider these items:
1. Ford Panther chassis is archaic. Ford hasn't even been serious about redesigns on the chassis since GM killed the B-body. The current Crown Vic carries the same body that started off as the Grand Marquis over a decade ago (CV had a 6 window greenhouse). Ford is simply collecting a paycheck on these cars.
2. Alot of damage happened under Jac Nasser's reign. Botched introductions, hideous customer service (cut warranty work hours estimates), concious plan to kill Mercury, emphasis on diversifying instead of focusing on cars and trucks, focusing valuable cash on premium brands of the PAG (ie: Jaguar, Rover, etc...) at the expense of Ford's core vehicles, mishandling the Explorer-Bridgestone debacle costing Ford billions in the end.
3. Finally, simply having a pretty dull lineup and being too late and too cash strapped to fix it as fast as is needed. Mustang, Explorer, and F-series trucks (despite being down in sales) were carrying the company till the Milan-Zephyr-Fusion came out. Ranger hasn't had a serious restyle since my boy was born (he'll be 18 this year). Focus' restyling was lame. Thunderbird never got the promised supercharger. LS was never redesigned despite being around 7 years!
It takes alot to bring down a car company. There's alot of clues and a whole lot of assets between good times and locked doors. Puny AMC took a decade, Studebaker took 16 years. GM is going to come around within a couple of years. It also takes radical action to spark a turnaround at a car company. Chrysler proved it more times than anyone can remember. GM's showing it now.
Ford seems to not only have gone conservative, it also doesn't seem to have it's old snap in bringing products out almost as quick as Chrysler used to.
I really hope Ford is doing more and better than it seems from the outside.
1. Ford Panther chassis is archaic. Ford hasn't even been serious about redesigns on the chassis since GM killed the B-body. The current Crown Vic carries the same body that started off as the Grand Marquis over a decade ago (CV had a 6 window greenhouse). Ford is simply collecting a paycheck on these cars.
2. Alot of damage happened under Jac Nasser's reign. Botched introductions, hideous customer service (cut warranty work hours estimates), concious plan to kill Mercury, emphasis on diversifying instead of focusing on cars and trucks, focusing valuable cash on premium brands of the PAG (ie: Jaguar, Rover, etc...) at the expense of Ford's core vehicles, mishandling the Explorer-Bridgestone debacle costing Ford billions in the end.
3. Finally, simply having a pretty dull lineup and being too late and too cash strapped to fix it as fast as is needed. Mustang, Explorer, and F-series trucks (despite being down in sales) were carrying the company till the Milan-Zephyr-Fusion came out. Ranger hasn't had a serious restyle since my boy was born (he'll be 18 this year). Focus' restyling was lame. Thunderbird never got the promised supercharger. LS was never redesigned despite being around 7 years!
It takes alot to bring down a car company. There's alot of clues and a whole lot of assets between good times and locked doors. Puny AMC took a decade, Studebaker took 16 years. GM is going to come around within a couple of years. It also takes radical action to spark a turnaround at a car company. Chrysler proved it more times than anyone can remember. GM's showing it now.
Ford seems to not only have gone conservative, it also doesn't seem to have it's old snap in bringing products out almost as quick as Chrysler used to.
I really hope Ford is doing more and better than it seems from the outside.
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Re: Layoffs and plant closings won't save the No. 2 automaker.
Originally Posted by stereomandan
That's too bad. I hate to see either GM or Ford doing poorly. With Ford, this was a long time coming I'm afraid. GM got all the press last summer with the talk of bankruptcy, since Delphi claimed bankruptcy. Ford was under the radar, but I was wondering how they really were doing, since I felt they were worse off than GM.
Dan
With Ford, this was a long time coming I'm afraid. GM got all the press last summer with the talk of bankruptcy, since Delphi claimed bankruptcy. Ford was under the radar, but I was wondering how they really were doing, since I felt they were worse off than GM.Dan
They DID lose volume, they DID lose sales, and they DID lose the #1 brand title, they did slide 28% on SUV sales, and so on...
BUT...
They are making a PROFIT!!!!
Ford posted $1.9-billion in profit for the first 3 quarters of 2005.
That ain't too shabby.
The financial community seems to have more of a fatalistic view of things than the company itself does. Kinda like GM having $20-billion in cash reserves, but everyone was saying "bankruptcy". I never have, nor do I at this time, think that GM would file bankruptcy. Likewise, Ford is not going out of business tomorrow either. What alarmed me about GM was Kerkorian buying up controlling interest and busting the company apart for profits. Since the Ford family already holds controlling interest in Ford, and I think they would have the company's best interest in mind, I don't share the concern for hostile takeover.
They have some cash in hand, and have some good product to build from, but just like GM, it will take time. Good plans are a good first step, but I firmly insist that good products will do more to turn things around than plant closings, layoffs, and "consolidations".
Lastly, I really wish financial advisors would dry up and blow away. They cause more grief than they are worth. Just like bean-counters that negate all the great work of engineers and designers when they strip all the quality, style, and essence of a car in the name of saving a buck.
Ford will be here in 2008 - let's just see if they can undo some of the past mistakes (several itemized by Guy above) that are costing them sales today.
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Re: Layoffs and plant closings won't save the No. 2 automaker.
Ford had the # selling small pickup with the Ranger, then gave it right away to the Toyota Tacoma and Chevy Colorado. They are taking the ranger name and doing to it what they did with the Tuarus.
Five Hundred is a great car in a bland package.
2006 Explorer look like a 2002 Explorer with a new chrome grill to the avg. person on the steet dispite being the safest midsize SUV on the street and getting a Mustang GT V8
at least they are beating out GM in the race to 5 & 6 speed automatics
Five Hundred is a great car in a bland package.
2006 Explorer look like a 2002 Explorer with a new chrome grill to the avg. person on the steet dispite being the safest midsize SUV on the street and getting a Mustang GT V8
at least they are beating out GM in the race to 5 & 6 speed automatics
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Re: Layoffs and plant closings won't save the No. 2 automaker.
Originally Posted by ProudPony
Here's the thing...
…I really wish financial advisors would dry up and blow away. They cause more grief than they are worth. Just like bean-counters that negate all the great work of engineers and designers when they strip all the quality, style, and essence of a car in the name of saving a buck.
…I really wish financial advisors would dry up and blow away. They cause more grief than they are worth. Just like bean-counters that negate all the great work of engineers and designers when they strip all the quality, style, and essence of a car in the name of saving a buck.
Engineers don’t go to school to learn how to deal with financial issues and as such, they usually don’t see that they have any responsibility to consider costs…with that attitude left unchecked, a GM design engineer would design and build the best car in the world…it would never crash, and if it did crash no one would ever be hurt and it would never be beaten in any performance contest or measurement of any kind; the problem is, not more than two or three people on the planet could afford to buy it.
Building economy cars and family sedans (“appliances” as some like to call them) and selling lost of them at a profit are what keeps manufacturers in business and able to produce those “must have” cars we all like. But the “must have” cars will never sell enough to keep the factory doors open. Likewise, even the “must have” cars have to make some concessions to economics or they simply can’t and won’t be produced (or won’t last long if they are).
Besides, if every manufacturer made perfect cars that we would never want to add our own personalities/improvements to, what would happen to the aftermarket?
Last edited by Robert_Nashville; Jan 22, 2006 at 04:12 PM.
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Re: Layoffs and plant closings won't save the No. 2 automaker.
Originally Posted by Robert_Nashville
Engineers don’t go to school to learn how to deal with financial issues and as such, they usually don’t see that they have any responsibility to consider costs…with that attitude left unchecked, a GM design engineer would design and build the best car in the world…it would never crash, and if it did crash no one would ever be hurt and it would never be beaten in any performance contest or measurement of any kind; the problem is, not more than two or three people on the planet could afford to buy it.
Imho, engineers have a much better grounding in reality than the beancounters, who swear that if you make it out of dirt filled plastic and foam and with a beam axle suspension that no-one will ever notice. When the beancounters have too much power, this is the case. You still end up with a car that sells for $20,000 (but not for long, because people figure out what it's made of real quick).
Also, don't confuse engineers for "car guys" because there is a big difference. Many engineers are car guys, but the majority would be just as happy designing toasters or airplanes. If the car guys were totally running the show, then it would be bad news (for most people, anyway). Nothing but two seat v8 roadsters as far as the eye can see...
