U.S./ Ford's future focus: Product, people,profits
Obstacles loom as companyy fights to last a second century
By Daniel Howes / The Detroit News
DEARBORN -- Ford Motor Co.'s second century begins now. One hundred years ago today, on June 16, 1903, Henry Ford founded a car company that put the world on wheels, accelerated the rise of the American middle class and closed the distance between rural farms and teeming cities.
He became perhaps the most influential industrialist the United States ever produced, but not without facing challenges, setbacks and mistakes. Now, his great-grandson Bill Ford Jr. is at the wheel and responsible for guiding Ford Motor to sustainable profitability at home and abroad.
It won't be an easy task.
The 46-year-old chairman became the first Ford to run Ford Motor in more than 20 years, after firing Jacques A. Nasser in October 2001 and taking the job of CEO. Bill Ford's Uncle Henry, known as "Hank the Deuce," would have been proud.
Nasser's bequests to his successor were losses that totaled $6.4 billion over 2001 and 2002. Slipping product quality. Botched launches. And a collection of disparate businesses that, more than anything, represented capital squandered -- billions of it, in fact.
Untangling the mess, fixing the product plan and turning losses to profits (first quarter earnings totaled $896 million) has, rightly so, been Job One for Bill Ford and a team crafted from those not broomed with Nasser or in the aftermath of his departure.
As Ford Motor faces the next decade or so of what many hope will be its second century, a long list of variables looms.
How the automaker under Bill Ford and his lieutenants manages them will determine whether Ford Motor prospers and, with it, the Ford family, Metro Detroit and, in some meaningful measure, the United States.
First are the cars and trucks -- without which there can be no profits and no prosperity. Under Bill Ford and his team, the mantra is "65 in five," meaning Ford Motor plans to unveil 65 new Lincolns, Mercurys and Ford-brand vehicles over the next five years.
That's not a noble goal so much as it is a necessary one. The margin for error, for "missing" with a car or truck, is shrinking fast. With crosstown rival General Motors Corp.'s product and manufacturing renaissance well under way and with Toyota Motor Corp. and Honda Motor Co. pushing deeper into pickup trucks and sport utility vehicles, Ford Motor can't afford many mistakes.
Nor can it be content to lag behind, a Nasser legacy best exemplified by the absence of the Ford blue oval from the "crossover utility vehicle" segment. The automaker's coming Freestyle, among others, looks good. It had better be, too.
"Product has brought us out of every problem we've been in," says Edsel B. Ford II, a great-grandson of Henry Ford and a Ford Motor director. "And product is going to lead us out of this as well."
It doesn't end with North American brands, either. For several years, Ford Motor has been touting its Premier Automotive Group of Jaguar, Volvo, Land Rover and Aston Martin, promising that together with Lincoln it would account for one-third of corporate profits. It's not even close.
Second is profitability and financial strength, a hallmark of Ford Motor as recently as the late 1990s. The automaker's cash hoard totals $25 billion, but its shares are trading near record lows, its debt is being closely watched by rating agencies, and its operations outside the United States are losing money.
Under vice chairmen Allan Gilmour and Carl Reichardt, Ford Motor has shored up the balance sheet, sold unwanted assets accumulated by Nasser amid the dot-com boom and partly rebuilt precious financial credibility. The process should -- and likely will -- continue as the crucial F-150 pickup launches later this year and more new vehicles roll out.
As complex as the auto industry is, success comes down to a simple formula. Good cars and trucks efficiently built and smartly engineered bring in more revenue and, done properly, fatten the bottom line. More profits enrich shareholders, retain jobs and fund investment in new cars and trucks, completing the cycle.
Third is leadership. At 46, Bill Ford is the youngest person to lead Ford Motor since his uncle, Henry Ford II, returned from the Navy in 1945 to wrest the company away from Harry Bennett. And just as his uncle needed top talent around him to rebuild Ford Motor, so does Bill Ford need his own coterie of the best and the brightest.
They don't have to come from the outside. They don't all have to be in their late 50s or be plucked from retirement like Gilmour. But to manage a global company in a hyper-competitive industry, where speed matters almost as much as smarts, they have to be able to play.
For now, Bill Ford aims to "settle things down," as he said in a recent interview with The Detroit News. But changes near the top are likely within the next year -- or two, at most -- as he is likely to shift the chief financial officer's duties from Gilmour and seek a successor to Nick Scheele, now president and chief operating officer.
Fourth is the Ford family. For a century, the descendants of Henry Ford have remained stalwart backers of the company he founded. Not once in anyone's memory has a Ford family member tried to unload Class B shares, which give the family a controlling 40 percent stake in Ford Motor.
But the family that came from Henry Ford's only son, Edsel B. Ford, is multiplying. For the centennial weekend, 81 members of the extended Ford family showed up for a family photo, says Edsel Ford II, with only three members missing.
The first of the fifth generation, Elena Ford, is working for the company. Edsel Ford II's eldest son recently graduated from college; more cousins are behind him. So far, the fourth generation -- led by Bill Ford, Edsel Ford II and Lynn Ford Alandt -- have remained faithful to the automaker, the family's role in it and the legacies of Henry Ford.
What will the future bring with future -- and probably larger -- generations?
"We won't know for 10 to 15 years whether that proliferation becomes an issue," Bill Ford says.
Fifth is the environment and next-generation powertrains, such as gas-electric hybrid engines and hydrogen fuel cell vehicles. It's here that an industry "game-changer" could emerge in the same way Henry Ford's moving assembly line, his Model T and his "$5 day" transformed America in the first 25 years of Ford Motor's life.
The fundamental difference between then and now is competition. Henry Ford was a true entrepreneur in that he assembled existing technologies, improved on them and moved his product into a wide-open market that he could dominate.
Now, Bill Ford and Ford Motor, poised to launch their own hybrid Escape SUV, have GM investing billions to become the first automaker to manufacture 1 million or so fuel cell powered cars (a goal that may prove too lofty for some time to come). Toyota and Honda already are building and selling hybrid cars, lending both a green patina hailed by environmentalists.
This is where Bill Ford Jr. yearns to make his mark, to show that industrialist and environmentalist aren't mutually exclusive labels. No, it won't be easy -- none of it will. But the history of Ford Motor and its family is that neither shrink from tough challenges.
(Photo)The new Ford GT, on display at the Ford centennial celebration in Dearborn, is a 1960s replica. The automaker plans to unveil 65 vehicles over the next five years.
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....