US:Meltdown in Motown,5 ways to measure Ford's momentum
Meltdown in Motown
5 ways to measure Ford's momentum
DETROIT -- Bill Ford and Mark Fields say Ford Motor Co. must change or die, but they aren't setting many hard targets to help track the beleaguered company's progress.
With Ford Motor on the ropes, CEO Ford and Fields, new president of the Americas, laid out a plan to close 14 factories and cut as many as 30,000 jobs over the next six years. But there were few signposts to show whether the Way Forward plan is working.
The plan -- announced with much fanfare on Monday, Jan. 23 -- does pledge a profit in the troubled North American automotive business no later than 2008. That unit lost $1.6 billion before taxes and charges in 2005. And Ford said it would cut material costs by $6 billion through 2010.
But most other turnaround targets are vague -- such as bolder design and more innovation. So in the absence of specific markers from Ford, here are five factors to keep a close eye on:
1. Is Ford Motor holding its market share?
The automaker wants to maintain or improve market share in all regions in 2006. In the all-important United States, where share is in a 10-year skid, Ford executives say new products such as the 2006 Ford Fusion should help stabilize share this year. Ford's domestic brands finished 2005 with 17.4 percent share of the United States.
But competitors are flooding the market with new vehicles, too. And companies such as Toyota, Honda and Hyundai have a better track record of gaining share.
A number of analysts predict Ford's market share will continue to spiral downward.
2. Can Ford manage glitch-free product launches?
Ford must introduce products with high quality and without manufacturing disruptions. Such troubles afflicted the launches of the Ford Five Hundred sedan in 2004 and the Fusion sedan last year. Despite those problems, Ford generally has improved its launch execution.
New products this year include the 2007 Ford Edge and Lincoln MKX crossovers, which go into production in October. The redesigned Ford Explorer Sport Trac debuts in February. An updated Ford Expedition and Lincoln Navigator go on sale in the fall.
Trouble-free launches mean Ford is working well with suppliers -- something essential to its success.
3. Will the brain drain stop?
Mark Fields says he almost has his team fully in place. Expect a couple more departures in February. Ford Motor says it will complete a 12 percent reduction -- six or seven executives -- in corporate officers by April 1.
But then the revolving door in the executive suite should stop. Turnover has been rampant since Bill Ford took over as CEO in late 2001. Continued management instability would be a red flag.
4. Will incentives be curbed?
Fields says Ford Motor will cap "cash-on-the-hood" incentives and lower prices on new-vehicle introductions. The aim is to bring sticker prices in line with transaction prices. The automaker cites the redesigned 2005 Mustang and the 2006 Fusion as successful examples of clear, simple pricing. Executives say the complete product lineup will convert to this model over time.
So watch for Ford Motor's incentive outlay to moderate. The company spent an average of $3,146 per vehicle on incentives for its Ford, Lincoln and Mercury brands in 2005, according to Edmunds.com.
5. Can Lincoln mount a comeback?
Keep an eye on Lincoln sales numbers. The luxury brand will have a full year of the 2006 Zephyr sedan. Sales have been forecast as high as 40,000 annually once all-wheel drive and a more powerful engine arrive this fall. Lincoln drops the LS sedan this spring, but the updated Navigator and the new MKX arrive in the fall.
New products mean Lincoln sales should start to recover. Last year marked Lincoln's lowest sales year since 1983. The brand sold 123,207 vehicles last year, down 11.4 percent from 2004.
Fields said Lincoln eventually will be the volume leader of the Lincoln Mercury business. But he didn't say how quickly that would happen.
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.....