US:P.Brown Comment:Ford: The wait is over, the message is murky, but what's the plan?
PETER BROWN COMMENT
Ford: The wait is over, the message is murky, but what's the plan?
Peter Brown is associate publisher and editorial director of Automotive News.
Just wait till Jan. 23, the Ford Motor Co. people said. Then you'll see Mark Fields' dramatic plan to reverse the company's stunning decline in North America.
Well, Jan. 23 came and went, leaving scared workers, mystified financial analysts and a confused American consumer. (An old college friend called me that evening. "Is this good or bad?" she asked. "Is Ford going out of business? If they say they're going to start making cars that people want to buy, what the heck have they been trying to make?")
Fields, the president of the Americas, and Ford Motor CEO Bill Ford, President Jim Padilla and CFO Don Leclair talked for 2½ hours to a mob of reporters and analysts.
And all we know is that at some vague time in the next six years (long after the soon-to-be released Toyota Camry will have been replaced again), Ford hopes to close 14 plants and eliminate … oh, let's say 25,000 or 30,000 manufacturing jobs.
But Fields identified only five plants and about a quarter of the jobs to be cut. So as the sun rose on Jan. 24, Ford had just two classes of factory workers: the doomed and the anxious. What do you suppose the workers in Ford plants are talking about today: innovating for greater productivity, or what are we going to do if OUR plant closes?
About half of the prepared remarks bragged about Ford's many successes: Ford Credit, large pickups, the Mustang and Fusion, and profits elsewhere in the world. This made for a murky message: We've done a lot of great things, and we have to change or die.
Meanwhile, Ford will no longer give earnings guidance but will certainly earn a profit in the North American automotive operations by 2008.
Here are some leftover questions for Mark Fields and Bill Ford:
You committed to stabilizing market share "in the near term." You also committed to "straightforward" pricing, with stickers much closer to transaction prices. Well, which is it? In the near term, the only way to guarantee market share, as Bill Ford acknowledged, is to give the vehicles away with dramatic incentives.
You vowed to start making vehicles that customers want. Until now, what have you been trying to make? What do you know about the customer today that you didn't know last year?
What plants are you going to close, and when? In November, General Motors gave us that information about its own cuts.
Why is your cash going to drop by $5 billion in the next year? CFO Leclair's presentation showed it. But when a financial analyst asked where the money would go, Leclair dismissed the drop as barely more than a rounding error and then said: I'm not telling you; that would be too much like earnings guidance, and we don't do that.
Speaking of earnings guidance, as recently as a year ago, you were still projecting a 2006 pretax profit of $7 billion and rising. How is your crystal ball better today?
Cutting 1.2 million units of capacity will get you to full factory utilization, but only if you maintain today's sales. That really means you have to produce more appealing products. You say you're going to "innovate" your way out of this mess. What are you fundamentally changing to make Ford - which sits at or near the bottom of your suppliers' rankings of innovative automakers - innovative? Name some recent innovations.
The 2002 restructuring was based on optimistic forecasts. It failed to cut deeply enough, failed to create enough breakthrough products, failed even to eliminate some of the vice president positions it had vowed to trim. Given the vagueness of the new plan, what will make this one different?
Well, the Jan. 23 plan came. Unlike the Nissan Revival Plan, which CEO Carlos Ghosn announced with equal fanfare in 1999, the Ford plan left more questions than answers. But now it's time to execute.
For the sake of Ford's workers, suppliers, shareholders and the millions of Americans who depend, directly or indirectly, on the company, one can only wish Ford the best.
Here's the good news: Ford has a template to succeed. It's Ford.
In the 1979-82 recessions, Ford's clear-eyed management dramatically cut the company down to fighting size. And when the exciting Ford Taurus was introduced mid-decade, the company was positioned for a great period of prosperity.
Ford has great dealers and plenty of smart, capable people. Does Ford have a leadership willing to act dramatically? Even after Jan. 23, that's still the question.
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.....