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USA:Bill Ford Does Get Some Respect, but the Critics Still Have His Number

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Bill Ford Does Get Some Respect, but the Critics Still Have His Number

New York Times
By DANNY HAKIM


(Photo)William Clay Ford Jr. said this year that the company thought that higher gas prices might well persist long into the future. That's a big problem: among the major automakers, Ford has the lowest average fuel economy.

DEARBORN, Mich., May 5 - Not long ago, William Clay Ford Jr., chief executive of Ford Motor, found himself signing autographs for some young admirers.

"I only have two heroes in my life, and he's one of them," said Christopher Larsch, a 12-year-old clearly being groomed for management by his mother, a Ford accountant. Chris, wearing an outsize Detroit Red Wings jersey, was among a throng crowding Mr. Ford at company headquarters here during Take Our Children to Work Day.

Chris's other hero? Bill Gates.

Of course, the chief executive autograph seems kind of 1999. What about the Red Wings, Chris? Steve Yzerman? Brett Hull?

"It's not the same," he said, explaining that Mr. Ford was at the top of his list, "because of what he's done for the company. But he'll also just walk up to you like a normal person and shake your hand."

Chris isn't the only person in Dearborn feeling better these days about Mr. Ford, 47, now that he has pulled his great-grandfather's company out of a sinkhole. After losing $6.4 billion, cumulatively, in 2001 and 2002, Ford eked out $495 million in net profit last year and more than quadrupled that in the first quarter to beat its Detroit rival, General Motors, for the first time in three years.

"It's really gratifying to see what we're doing pay off," Mr. Ford said in an interview here on Monday. "There has been no shortage of skeptics."

An espresso-chugging baby boomer, Mr. Ford is the scion of two auto families, the Fords and Firestones. He is also vice chairman of the Detroit Lions football team, and wealthy enough to easily afford to earmark his $1.5 million bonus to scholarships for children of Ford workers, including an older brother of Chris Larsch.

But outside Dearborn, there are still plenty of skeptics. Wall Street is encouraged but regards Ford and G.M. as overly dependent on North American sport utility and truck sales, plus profits from car loans that could get harder to generate as interest rates rise. Prospects are darkened by Toyota's long shadow, Hyundai's momentum and the general saturation of the American car market, which has led the Big Three into a bruising discounting battle.

Environmental groups remain wary of a man they once thought could be a rare industrialist ally. One group, Bluewater Network, recently ran an ad depicting Mr. Ford as Pinocchio for backing away from the company's goal of improving S.U.V. fuel economy by 25 percent. Safety issues persist four years after the scandal over Ford Explorers equipped with Firestone tires. These include a recent string of fuel leak problems in Ford police cruisers and lawsuits over faulty doors that open during crashes.

"There are some encouraging signs, but he's not come close to dealing with Ford's legacy of producing dangerous, gas guzzling S.U.V.'s," said Ken Cook, president of the Environmental Working Group, which last year published a blistering report on the company's handling of lawsuits involving the discontinued Ford Bronco II.

"If he's going to live up to his image, as someone who is going to turn this company around in every way, socially and environmentally,'' he added, "that has to be dealt with."

Signs of a fresh environmental strategy are finally emerging. In the early fall, the company will sell the first S.U.V. with hybrid electric technology, a version of its Ford Escape. Ford will be the world's third automaker, after Toyota and Honda, to offer a hybrid with substantial fuel-saving ability.

Mr. Ford said this year that the company now thought that higher gas prices might well persist long into the future. That's a big problem for Ford: among the major automakers, it has the lowest average fuel economy, according to the Environmental Protection Agency, largely because of its high proportion of truck sales.

"If you look at where society is headed, whether it's the Kyoto compact, whether it's the Hollywood movie that's coming out this summer on global warming, all of those things will truly have an impact on the debate," Mr. Ford said, referring to "The Day After Tomorrow," a doomsday movie about global warming to be released this month.

"I don't want Ford to be caught unaware or for us to be always saying no, we can't do something," he added.

This month, Ford reopened its storied River Rouge plant here in Dearborn. Once Henry Ford's showpiece and a symbol of early-20th-century American industrial might, where steel came in one end and cars out the other, it is the younger Ford's plant now. With a skylight-strewn roof covered with a special plant that sucks up carbon emissions and nets surrounding it to grow greenery, it could be the first Ivy League auto plant.

It also is a reflection of modern, so-called flexible manufacturing. The steel mill was sold long ago and the parts building outsourced to suppliers. The plant that once built the Model A - and only the Model A - can now build nine different vehicles, from sedans to the F-Series pickup.

"During the last two and a half years, when things were not going well here and we were counting every penny, a lot of people said to me, 'You've got to kill the Rouge,' '' he said. "To me that was our future. To me it would be like not making a Mustang."

Mr. Ford faced down the critics, both inside and outside Ford. "We could have really made the short term look better,'' he added, "by canceling the Rouge, cutting product spending, not investing in new hybrids and things like that.''

When Mr. Ford ousted Jacques Nasser as chief executive in 2001, the company was mired in red ink and wasteful practices built up during the flush times of the late 1990's. Just about everyone was angry, from customers to dealers to suppliers. Mr. Ford has tried to emphasize stability, consistency and a touch of paternalism at a company that has not been run by a Ford since the late 1970's.

One crucial factor in Toyota's successes, he said, is that it has not had a new chief executive uprooting strategies every few years. It just builds quality vehicles.

With an eye to longevity, Mr. Ford shuffled his management team last month, cementing a younger tier of executives. Five men are leading candidates to one day succeed Nicholas V. Scheele, Ford's president, and follow such notables as Robert S. McNamara and Lee A. Iacocca. They are Mark Fields and Lewis W. K. Booth, the top European executives; Greg C. Smith, who runs Ford's operations in the Americas; Mark A. Schulz, Asia and Africa chief; and Philip R. Martens, product development chief in North America.

"In terms of operating management, those five guys are kind of the next generation," Mr. Ford said. "Ultimately I'll judge them on their results but also their ability to work together."

Much of the improvement has been achieved through cost-cutting and wringing inefficiency out of a system that has been an industry laggard. The corporate cupboard is also being stocked with new Fords, Lincolns and Mercuries that will arrive over the next 18 months, including several crucial vehicles, like the large Ford Five Hundred sedan that will make its debut in the late summer.

Aspects of the company's strategy are controversial. Ford has been willing to lose market share in the United States by giving up discounted deals to rental companies and corporate fleets and reducing incentive spending. That paid off in the first quarter, but there are questions about how long it can be sustained after weak April sales. Ford just enchanced the deals offered on some of its marquee S.U.V.'s.

"He should be feeling better,'' said Stephen Girsky, a Morgan Stanley auto analyst. "They've been pulled back from the brink."

"On the other hand, the company's share loss is alarming," Mr. Girsky added. "The profit picture suggests they're focusing on profits instead of share, which you can do as long as the market is growing. If the market is shrinking, or if capacity is coming into the market, it becomes a challenge."

Having too many auto factories in the industry is already a problem for Ford, and it could get worse with Nissan entering the big pickup and S.U.V. market and Toyota and Hyundai breaking ground on new plants. But Ford may be better positioned than G.M. to cope.

Chris Struve, an analyst at Fitch, the debt rating service, said the short-term outlook was better for Ford than for G.M., because Ford has plans to keep production under better control. He left G.M. with a negative outlook this week but lifted Ford's.

"When we look forward a year or two, we don't see Ford worse than we see them today,'' he said. "Arguably we see them better. The probability of them doing worse is fairly close to zero."

 
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