Fixing Ford 101

[Overdrive]

Over the last 5 years, the decline of Ford and GM in the North American market has been disheartening to say the least. We continually see plants shuttered, while seeing the new domestics (i.e. imports) opening new plants primarily in the deep south.

 

Every 5 - 8 years there is another wave of reductions, consolidations, overhauls and restructuring by GM and Ford, but it never seems to fix the root causes.

 

I've often fantasized about, if I had the reins of power in Ford, what would I do to make Ford the top automaker here in North America, if not the world.

 

#1 Privatize Ford

While the money people at Ford would scoff at this idea, I would plow ahead with a 10 year plan to privatize Ford. There are so many benefits to not having to answer to shareholders and paying out dividends it's not funny. Not to mention the administrative costs therein. Put simply, I would target purchasing 10% of Ford's outstanding shares each year for 10 years.

 

#2 Stop Rebates and Incentives

The madness must end. Taping cash to vehicles that Ford sells just to keep plants busy is a losing proposition. Rebates must stop. Even if plants have to be idled due to excess inventory. Even if Ford must lay off workers. Rebates must stop....FOREVER. It will be very painful at first, and very costly. Rebates drive down resale values and do nothing to enhance the image of Ford or it's products. Having a fire sale every other month is exactly what Ford's competitors (Toyota, Honda et al) don't do. Painful, bloody and costly. But in the longterm, it'll be good for Ford's image, it's products and it's profitability.

 

#3 Revamp Benefits

The benefits of the workforce need to be competitive with other Fortune 500 companies to keep a quality workforce. But the goldplated packages for both union and salary are things of the past. Copays and deductions need to be on par with other companies. Ford may even want to look at self insuring at some point with respect to health care. It's a huge cost and needs to be looked at to balance the line between keeping a quality workforce and being fiscally sound.

 

#4 Product Development

Ford has a heritage of producing some fine examples of American vehicle prowess in the past. Today, Ford has lost identity. When you ask the average buyer about Ford, what do they think? Look at what DCX has done with the Charger, the 300C and the Magnum. Ford can move ahead in the future by looking at the past. Retro is in. The Mustang is a fine example. Ford designers need to take a hard look at past popular vehicles for styling cues.

 

#5 Product Names

STOP making new car names every few years. Toyota Camry, Honda Accord...what do these vehicles have in common? They are perceived as being well built, have good resale value and they don't have their names changed every 5 years. The closest things Ford has to these types of brand identifiers would be the Ranger and the Mustang. Stop changing the names. Pick a name and stick with it, forever so that consumers will come to think of that name like a comfortable blanket.

 

#6 Product Quality

Stretch out product refreshes. There is nothing wrong with producing a particular model for 2 to 4 years w/o visual changes. Focus instead on fixing bugs in the product between refreshes. There should be a team for each model whose only goal in life is to stamp out problems with a passion. Buick did this with the LeSabre in the 80s and it paid off in spades. Not only did GM spread their vehicle costs over a longer cycle, but they made huge strides in building a bullet proof car that even the new domestic loving consumer reports had to smile at. Building a car like a swiss watch, so to speak, should be job #1. Even down to the smallest details, nothing is too unimportant not to fix. Not only will this drive up desireability in the market, but it will cut Ford's costs in warranty issues and the bad pr associated with recalls.

 

And please don't say this is being done already. If it is, it's not being done right. Each product manager should have a matrix of EVERY single bug found with a vehicle and what timeline and corrective actions. Read the auto reviews. If there are issues with seating, fix them! If the instrument cluster layout gets panned, fix it! If the weatherstrip molding has a tendency to fall off because someone cheapened up on the adhesive, fire that person and get someone in there who has a passion for making Ford vehicles the most weather resistant vehicles on the rode. See my point? There has to be a passion in making Ford vehicles hum and purr. Every one of them has to be a baby delivered to a cash paying customer will pride at the craftsmanship of Ford workers.

 

#7 Advertising

Stop the insanity! No more "lease deals". No more "rebates and incentive" advertising. Focus on the car. Americans love good old fashioned salesmanship (salespersonship I guess for those pc types). Imagine a commercial starting where the screen fades in to a sleeping baby in it's safety seat in the middle back of a Ford Freestar. You hear it softly breathing, contented. The camera moves back a little and the seats and carpet become translucent, revealing the structural detailis of the vehicle. We see the seat anchored to the floor, we see the crush zones in the sides of the vehicle and other pertinent information about why that baby is SAFE in a Ford Freestar. The camera then pans slowly around 180 deg and, from the baby's point of view, we see a mother looking into the rear view mirror smiling at baby. Fade out and the words with audio come in...The Ford Freestar...built for precious cargo.

 

I'm not an advertising guru obviously, but the point is the cheesy old advertising of the past does NOTHING to enhance Ford's image or product desireability. There are so many cool ideas that could be made with Ford products, it isn't funny.

 

---------------

Retouching on product cycles, and keeping a vehicle name. Americans like to drive vehicles that look CURRENT. When product cycles are fast, it makes the resale on their current vehicle go down. Keeping lengthy times between refreshes and focusing on quality improvements and bug fixes between refreshes will go a long ways towards making Ford vehicles solid choices of people who want to preserve their investment of vehicle dollars. I would want Ford to build vehicles so damn good, that the idea of keeping them for 4 to 6 years is NORMAL.

---------------

 

#8 Flagship Vehicle

Personally, I wish Ford would come out with it's own "K car". My choice would be the Ford Crown Victoria. This is a very good vehicle and a good American value. I would make a value version of it with zero options. In the past, male family car buyers have a very definitive set of hotbuttons. My configuration would be very simple. 8 cyl crown vic, split bench cloth seats in the front with a fold down arm, bench rear seat, tilt/cruise/power windows/locks standard. AM/FM/CD standard. Air standard w/ABS and an dual airbags. That's it. No power seats, no power anything else. No options whatsoever except color. Price this vehicle at sub $20k and you'll have 3 screaming shifts of overworked employees at the St. Thomas facility.

 

#9 Supply and Demand

Supply of Ford Vehicles needs to be less than the demand. Basic economics but over the last 20 years American automakers keep having to fuel demand with financial incentives. Ford is making some hard decisions in January, with respect to plant closings. The current duel between Ford and GM on full size pickups is a good example. Who cares who has the most units sold per year. What matters is who's making the most money per unit. I'd rather be #2 in volume but #1 in profitability. The plants must be run at capacity. Personally, I think Ford has too many truck plants. But the point is, dealers being allocated vehicles is a much better distribution model. Public perception of vehicles being IN DEMAND is so much better for so many reasons, principally the bottom line....Ford really needs to to look at this.

 

Anyway, if I were King for a Year at Ford, or President I guess, this would be my operating plan. I sincerely hope Ford can turn it around and rise like a Phoenix vis a vie Harley Davidson. There's alot of us rooting for you guys.

 

PS: One more thing. Please try and source more equipment from North American suppliers. The Europeans are getting fat and happy off of Powertrain and Engine operating unit machinery. It's hypocritical to bemoan Americans buying foreign vehicles when Ford itself sources equipment to offshore machine builders CONSTANTLY.

[TheLemon]

Over the last 5 years, the decline of Ford and GM in the North American market has been disheartening to say the least. We continually see plants shuttered, while seeing the new domestics (i.e. imports) opening new plants primarily in the deep south.

 

Every 5 - 8 years there is another wave of reductions, consolidations, overhauls and restructuring by GM and Ford, but it never seems to fix the root causes.

 

I've often fantasized about, if I had the reins of power in Ford, what would I do to make Ford the top automaker here in North America, if not the world.

 

#1 Privatize Ford

While the money people at Ford would scoff at this idea, I would plow ahead with a 10 year plan to privatize Ford. There are so many benefits to not having to answer to shareholders and paying out dividends it's not funny. Not to mention the administrative costs therein. Put simply, I would target purchasing 10% of Ford's outstanding shares each year for 10 years.

 

#2 Stop Rebates and Incentives

The madness must end. Taping cash to vehicles that Ford sells just to keep plants busy is a losing proposition. Rebates must stop. Even if plants have to be idled due to excess inventory. Even if Ford must lay off workers. Rebates must stop....FOREVER. It will be very painful at first, and very costly. Rebates drive down resale values and do nothing to enhance the image of Ford or it's products. Having a fire sale every other month is exactly what Ford's competitors (Toyota, Honda et al) don't do. Painful, bloody and costly. But in the longterm, it'll be good for Ford's image, it's products and it's profitability.

 

#3 Revamp Benefits

The benefits of the workforce need to be competitive with other Fortune 500 companies to keep a quality workforce. But the goldplated packages for both union and salary are things of the past. Copays and deductions need to be on par with other companies. Ford may even want to look at self insuring at some point with respect to health care. It's a huge cost and needs to be looked at to balance the line between keeping a quality workforce and being fiscally sound.

 

#4 Product Development

Ford has a heritage of producing some fine examples of American vehicle prowess in the past. Today, Ford has lost identity. When you ask the average buyer about Ford, what do they think? Look at what DCX has done with the Charger, the 300C and the Magnum. Ford can move ahead in the future by looking at the past. Retro is in. The Mustang is a fine example. Ford designers need to take a hard look at past popular vehicles for styling cues.

 

#5 Product Names

STOP making new car names every few years. Toyota Camry, Honda Accord...what do these vehicles have in common? They are perceived as being well built, have good resale value and they don't have their names changed every 5 years. The closest things Ford has to these types of brand identifiers would be the Ranger and the Mustang. Stop changing the names. Pick a name and stick with it, forever so that consumers will come to think of that name like a comfortable blanket.

 

#6 Product Quality

Stretch out product refreshes. There is nothing wrong with producing a particular model for 2 to 4 years w/o visual changes. Focus instead on fixing bugs in the product between refreshes. There should be a team for each model whose only goal in life is to stamp out problems with a passion. Buick did this with the LeSabre in the 80s and it paid off in spades. Not only did GM spread their vehicle costs over a longer cycle, but they made huge strides in building a bullet proof car that even the new domestic loving consumer reports had to smile at. Building a car like a swiss watch, so to speak, should be job #1. Even down to the smallest details, nothing is too unimportant not to fix. Not only will this drive up desireability in the market, but it will cut Ford's costs in warranty issues and the bad pr associated with recalls.

 

And please don't say this is being done already. If it is, it's not being done right. Each product manager should have a matrix of EVERY single bug found with a vehicle and what timeline and corrective actions. Read the auto reviews. If there are issues with seating, fix them! If the instrument cluster layout gets panned, fix it! If the weatherstrip molding has a tendency to fall off because someone cheapened up on the adhesive, fire that person and get someone in there who has a passion for making Ford vehicles the most weather resistant vehicles on the rode. See my point? There has to be a passion in making Ford vehicles hum and purr. Every one of them has to be a baby delivered to a cash paying customer will pride at the craftsmanship of Ford workers.

 

#7 Advertising

Stop the insanity! No more "lease deals". No more "rebates and incentive" advertising. Focus on the car. Americans love good old fashioned salesmanship (salespersonship I guess for those pc types). Imagine a commercial starting where the screen fades in to a sleeping baby in it's safety seat in the middle back of a Ford Freestar. You hear it softly breathing, contented. The camera moves back a little and the seats and carpet become translucent, revealing the structural detailis of the vehicle. We see the seat anchored to the floor, we see the crush zones in the sides of the vehicle and other pertinent information about why that baby is SAFE in a Ford Freestar. The camera then pans slowly around 180 deg and, from the baby's point of view, we see a mother looking into the rear view mirror smiling at baby. Fade out and the words with audio come in...The Ford Freestar...built for precious cargo.

 

I'm not an advertising guru obviously, but the point is the cheesy old advertising of the past does NOTHING to enhance Ford's image or product desireability. There are so many cool ideas that could be made with Ford products, it isn't funny.

 

---------------

Retouching on product cycles, and keeping a vehicle name. Americans like to drive vehicles that look CURRENT. When product cycles are fast, it makes the resale on their current vehicle go down. Keeping lengthy times between refreshes and focusing on quality improvements and bug fixes between refreshes will go a long ways towards making Ford vehicles solid choices of people who want to preserve their investment of vehicle dollars. I would want Ford to build vehicles so damn good, that the idea of keeping them for 4 to 6 years is NORMAL.

---------------

 

#8 Flagship Vehicle

Personally, I wish Ford would come out with it's own "K car". My choice would be the Ford Crown Victoria. This is a very good vehicle and a good American value. I would make a value version of it with zero options. In the past, male family car buyers have a very definitive set of hotbuttons. My configuration would be very simple. 8 cyl crown vic, split bench cloth seats in the front with a fold down arm, bench rear seat, tilt/cruise/power windows/locks standard. AM/FM/CD standard. Air standard w/ABS and an dual airbags. That's it. No power seats, no power anything else. No options whatsoever except color. Price this vehicle at sub $20k and you'll have 3 screaming shifts of overworked employees at the St. Thomas facility.

 

#9 Supply and Demand

Supply of Ford Vehicles needs to be less than the demand. Basic economics but over the last 20 years American automakers keep having to fuel demand with financial incentives. Ford is making some hard decisions in January, with respect to plant closings. The current duel between Ford and GM on full size pickups is a good example. Who cares who has the most units sold per year. What matters is who's making the most money per unit. I'd rather be #2 in volume but #1 in profitability. The plants must be run at capacity. Personally, I think Ford has too many truck plants. But the point is, dealers being allocated vehicles is a much better distribution model. Public perception of vehicles being IN DEMAND is so much better for so many reasons, principally the bottom line....Ford really needs to to look at this.

 

Anyway, if I were King for a Year at Ford, or President I guess, this would be my operating plan. I sincerely hope Ford can turn it around and rise like a Phoenix vis a vie Harley Davidson. There's alot of us rooting for you guys.

 

PS: One more thing. Please try and source more equipment from North American suppliers. The Europeans are getting fat and happy off of Powertrain and Engine operating unit machinery. It's hypocritical to bemoan Americans buying foreign vehicles when Ford itself sources equipment to offshore machine builders CONSTANTLY.

 

 

You forgot #10

 

 

 

#10 TAKE CARE OF PAST, PRESENT and FUTUR CUSTOMERS. Respect customers they are the one spending their money and making the final decisions! Ford Motor Company should make priority #1 to make sure all dealerships do their jobs properly.....

[ford4v429]

You forgot #10

#10 TAKE CARE OF PAST, PRESENT and FUTUR CUSTOMERS. Respect customers they are the one spending their money and making the final decisions! Ford Motor Company should make priority #1 to make sure all dealerships do their jobs properly.....

 

 

I agree. I actually think that should be in the top three priorities, tho.

 

Wow...I woulda missed that, but the quote goes around the 'ignore'. I agree too: nice post lemon

 

lots of ideas in this thread-

 

RichardJensen- question:

regarding ford becoming privately held- IF they could afford this, do you think it would be the best way for them to spend that money? Ive never understood the ins and outs of publicly/privately held companies...

Edited December 1, 2005 by ford4v429

[ford4v429]

#9 Supply and Demand

Supply of Ford Vehicles needs to be less than the demand. Basic economics but over the last 20 years American automakers keep having to fuel demand with financial incentives. Ford is making some hard decisions in January, with respect to plant closings. The current duel between Ford and GM on full size pickups is a good example. Who cares who has the most units sold per year. What matters is who's making the most money per unit. I'd rather be #2 in volume but #1 in profitability. The plants must be run at capacity. Personally, I think Ford has too many truck plants. But the point is, dealers being allocated vehicles is a much better distribution model. Public perception of vehicles being IN DEMAND is so much better for so many reasons, principally the bottom line....Ford really needs to to look at this.

 

Anyway, if I were King for a Year at Ford, or President I guess, this would be my operating plan. I sincerely hope Ford can turn it around and rise like a Phoenix vis a vie Harley Davidson. There's alot of us rooting for you guys.

 

PS: One more thing. Please try and source more equipment from North American suppliers. The Europeans are getting fat and happy off of Powertrain and Engine operating unit machinery. It's hypocritical to bemoan Americans buying foreign vehicles when Ford itself sources equipment to offshore machine builders CONSTANTLY.

 

 

Max-

interesting, but I got one question about the supply and demand...isnt it best to just BARELY keep up with demand? Currently the mustang situation I kinda think is costing Ford and most dealers a lot of money, and possibly quite a few customers. I kinda think capacity increase there would be a good thing as there is an awful lot of people that had to wait an awfully long time to hand Ford their money...I really dont think 'hard to get' adds sales clout to a product that so easily sells itself on its own merits- A lot of car at an affordable price that looks just about perfect...guess its probably a moot point now, would expect by summer demand may drop enough to where dealers may actually have a selection to pick from - although this may increase sales a bit in itself...who knows...

A couple more flexible plant lines like AAI would be nice to help pick up the slack when needed or build small scale runs to 'test the waters' on new launches. If enough backup suppliers could be found to say add another 'mustang line' within 6 months(or transfer the mazda 6 off its line for a while, etc), it sure woulda been a nice option for Ford last spring...flexible lines hold a lot of promise I think...a quick way to 'strike while the iron is hot' would be quite an advantage. bet they coulda sold double the mustang volume last year had there actually been selections on lots around the country instead of just Florida...

[Paul Selby]

You forgot #10

#10 TAKE CARE OF PAST, PRESENT and FUTUR CUSTOMERS. Respect customers they are the one spending their money and making the final decisions! Ford Motor Company should make priority #1 to make sure all dealerships do their jobs properly.....

 

 

You are correct, I would say Ford has lost most of their customers not due to problems but due to the problem not being corrected by the dealer. Fords 1-800 help line needs people that at a minimum, act like they care.

[Overdrive]

Pioneer, yes dealers are the front line and Ford's face to the customer. Striving to make Ford sales outlets a pleasant overall experience is a given, at least in my opinion. I haven't looked at where they stand compared to other brands.

 

ford4v429, I think a methodical buyback of common stock amoritized over a decade would be a prudent and wise use of money. Ford would be investing in itself. The downside would be loss of that cash flow for 10 years and the expenses associated with the buyback administration. The upside would be that, once private, Ford can concentrate on doing what's best for the company in the short term and the long term, w/o having to worry about quarterly returns, dividends, etc. Not to mention the stock price is a bargain right now. But, the whole idea hinges on Ford driving down it's costs in a number of areas and increasing it's profitability so that it can self finance w/o the need to look outside itself for cash.

 

With respect to supply and demand, I do not agree that the best supply is 1 unit short of demand. In order to build a sustained a long term demand for Ford products, there cannot be a flood of vehicles and dealers on every corner that people can shop to get a vehicle $1 cheaper down the road. The imports allocated vehicles and it tended to shore up pricing with a side benefit of shoring up residual values. I guess what I'm saying is there needs to be enough units for customers to purchase obviously, but not so many that dealers slash prices to move them off their lots. The perception with GM and Ford vehicles are that they are a dime a dozen. And this is true, unfortunately. The incessant fire sale advertising fuels this perception.

 

Where Ford needs to get to is that every vehicle that is "allocated" to the dealer and it shows up off the hauler, that dealer knows there is "demand" for it. It must be a deep and sustained demand, not just 1 unit less than the number of buyers...you can achieve that with incentives. Instead, the product itself must drive the demand.

 

But in order to get there, Ford will have to be willing to slow down production on units where the days supply exceeds certain threshholds and not give into the temptation to tape cash to the vehicles to keep production going.

Edited December 2, 2005 by Maximum Overdrive