The inside story: Ford's roadmap for survival

[jpd80]

Ford was already on track to cut at least $5 billion in annual operating expenses because of its earlier restructuring actions. These new cuts, announced Friday, are expected to save another $8 billion to $9 billion.

 

At the same time, Ford is transferring money from its lending arm, Ford Credit, to the parent company and will continue debt-equity swaps to raise additional capital. These actions, combined the possible sale of assets like its stake in Japan's Mazda Motor Corp., are expected to raise another $6 billion to $8 billion through 2010, when the full benefits of the new UAW contract kick in.

 

The product plan remains largely intact. In the end, Ford only delayed one new product program -- a European crossover that had not even been announced. It is also postponing plans to offer a diesel version of the F-150, as well as the freshening of a few of its poorer sellers in the United States.

 

Because Ford's plan assumes no help at all from the federal government, some of these actions could be reversed by a federal bailout. And Mulally said Ford's approach should help make the case for government assistance.

 

"Whoever is going to invest or loan us money wants to know we're taking the actions to create a viable company going forward," he said. "We are absolutely taking the appropriate actions. We've demonstrated that we're making progress."

 

Full article here

 

Does anyone here know about the Euro crossover mentioned?

I wonder if GRWD platform is back on but on a smaller more modest scale?

[OHV 16V]

Was just about to post the link to this full article, good find... Wonder how long the diesel F-150 is on hold for?

[jpd80]

I really hope they can justify F150 diesel, it's something different but maybe doomed by cost.

It's great to see Ford wanting to deliver good products across the board, a broader perspective.

 

Ford deserves to survive, they're controlling their own fate through good management.

 

GM and Chrysler pretend to change but just want more cash to continue the way they are......

Edited November 13, 2008 by jpd80

[Ford Jellymoulds]

Thanks for posting JDP, you can't help but feel sorry Alan Mulally and Ford when you see fuel prices rocket up and then hit the floor a few months later how can you plan for that?

 

Gotta say it does not make sense now for Ford to pay to bring the fuel-efficient cars in from FOE now, with low fuel prices and with bailout cash promised in the pipeline from Bushie & Obama that could be used to set up build FOE cars in the US it does not make sense for Ford to pay for it.

 

I just hope that Ford put the pressure the US government to release the cash ASAP so Ford can build the Fiesta Stateside as this would have been the biggest hit Stateside it would eat into Japanese car sales and hit them where it hurts for a change CARS.

 

Only crossover is the Kuga.

Edited November 13, 2008 by Ford Jellymoulds

[Topgun]

Thanks for posting JDP, you can't help but feel sorry Alan Mulally and Ford when you see fuel prices rocket up and then hit the floor a few months later how can you plan for that?

 

Gotta say it does not make sense now for Ford to pay to bring the fuel-efficient cars in from FOE now, with low fuel prices and with bailout cash promised in the pipeline from Bushie & Obama that could be used to set up build FOE cars in the US it does not make sense for Ford to pay for it.

 

I just hope that Ford put the pressure the US government to release the cash ASAP so Ford can build the Fiesta Stateside as this would have been the biggest hit Stateside it would eat into Japanese car sales and hit them where it hurts for a change CARS.

 

Only crossover is the Kuga.

Mulally better off sticking with his original plan instead of trying to flip flop all over the place on what to build every 3 months as the economy changes....sounds like he doesn't know what he is doing anymore.

[Ford Jellymoulds]

Mulally better off sticking with his original plan instead of trying to flip flop all over the place on what to build every 3 months as the economy changes....sounds like he doesn't know what he is doing anymore.

 

Who here knows what the future holds, GM could go under and Ford be could struggling to keep up with demand this time next year as its sees its sales double overnight as it picks up their ex buyers, who knows?

Edited November 13, 2008 by Ford Jellymoulds

[BORG]

Technically, Ford is the only company worthy of survival IMO. The other two have not worked nearly as hard and carefully as Ford has to get to this position. GM should not be allowed the bailout money under its current leadership.

[BSG 62]

I think that Mulally and company are still implementing the same general plan; switching the NA production bias towards cars. The key to the survival of Ford is profitablity but the million or rather billion dollar question is how to actually achieve this. I'm not a Ford insider but I get the impression that Mulally is trying to wring ever last bit of efficiency he can out of the company and do his best to ensure that every dollar spent goes toward improving product. Of course this is easy to say and hard to do but I think this guy has a workable plan.

[kyle]

Technically, Ford is the only company worthy of survival IMO. The other two have not worked nearly as hard and carefully as Ford has to get to this position. GM should not be allowed the bailout money under its current leadership.

 

Come on Borg-you don't really mean that.

 

6 months ago GM and the industry were in good shape. They have been extremely successful outside the US-they must of done something right in China and Europe. While GM may of made some mistakes, Wagoneer and his team are not as incompetent as everyone in the industry looks right now. Look at Toyota-they just spent $3 billion on a truck plant; Honda sales are off, etc. I can go on and on.

 

The biggest thing GM failed to do was mortgage the future like Mulally did. No one saw this coming-it was by luck that Ford got the extra capital.

[jpd80]

I think that Mulally and company are still implementing the same general plan; switching the NA production bias towards cars. The key to the survival of Ford is profitablity but the million or rather billion dollar question is how to actually achieve this. I'm not a Ford insider but I get the impression that Mulally is trying to wring ever last bit of efficiency he can out of the company and do his best to ensure that every dollar spent goes toward improving product. Of course this is easy to say and hard to do but I think this guy has a workable plan.

Exactly, the changes they are wringing internally are to give them a cash improvement

now nearer $9 Billion for every year from here on. Cash burn is downsizing restructuring

and stopping F150 production to eat up September's inventory of '08 F150s before the '09 model hit.

 

GM are trapped by the credit freeze, there's no cash out there to restructure or do anything.

How smart were Ford to mortgage the farm when they could get a good price.

They did well turning J/LR but Volvo is still a $720 million headache and counting.

 

The biggest thing GM failed to do was mortgage the future like Mulally did. No one saw this coming-it was by luck that Ford got the extra capital.

There was no luck in it, their plan was to mortgage everything in case this very scenario happened.

I'm pretty sure Ford were even saying this back in 2006.

Edited November 13, 2008 by jpd80

[NickF1011]

The biggest thing GM failed to do was mortgage the future like Mulally did. No one saw this coming-it was by luck that Ford got the extra capital.

 

Well...apparently Ford did.

[Unknown25]

Its called Risk Management or Hedging. Ford thought it was important, GM & Chrysler didn't

[Ovaltine]

Same article, but different excerpt:

 

DEARBORN -- For the last six weeks, Ford Motor Co.'s top executives met almost daily to craft a plan to keep the company solvent in the face of the worst financial crisis in decades. Surrounded by black-and-white photographs of Henry Ford and the Model T in the Thunderbird Room on the 11th floor of Ford's world headquarters, they waged a battle to decide Ford's future.

 

CEO Alan Mulally and his leadership team worked through lunch, taking quick bites of Caesar salad as the global credit crisis deepened and automobile sales collapsed. With gasoline prices falling, some argued that Ford should abandon its costly plan to retool North American truck factories to produce smaller, more fuel-efficient cars from Europe. Others pushed to curtail future investment in key products like the F-150 pickup that have seen sales drop off dramatically in recent years.

 

Global product development chief Derrick Kuzak -- backed by Mulally -- countered: If Ford has a future, it depends on delivering a new generation of class-leading cars and trucks that people actually want to buy. They fought off every challenge to one of the most ambitious product plans ever put together, albeit at the cost of thousands of jobs.

 

"We're only going to be in business if we create products that people really do want and value," Mulally told The Detroit News in an exclusive interview Tuesday. "This is the essence of creating a viable Ford."

 

 

 

 

A few comments/thoughts:

 

1. Notice that the room that all of the decision making in is called the "Thunderbird Room". I hope that when things turn around, this is a sign that the company has not yet abandoned the marque for good. I would LOVE to be tooling around in a sleek hot new 4-seat T-Bird somewhere down the road in my 50's.

:-)

 

2. Also notice that some tool(s) in the upper management were already starting to use the recent (most likely temporary) lowering of gas prices to start backing away from the new direction that Mulally and Co. had the guts to head towards. Good grief! When are these types of fools going to learn???? It's the promise of these NEW designs coming that for the first time since the 80's actually has me watching websites and my car mags for new Ford designs that I'll consider buying in the next few years! You Go Alan!

 

3. From everything I've read so far, I think I like Kuzac. He always seems to be talking common sense. Again, you GO Dennis!

 

 

After reading this article today at home, I actually had a good feeling for Ford's chances for once. I like the fact that Alan and Co. are "staying the *new* course* they set when fuel prices were high.

 

I really think that is the best decision. Kudos to everyone at FoMoCo on this one!

 

 

-Ovaltine

Edited November 13, 2008 by Ovaltine

[old_fairmont_wagon]

Its going to take a while (an undefinied amount of time longer than weeks but shorter than half a decade) for people to forget what it was like to pay $4 a gallon for gas. ITs also going to take a while for the economy to get back on its feet and stir up demand for vehicles for light construction, vehicles that are considered luxury purchases, and vehicles that are more image than utility. Continuing the investment in high fuel mileage small and mid-sized vehicles helps with not only meeting gov't fuel economy mandates (which look to possibly be going up in the future) as well as keeps desirable vehicles in the pipeline that are also attainable by common working folks. People aren't going to be able to justify $40K SUVs and Crossovers like they used to. They will be instead looking for efficient utility vehicles in the $17K to $32K range. Unfortunately, that puts a lot of pricing pressure on the Flex, and leaves ford with a hole in its three row product line once the Taurus X gets canceled. Ford has no minivan that they can pedal in the mid $20Ks to mid $30Ks, and, save for the Explorer, has nothing in the three row range purchaseable in that price catagory.

 

Unfortunately, with the Taurus makeover, the MkS rolling down the line, and the Flex on it, its costing money to produce two different versions of the platform it seems. So, the question is, where is Ford going to come up with a value priced three row that's reasonably efficient in the near term? Families still need transportation, if Ford doesn't offer them what they need at a price they can afford, they will shop elsewhere. Excluding the minivans on the market (Sienna, Odyssey, Caravan/T&C, Entourage, Sedona, Quest), the following are available in the above mentioned price range with three row seating...

 

Rav-4 (small)

Highlander (closer to the top end, but attainable in that range)

Pilot

Mazda5

Journey

Rondo (available third row, but small)

Borego (basically an explorer competitor, but, with a better value position with similar economy and better engines)

Sante Fe

Vera Cruz (the very lowest level trim can be purchased comfortably in the range)

 

 

I've probably forgotten a few, but, its safe to say, that's a market that the Flex doesn't play in and Ford, save for its interest in Mazda, doesn't have a product in. We've all detailed why the TaurusX and Freestyle were not competitive in this market, mainly due to being on the top end of the price range, having staid designs, an undesirable powertrain for the Freestyle, and a complete and utter lack of any kind of marketing whatsoever. There's no reason that Ford can't have a dog in that fight. My advice, if Ford intends to stay a bread-and-butter brand, is to find a way to take the edge platform and make a 3 row crossover from it that's less expensive than the Flex, more expressive in design than the Taurus X, and at least as efficient as the current Edge. Borrow from your friends over at Mazda who have the existing CD3 based Mazda CX-9 to jump-start development. Without a minivan, this is a market that I feel it is strongly important for Ford to be in if they hope for solid products to aid them in long term survival.

[2005Explorer]

Its going to take a while (an undefinied amount of time longer than weeks but shorter than half a decade) for people to forget what it was like to pay $4 a gallon for gas. ITs also going to take a while for the economy to get back on its feet and stir up demand for vehicles for light construction, vehicles that are considered luxury purchases, and vehicles that are more image than utility. Continuing the investment in high fuel mileage small and mid-sized vehicles helps with not only meeting gov't fuel economy mandates (which look to possibly be going up in the future) as well as keeps desirable vehicles in the pipeline that are also attainable by common working folks. People aren't going to be able to justify $40K SUVs and Crossovers like they used to. They will be instead looking for efficient utility vehicles in the $17K to $32K range. Unfortunately, that puts a lot of pricing pressure on the Flex, and leaves ford with a hole in its three row product line once the Taurus X gets canceled. Ford has no minivan that they can pedal in the mid $20Ks to mid $30Ks, and, save for the Explorer, has nothing in the three row range purchaseable in that price catagory.

 

Unfortunately, with the Taurus makeover, the MkS rolling down the line, and the Flex on it, its costing money to produce two different versions of the platform it seems. So, the question is, where is Ford going to come up with a value priced three row that's reasonably efficient in the near term? Families still need transportation, if Ford doesn't offer them what they need at a price they can afford, they will shop elsewhere. Excluding the minivans on the market (Sienna, Odyssey, Caravan/T&C, Entourage, Sedona, Quest), the following are available in the above mentioned price range with three row seating...

 

Rav-4 (small)

Highlander (closer to the top end, but attainable in that range)

Pilot

Mazda5

Journey

Rondo (available third row, but small)

Borego (basically an explorer competitor, but, with a better value position with similar economy and better engines)

Sante Fe

Vera Cruz (the very lowest level trim can be purchased comfortably in the range)

 

 

I've probably forgotten a few, but, its safe to say, that's a market that the Flex doesn't play in and Ford, save for its interest in Mazda, doesn't have a product in. We've all detailed why the TaurusX and Freestyle were not competitive in this market, mainly due to being on the top end of the price range, having staid designs, an undesirable powertrain for the Freestyle, and a complete and utter lack of any kind of marketing whatsoever. There's no reason that Ford can't have a dog in that fight. My advice, if Ford intends to stay a bread-and-butter brand, is to find a way to take the edge platform and make a 3 row crossover from it that's less expensive than the Flex, more expressive in design than the Taurus X, and at least as efficient as the current Edge. Borrow from your friends over at Mazda who have the existing CD3 based Mazda CX-9 to jump-start development. Without a minivan, this is a market that I feel it is strongly important for Ford to be in if they hope for solid products to aid them in long term survival.

 

Doesn't the new Explorer coming in the next couple of years fill this gap?

[NickF1011]

Doesn't the new Explorer coming in the next couple of years fill this gap?

 

I wouldn't say it "fills the gap", but it will play in the same area. With the splintering of the auto market, it's hard to define product overlap anymore, except in cases of blatent rebadges.

[akirby]

Also notice that some tool(s) in the upper management were already starting to use the recent (most likely temporary) lowering of gas prices to start backing away from the new direction that Mulally and Co. had the guts to head towards. Good grief! When are these types of fools going to learn????

 

That's an easy one. They're going to learn NOW or they won't have a job LATER. I've worked for managers like Mulally and Kuzak and Fields and they simply won't put up with that type of thinking. Learn, adapt or get out.

[J-150]

Come on Borg-you don't really mean that.

 

6 months ago GM and the industry were in good shape. They have been extremely successful outside the US-they must of done something right in China and Europe. While GM may of made some mistakes, Wagoneer and his team are not as incompetent as everyone in the industry looks right now. Look at Toyota-they just spent $3 billion on a truck plant; Honda sales are off, etc. I can go on and on.

 

The biggest thing GM failed to do was mortgage the future like Mulally did. No one saw this coming-it was by luck that Ford got the extra capital.

 

 

 

what planet have you been on?

 

GM hasn't been in good shape for 5 years.

[mettech]

Technically, Ford is the only company worthy of survival IMO. The other two have not worked nearly as hard and carefully as Ford has to get to this position. GM should not be allowed the bailout money under its current leadership.

 

+1

 

I'm proud of Ford.... Excellent reading.

 

On the flip side, if GM does not make major changes, I do not support the bail out.

[jpd80]

So how much money does GM really need to survive, surely not all of the $50 billion, maybe $25 billion?

That's a big mill stone, oh and the need to downsize and start making suitable products.

 

Out of touch, out of time, out of cash. GM blew every opportunity given to them.

 

 

Edit,

It wouldn't surprise me if Ford found a way to keep all its future platforms plans too,

meaning a future RWD platform of some description that maybe covers Mustang, Falcon and Territory.

Edited November 13, 2008 by jpd80

[Harley Lover]

Mulally better off sticking with his original plan instead of trying to flip flop all over the place on what to build every 3 months as the economy changes....sounds like he doesn't know what he is doing anymore.

Did you read the article? Do you have reading comprehension issues? He is sticking with the plan!

[J-150]

No one saw this coming-

 

 

Buffet saw it.

Greenspan saw it 5 years ago

 

a lot of people saw it and moved their money accordingly.

[RichardJensen]

They have been extremely successful outside the US-they must of done something right in China and Europe. While GM may of made some mistakes, Wagoneer and his team are not as incompetent as everyone in the industry looks right now.

1) Not in Europe. GM's European operations are a disaster area and have been for years. They haven't been consistently profitable since I was in high school. Maybe even farther back than that. Also, look at the revenue breakdown, GM is far more dependent on the NA market for revenue than Ford.

 

2) Wagoner IS as incompetent as he looks. The man has been CEO since 2000 and what has he done? The Lambdas? That's it. That's the ONLY US product line he has superintended that has been even remotely worthy of being described as 'attractive' to the general public.

Edited November 13, 2008 by RichardJensen

[atomcat68]

Did you read the article? Do you have reading comprehension issues? He is sticking with the plan!

I think he meant GM, but didn't say it well.

[atomcat68]

Quote from the article:

"With gasoline prices falling, some argued that Ford should abandon its costly plan to retool North American truck factories to produce smaller, more fuel-efficient cars from Europe."

 

The price of gas is no longer revelant. The Cafe standards demand smaller cars. There's no backing out of this now. Most cars sold must be smaller.