Some lesson Ford should learn from history

[weiweishen]

http://money.cnn.com/2010/04/28/autos/mulally_ford_letter.fortune/

 

• In 1955, Ford's profits in the first nine months exceed those of any previous full year in the company's history. Flush with cash, Ford starts work on a new division designed to strike at the heart of GM's successful mid-market brands. It is called Edsel.

 

• In 1964, Lee Iacocca launches the Mustang, and, in 1969, the ultra-profitable Continental Mark III. He also oversees the Pinto. It is later revealed that Ford decided not to make an $11 fix that would reduce the likelihood of fires from rear-end collisions because it would be cheaper to settle the lawsuits that resulted from those fires.

 

• In 1986, CEO Donald Petersen introduces the Taurus, which revolutionizes car design, and oversees development of the equally revolutionary Explorer. With the money rolling in, he tries unsuccessfully to buy Lockheed, but gets Jaguar and Aston Martin instead. The two British car companies remain persistent money-losers.

 

• The SUV and pickup truck boom of the 1990s makes Ford flush again, so CEO Jac Nasser gets out the company checkbook. He waves it at Nissan and then buys Volvo, Land Rover, and some other cats and dogs. After Nasser is forced out, his acquisitions are liquidated at fire-sale prices.

 

• Having accumulated a cash hoard of $24 billion in 2000, Ford revamps its ownership structure and pays a $10 billion special dividend, with a big chunk going to the Ford family. By 2006, the company is in dire straits again, and it is forced to borrow $23 billion

[Edstock]

The article concludes with

 

"So Alan, now that you have reached the age of 64 and are grooming a successor, you should be thinking about your legacy at Ford.

 

Other CEOs have been as successful as you. Your unique contribution may be not in teaching how to turn around Ford, but in how to keep it turned around once you have done so."

 

Well said.

[NickF1011]

This rollercoaster is mirrored at most major companies the world over. Everyone has their ups and downs. Ford seems to have learned some lessons from each one.

 

Has Ford created a new brand since Edsel? Nope. I still feel it's an inevitability that even Mercury will ride off into the sunset.

 

Has Ford had any Pinto-like repeats? Nope. (And, while bad, I don't consider the Exporer/Firestone or cruise control issues to be the same type of lapse or quite as damning to management.)

 

Has Ford bought any brands since Jag/Aston/LR/Volvo? Nope. Will they in the future? Not anytime in the next two decades for sure.

 

Has Ford given windfalls to executives and special shareholders and driven up debt uncontrollably recently? Nope. They have instead gone the opposite direction and reduced executive compensation and debt.

 

Hopefully they keep on keeping on.

[92merc]

"Ford has a history of high highs leading to low lows."

 

And yet, Ford didn't take any bail out money, did not declare bankruptcy (GM once, Chryco Twice) and yet Fortune is advising Ford?? WTF?

 

GM is planning on the Volt turning the company around, even though it won't admittedly make any money on the Volt. They haven't increased their quality near as much as Ford, and they are planning on doing the same things over and over expecting different results. But a letter to Ford is needed? WTF?

 

Chryco, well, I won't even go there. They are no where right now, and going downhill. Fiat has no skill in Europe in managing it's brands. So again, a letter to Ford?? WTF?

 

Ford turned a quarterly profit, and Fortune felt the need to slap some sort of story down regarding it. Nothing more...

Edited April 28, 2010 by 92merc

[atvman]

1. People love ground breaking new models.

2. Don't buy or start new brands.

3. The revenues created by high quality are greater than the costs associated with providing it.

4. Be conservative with money in the bank.

[ausrutherford]

1. People love ground breaking new models.

2. Don't buy or start new brands unless they are sound to begin with.

3. The revenues created by high quality are greater than the costs associated with providing it.

4. Be conservative with money in the bank.

 

Added something.

Edited April 28, 2010 by ausrutherford

[NickF1011]

Added something.

 

Even if they are sound, Ford really shouldn't explore any such moves unless it will somehow substantially improve the Ford/Mercury/Lincoln position in the marketplace at the same time.

[jpd80]

Even if they are sound, Ford really shouldn't explore any such moves unless it will somehow substantially improve the Ford/Mercury/Lincoln position in the marketplace at the same time.

 

Agree, rather than adding another brand Ford would be better adding a trim line like "Titanium" or "Econetic" to existing vehicle line up. At any case, don't follow the GM mistake of turning whole brands into mere trim lines of the same generic cars. Lincoln, Mercury and Fords all need to be distinct from each other to attract their respective buyers.

 

Ford is now a much less complicated now that Jaguar/ Land Rover/Aston Martin and Volvo are now no longer part of the picture.

Edited April 28, 2010 by jpd80

[NickF1011]

At any case, don't follow the GM mistake of turning whole brands into mere trim lines of the same generic cars. Lincoln, Mercury and Fords all need to be distinct from each other to attract their respective buyers.

 

Unfortunately, at present time, that sounds a whole lot more like Ford's overall lineup than GM's. Chevrolet-Buick-Cadillac (GMC not so much) at present are far more distictive as individual brands than Ford-Mercury-Lincoln. Ford has a long ways to go in that regard. However, with the Ford "core" models pretty much all brought up to speed and to sustainability, it's only a matter of time before Lincoln-Mercury gets the attention it needs and deserves.

[jpd80]

Unfortunately, at present time, that sounds a whole lot more like Ford's overall lineup than GM's. Chevrolet-Buick-Cadillac (GMC not so much) at present are far more distictive as individual brands than Ford-Mercury-Lincoln. Ford has a long ways to go in that regard. However, with the Ford "core" models pretty much all brought up to speed and to sustainability, it's only a matter of time before Lincoln-Mercury gets the attention it needs and deserves.

 

A necessity of cost cutting but far from badge engineering, I'd like to see Lincoln and Mercury go a bit more extravagant in sheet metal differentiation compared to their Ford donor vehicles, that would be more expensive of course but set those two brands on a course up market....

[RichardJensen]

Lincoln needs to BE different. Mercury just needs to SEEM different.

[RichardJensen]

An open letter to Alex Taylor III:

 

Dear Alex,

 

Bill Ford has forgotten more about Ford Motor Company than you will ever know.

 

The risk of mistakes being repeated under his watch is so small as to be insignificant.

 

Your article serves no purpose.

 

Sincerely,

 

The Real World.

[mettech]

An open letter to Alex Taylor III:

 

Dear Alex,

 

Bill Ford has forgotten more about Ford Motor Company than you will ever know.

 

The risk of mistakes being repeated under his watch is so small as to be insignificant.

 

Your article serves no purpose.

 

Sincerely,

 

The Real World.

 

I thought for sure you would call him a "jackass".

[RichardJensen]

Mr. Alex Taylor III

 

(I know that he wants everyone to know that he's the third of something)

 

is convinced that Marchionne is a miracle worker.

 

I think he really does need to get a few letters from the -real world-.

[RichardJensen]

I thought for sure you would call him a "jackass".

 

Pretty sure I've done it in the past.

 

He and David Kiley are two of the most harebrained reporters on the automotive beat.

 

You could pile Alex Taylors up five or six deep and still not have the professionalism and acumen of Amy Wilson, who--unfortunately--is apparently off the Ford beat. That leaves Bryce Hoffman as about the only reporter covering Ford worth reading. I'm still making up my mind about the FreeP's reporter.

 

I should add--the bureau chief at BusinessWeek is a pretty good writer as well. David Welch.

http://www.businessweek.com/autos/autobeat/

Edited April 28, 2010 by RichardJensen

[ausrutherford]

Even if they are sound, Ford really shouldn't explore any such moves unless it will somehow substantially improve the Ford/Mercury/Lincoln position in the marketplace at the same time.

 

Who says they should buy/create another car brand? :shades:

 

Remember how Honda was able to make a profit in 2008? It wasnt their cars but their motorcycles, lawn equipment, etc. I mean After Ford has Ford, Lincoln, Mercury, and the low cost Chinese brand all fixed up...is there anything else they can do in the car market?

 

Ford used to make Tractors, Buses, and 18-wheelers...why not again?

[Anthony]

 

Has Ford created a new brand since Edsel? Nope. I still feel it's an inevitability that even Mercury will ride off into the sunset.

 

 

Well, there was Merkur. But everyone else forgot that one too.

[Pioneer]

Well, there was Merkur. But everyone else forgot that one too.

 

 

Merkur is the German word for "Mercury".

 

Personally, I don't consider it a separate brand since they were sold at Mercury dealerships. Just an idiotic way of trying to make your name sound more important. Like "Infiniti".

[atvman]

Lincoln needs to BE different. Mercury just needs to SEEM different.

I agree 100%. Mercury products can be 90% identical to Ford products as long as they look different and have a little bit nicer trim. Lincoln products need to be further differentiated somehow.

[akirby]

I agree 100%. Mercury products can be 90% identical to Ford products as long as they look different and have a little bit nicer trim.

 

Of course they could be that way - but for what purpose? The only reason would be to give Lincoln/Mercury dealers volume products to sell. There is no business reason for Mercury to be rebadged Fords otherwise.

 

I think Mercury has to have stand alone products (off shared platforms of course) that are unique. I believe Taurus sales were helped by not having a Sable competitor. And I don't believe Ford lost many (if any) Taurus sales because they didn't have a Sable.

 

If they can't find unique vehicles for Mercury then it needs to go away. It's that simple.

[NickF1011]

Ford used to make Tractors, Buses, and 18-wheelers...why not again?

 

Because they became distractions to the Ford-Lincoln-Mercury business.

[97 F350]

Agree, rather than adding another brand Ford would be better adding a trim line like "Titanium" or "Econetic" to existing vehicle line up.

 

Sound too much like the Ram "brand" that Chrysler is doing. Which completely smacks of desperation.

 

Who says they should buy/create another car brand? :shades:

 

Remember how Honda was able to make a profit in 2008? It wasnt their cars but their motorcycles, lawn equipment, etc. I mean After Ford has Ford, Lincoln, Mercury, and the low cost Chinese brand all fixed up...is there anything else they can do in the car market?

 

Ford used to make Tractors, Buses, and 18-wheelers...why not again?

 

And airplanes (I think) and lawnmowers. A neighbor around the block has an old Ford riding mower. I covet it so much!

[ausrutherford]

Because they became distractions to the Ford-Lincoln-Mercury business.

 

And yet Honda used them to make continued profits.

[fordmantpw]

And yet Honda used them to make continued profits.

 

Just because it works for one doesn't mean it will work for all.

[NickF1011]

And yet Honda used them to make continued profits.

 

Honda was a small motor company before it was an automotive company. It's in their blood. It's part of who they have always been. Ford started as an auto company. It should remain an auto company.