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Farley to address high warranty costs.


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So after reading all these comments, is it safe to say that Ford has no audit procedure on vendor quality??  If a vendor supplied component does not fail that means it's good?    If there are a lot of associated warranty issues associated with that component, oops-time to start asking questions.?

 

And when a supplier is selected, is there not a specific quality spec that must be met??  If Ford was still building that component in house, would the same QC routine practiced by the company be imposed on a vendor supplied component?

 

What drives the shift to vendor supplied components?  Less costly  than in house I would imagine.  And the first question has to be, .."how can they do it for less than we can?".  Beyond the usual..."Less overhead, lower labor rates, economy of scale-they build similar for GM blah blah.

 

Probably they can do it for less because its a "cheaper" part.  Not always but.........no such thing as a free lunch.

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2 hours ago, Bob Rosadini said:

So after reading all these comments, is it safe to say that Ford has no audit procedure on vendor quality??  If a vendor supplied component does not fail that means it's good?    If there are a lot of associated warranty issues associated with that component, oops-time to start asking questions.?

 

And when a supplier is selected, is there not a specific quality spec that must be met??  If Ford was still building that component in house, would the same QC routine practiced by the company be imposed on a vendor supplied component?

 

What drives the shift to vendor supplied components?  Less costly  than in house I would imagine.  And the first question has to be, .."how can they do it for less than we can?".  Beyond the usual..."Less overhead, lower labor rates, economy of scale-they build similar for GM blah blah.

 

Probably they can do it for less because its a "cheaper" part.  Not always but.........no such thing as a free lunch.

This is so funny, Ford swings between quality and crap depending on who’s in charge and what their priorities are. Hackett and his team had to hit the ground running with a lot of projects drifting under an uncertain Fields, of course things were going to be less than perfect but Ford got smacked really hard by assuming things would go right with minimal attention to quality, boy were they wrong.

 

 

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17 hours ago, silvrsvt said:

 

Or you reach into your pocket and hit the keyfob?

 

In the grand scheme of things, its not a huge deal. 

What’s a key fob?  Phone as a key and proximity sensors is the way of the future.  Customers shouldn’t have to fumble around when their hands are full to unlock ALL doors.  Wonder if Ford will remove the hands free lift gate on SUV’s next?  Content matters, and Ford has been de-contenting for years to save costs.  This certainly hasn’t decreased warranty expense and it’s not the primary purpose of de-contenting.  

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8 hours ago, mustang84isu said:

If Ford is cutting out the ability to open the rear doors by touching the rear door handle sensor they are making a mistake.  We have a baby and most of the time we are opening the rear doors on our Edge first to put her in.  When you're carrying a child in a carseat and a diaper bag, not needing to fumble around with the keyfob or go for the front door handle first to get the rear doors open is an overlooked convenience that I am sure many parents appreciate and will miss when it is gone.


I have 3. Never had an issue with it. Total first world problem. 

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7 hours ago, Bob Rosadini said:

So after reading all these comments, is it safe to say that Ford has no audit procedure on vendor quality?? 


They do, and it is an effective process (I've been part of it before) despite what has been said here. Some vendors are better and quicker at responding than others. 

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10 hours ago, jpd80 said:

This is so funny, Ford swings between quality and crap depending on who’s in charge and what their priorities are. Hackett and his team had to hit the ground running with a lot of projects drifting under an uncertain Fields, of course things were going to be less than perfect but Ford got smacked really hard by assuming things would go right with minimal attention to quality, boy were they wrong.

 

The Hackett apologists on this thread (not you, jpd) are seemingly wanting to pretend that this just was discovered. That's not true. As you've stated for some time, it was a deliberate move on Ford's part (as Akirby has stated). It has been going on for pretty much all of Hackett's tenure. And it's damning of his leadership and decision making.

 

For example:

Quote

To attack internal quality problems, Ford has reconstituted teams that track the quality of inbound parts at its plants. These teams were previously disbanded as cost-cutting moves.

Are you effing kidding me? They (Hackett) disbanded those teams in a cost cutting move?

 

But wait, there's more:

Quote

Ford's quality gap compared with GM has worsened during the past three years. Warranty claims have ballooned almost $2 billion since 2017, Credit Suisse analyst Daniel Levy said.

In 2012 and 2013, Ford's warranty claims as a share of sales were below 2 percent every quarter, according to industry publication Warranty Week. But at the end of 2018, warranty costs topped 3 percent and hit 4.3 percent in the second quarter of this year as overall sales slid due to the coronavirus shutdown.

For the first nine months of 2020, Ford's warranty costs totaled $3.87 billion, while GM's were $1.68 billion, according to regulatory filings.

 

So, for those who seem to want to revise history regarding Allan Mulally, Ford's quality under his leadership was at minimum competitive, and under Hackett's regime is a joke compared to GM. I disagree with the assertion that Hackett "gambled" that costs would not rise. I would argue that he was either a) too inexperienced to know any better regarding the consequence of his actions or b) didn't care because he wanted to show short term results.

 

Whatever the reason for his decision, the results are unambiguous and a failure. And tellingly for Ford (and perhaps damning in its own right), the motivation to "fix" this is not rooted in being a leader or providing transport for the huddled masses, it's simply to show Wall Street better financial performance:

Quote

"We're targeting a fully competitive level of warranty spend on coverages and that's got lots of zeroes next to it," Farley said on an Oct. 28 earnings conference call, citing a need to be "punitive" with suppliers who ship faulty parts.

 

It's understood that financial performance is part and parcel of running a company, but isn't it a shame that Hackett's so called "gamble" has cost Ford so much money? A gamble should be measured as perhaps $100 million, not $2+ billion (in the first 9 months of 2020) and counting. And Ford did not bear the brunt of this failure on the part of Hackett alone: its customers also got fleeced and taken along for the ride. And that is the biggest failure of all.

 

https://www.autonews.com/automakers-suppliers/ford-tackles-warranty-costs-bid-boost-profit?utm_source=daily&utm_medium=email&utm_campaign=20201124&utm_content=hero-headline

Edited by Harley Lover
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I don't have hard numbers to back this up, but my perception is that Ford's quality peaked in the 2008-early 2011 timeframe, and began to slip with the introduction of the "one Ford" vehicles (Focus transmission and MyFord Touch. Granted, as a whole, vehicles were less complex in the late 2000s which might also be a contributing factor to poorer quality.

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1 hour ago, Alex D. said:

I don't have hard numbers to back this up, but my perception is that Ford's quality peaked in the 2008-early 2011 timeframe, and began to slip with the introduction of the "one Ford" vehicles (Focus transmission and MyFord Touch. Granted, as a whole, vehicles were less complex in the late 2000s which might also be a contributing factor to poorer quality.

 

Hard to say, but One Ford was not the cause of the issues. From the linked article, it's plain to see that costs began to increase in 2017, well after One Ford:

warranty.jpg

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3 hours ago, 02MustangGT said:

What’s a key fob?  Phone as a key and proximity sensors is the way of the future.  Customers shouldn’t have to fumble around when their hands are full to unlock ALL doors.  Wonder if Ford will remove the hands free lift gate on SUV’s next?  Content matters, and Ford has been de-contenting for years to save costs.  This certainly hasn’t decreased warranty expense and it’s not the primary purpose of de-contenting.  


Didn’t we learn that the foot operated lift gate was removed from the 2021 Edge?  I seem to remember that from the order guide that was posted but I could be wrong.  

 

2 hours ago, Harley Lover said:

 

The Hackett apologists on this thread (not you, jpd) are seemingly wanting to pretend that this just was discovered. That's not true. As you've stated for some time, it was a deliberate move on Ford's part (as Akirby has stated). It has been going on for pretty much all of Hackett's tenure. And it's damning of his leadership and decision making.


Excellent post!  You nailed everything. 

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33 minutes ago, Harley Lover said:

 

Hard to say, but One Ford was not the cause of the issues. From the linked article, it's plain to see that costs began to increase in 2017, well after One Ford:

warranty.jpg


I bet if there was a chart that went back even further (30 years or so) you would see a pattern of every 10 years or so of rising and falling warranty costs and if you were to throw quality ratings in there the curve would be the exact opposite for the same length of time. It's something I've noticed and had people point out to me. It's bizarre. 

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1 hour ago, Alex D. said:

I don't have hard numbers to back this up, but my perception is that Ford's quality peaked in the 2008-early 2011 timeframe

 

Yes sir Alex D. 2010 was the peak. That year, the Ford brand came very close to a "better than average" rating in CR's annual automotive reliability survey - almost as high as Lexus that year. Lincoln was solidly "average". Since then, neither Ford nor Lincoln have come close to "better than average" overall and most recently in the 2020 survey both brands were "much worse than average".

 

 

 

 

 

cr_auto_reliability_2010.jpg

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1 hour ago, rperez817 said:

 

Yes sir Alex D. 2010 was the peak. That year, the Ford brand came very close to a "better than average" rating in CR's annual automotive reliability survey - almost as high as Lexus that year. Lincoln was solidly "average". Since then, neither Ford nor Lincoln have come close to "better than average" overall and most recently in the 2020 survey both brands were "much worse than average".

 

JHC, that chart doesn't prove your point whatsoever. The chart I posted does prove my point. That chart demonstrates that, by an actual measurable metric (warranty costs as a percentage of sales) that Ford's costs were actually higher in late 2010, then essentially flat in the period from 2011 - 2015, after which the inexorable climb began. The CR chart, which is of questionable statistical value at best, doesn't prove your point.

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56 minutes ago, Harley Lover said:

 

JHC, that chart doesn't prove your point whatsoever. The chart I posted does prove my point. That chart demonstrates that, by an actual measurable metric (warranty costs as a percentage of sales) that Ford's costs were actually higher in late 2010, then essentially flat in the period from 2011 - 2015, after which the inexorable climb began. The CR chart, which is of questionable statistical value at best, doesn't prove your point.

 

Does "accruals" mean costs?  Also with the data showing a spike in late 2010 and this conflicting with RP's CR data would some of this be explained by model roll over? RP's is showing 2010 models-late 2010 data will reflect 2011 models also.....but sorting thru all of this you could also say that some of those warranty costs could of been from a 2008 Explorer since standard warranty was 3/36?  Data overload for me-i'm not an engineer or pretend to be one.....just glad to see them making changes and hopeful that will lead to results. There is no way Ford/Lincoln should not be on par with at least the Koreans! 

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1 hour ago, Harley Lover said:

The CR chart, which is of questionable statistical value at best, doesn't prove your point.

 

The data and analysis by CR in its annual automotive reliability surveys are statistically significant, meet the standards of a valid and reliable survey, and are presented in a way meaningful to car buyers.

 

Data about warranty costs incurred by an automaker are important to managers and executives at that automaker, but not to consumers. 

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2 minutes ago, rperez817 said:

 

The data and analysis by CR in its annual automotive reliability surveys are statistically significant and meaningful to car buyers.

 

Data about warranty costs incurred by an automaker are important to managers and executives at that automaker, but not to consumers. 


One is relevant to this thread, one isn't. That's the difference. 

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1 minute ago, fuzzymoomoo said:


One is relevant to this thread, one isn't. That's the difference. 

 

Fair enough fuzzymoomoo sir. The CR reliability data was presented simply to affirm that Alex D.'s perception of Ford's "peak quality" period was correct (it was in fact in the 2008 - early 2011 timeframe).

 

Y'all can return to the discussion about warranty costs now. 

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I've been at my job a long time. From where I stand, quality has been steadily dropping since 2012/2013. It is probably as bad as I have ever seen it in 27 years.  

Let's be honest here, when quality falls, they take dollars out of the service department's pockets. Labor time cuts, parts handling cuts, TSB's that only exist to cut labor times to the bone. More and more hoops for the technician (RVC's, SSSC involvement, etc) that do not pay more for the same job. Flat out claim denial for the stupidest reasons. That is going to drive even more experienced people out, making service for an already bastardized vehicle worse for the consumer. 

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And every time Ford finds itself in this position, it’s because they tried to save money, which as it turns out, costs it more than if it had embraced quality in the first place.

 

A lot of corporates are run this way, reactive only after losing billions because they just can’t “see losses” until after they have happened .

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I was just watching the TFL video review of the 2021 F-150 Powerboost. All that technology and so much that could go wrong or just not be understood by the user. I'm surprised anyone gets a decent reliability rating. The average driver probably uses less than half the features these vehicles have. The complexity is overwhelming. Fricking 30 way power seats with multi functional tailgate and enough onboarding generator power to power a camp site. The features make you dizzy.

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17 minutes ago, FordBuyer said:

I was just watching the TFL video review of the 2021 F-150 Powerboost. All that technology and so much that could go wrong or just not be understood by the user. I'm surprised anyone gets a decent reliability rating. The average driver probably uses less than half the features these vehicles have. The complexity is overwhelming. Fricking 30 way power seats with multi functional tailgate and enough onboarding generator power to power a camp site. The features make you dizzy.

But you know what, it’s normally not those areas that give problems, it’s all the little annoying areas where errors are not expected that causes real heartache and it’s mostly because someone skimped on quality or tried to save $$.

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18 minutes ago, jpd80 said:

And every time Ford finds itself in this position, it’s because they tried to save money, which as it turns out, costs it more than if it had embraced quality in the first place.

 

A lot of corporates are run this way, reactive only after losing billions because they just can’t “see losses” until after they have happened .


No different than consumers.  When money is tight maintenance is the first thing to go.  It’s an immediate cost reduction with the potential for higher costs in the future.  It takes a very disciplined management team to hold the line and invest in quality up front.  I think Farley will do that.

 

Think about how many new drivetrains, platforms and technology features Ford has introduced the last 10 years,  it’s mind boggling. Hopefully they’re done with new things and can focus on improvements and refinements,

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3 hours ago, akirby said:


No different than consumers.  When money is tight maintenance is the first thing to go.  It’s an immediate cost reduction with the potential for higher costs in the future.  It takes a very disciplined management team to hold the line and invest in quality up front.  I think Farley will do that.

 

Think about how many new drivetrains, platforms and technology features Ford has introduced the last 10 years,  it’s mind boggling. Hopefully they’re done with new things and can focus on improvements and refinements,

Yes, the cruel part is that most focus on the mistakes instead of celebrating all the things that worked well.

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2 hours ago, jpd80 said:

Yes, the cruel part is that most focus on the mistakes instead of celebrating all the things that worked well.

I remember the last time I visited the DTP back around 2007 or so, and one of the videos along the line talked about the increasing number of wiring harnesses used in the door. They were up to about 3 at the time. God knows how many more wiring harnesses are used now, and just how many more miles of wire in general and sensors everywhere. Show me an auto manufacturer with scores of new vehicle launches in one year with lots of new tech, and I will show you a company with lower reliability scores. But also a company with higher sales. Once Ford gets decent reliability out of Explorer/Aviator, they will make good profit margins and continue to sell well. Both are good lookers with lots of tech and multifunctional.

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