Ford's Job 1: Mending fences

Company makes overtures to disgruntled employees, wary dealers — and even Bridgestone/Firestone

DETROIT — Ford Motor Co.'s new management team led by William Clay Ford Jr. is moving quickly to make good on promises to rebuild relations with dealers, employees and other key groups.

The company is making overtures to restore relations with divorced partner Bridgestone/

Firestone Inc., and Ford Motor lawyers are discussing settlements with disgruntled employees who have sued over the company's performance reviews.

Dealers expect the company to leave businesses that compete with franchised retailers, including JoeAuto.com, an auto repair business in which Ford Motor is an investor. Suppliers anticipate a more collaborative partnership.

The efforts show that Bill Ford, 44, the new CEO, plans extensive fence-mending to end an era of acrimony and tumult at the company founded by his great-grandfather.

But fixing the company is going to take more than a honeymoon. The economy is weakening. General Motors is gaining strength. The new CEO — himself a work in progress — is trying to rebuild critical partnerships even as Ford Motor eliminates production capacity, jobs and assets.

"Our problems are no less difficult just because we have made this management change," Bill Ford said in a memo to dealers last week. "This business is about one thing and one thing only: great products."

Bill Ford, a self-described lifelong environmentalist, is the first member of the Ford family to head the company in 22 years. He replaces Jacques Nasser, 53, whose tenure as CEO ends after a stormy 34 months.

Automotivenews.com was first to report that Nasser would leave and Bill Ford would become CEO.

New triumvirate

The new CEO will rely on two key executives to restore the company's fortunes: Nick Scheele, 57, and Carl Reichardt, 70.

Scheele is the new COO and president of Ford automotive operations. Reichardt, a Ford board member since 1986, is the retired chairman and CEO of Wells Fargo & Co. in San Francisco.

While refusing to criticize Nasser directly, Bill Ford said the company had wandered "too far away" from its core business in recent years. To remedy that, he said, one of his first jobs will be repairing relations with key groups.

"You can't rebuild the business if you don't have strong partnerships," Ford said. "Our dealers, the UAW, white-collar employees, suppliers, Wall Street, government — a lot of those are either broken or not helping."

Nasser's critics say the company lost sight of its core car and truck business during the former CEO's relentless drive to transform Ford Motor into a consumer product company and an e-commerce powerhouse.

Whicle quality faltered, dealers were alienated, market share fell and profits tumbled. In October, Ford Motor announced its second consecutive quarter of losses, halved its dividend and saw its credit rating sink two notches.

Last week, Ford Motor declined comment on the terms of Nasser's severance, including whether the former CEO had signed a noncompete clause. After Nasser resigned, Jason Vines, whom Nasser had hired as vice president of communications, also left. The company's board will meet Thursday, and more resignations are possible.

Mending fences

In his early days at the helm, Bill Ford is reaching out to several core groups to deliver on his back-to-basics promise.

  • DEALERS

    Ford Division dealers want the new CEO to improve vehicle quality, get new products into showrooms as quickly as possible and restore a relationship of trust.

    "Provide us with high-quality, high-durability, appealing trucks and cars and there won't be a relationship problem," said Ralph Seekins, incoming chairman of the Ford Division National Dealer Council and owner of Seekins Ford-Lincoln-Mercury in Fairbanks, Alaska.

    In recent years, the company has enraged dealers by experimenting with a range of retailing and e-commerce ventures, including factory-owned stores. At the same time, dealers shouldered the task of repairing a lengthy string of vehicle defects.

    Achieving Bill Ford's back-to-basics strategy will take time, Seekins said. "In the meantime, we've got to establish trust and not lose it between now and then."

    Dealers also have faulted Ford Motor for imposing Blue Oval dealership certification, arguing that retailers are rated on customer satisfaction but cannot control faulty quality from the factory.

    Ford dealers will ask the factory to discuss returning to retailers 1 percent of each vehicle's invoice price, offsetting the 1 percent increase imposed as part of the Blue Oval program, said Jerry Reynolds, outgoing chairman of the dealer council and owner of Prestige Ford in Garland, Texas.

  • SUPPLIERS

    Ford Motor's relationship with the supplier community falls between that of No. 1 General Motors and DaimlerChrysler, said Neil De Koker, managing director of the Original Equipment Suppliers Association in Troy, Mich.

    "The demands for price reductions have been quite severe at Ford and quite stringent," De Koker said. Now he anticipates price reductions will be accomplished with greater partnership.

    Last week, Scheele said the company would not follow DaimlerChrysler's lead in demanding an across-the-board price cut from suppliers. Ford Motor will work with suppliers case-by-case to find ways to improve quality, reduce price and speed delivery, he said.

    In October, Ford Motor said that beginning Feb. 1, the company will impose higher quality standards on its Tier 1 suppliers to help overcome vehicle defects. The new standards require every supplier to recertify each of its manufacturing facilities to meet tougher specifications. The ratings must be maintained monthly.

  • EMPLOYEES

    Some white-collar employees sued Ford Motor this year after the company imposed an A-B-C grading scale for job performance.

    The policy, which was intended to create a company of high-achievers, mandated that 10 percent of employees in a department receive the lowest grade, C. Employees could be terminated after two years of C ratings.

    The performance reviews sapped morale, said Bill Ault, a computer specialist at Ford Motor. He is suing Ford Motor over the system, which the company dropped in July.

    Ault is pleased that Bill Ford is eager to improve morale. Last week, Bill Ford received a standing ovation from employees after a short speech at company headquarters announcing the management changes.

    "Still, the morale problems were two years in the making. People who bought into Nasser's ideas will have to be re-educated," Ault said. Now Ford Motor is discussing possible settlement with litigants in the grading-policy suits.

  • UAW

    Union leaders respect former manufacturing boss Jim Padilla, 55, who succeeds Scheele as group vice president of Ford North America.

    Ford Motor likely will trim production capacity as it retrenches. But the automaker is expected to eliminate overtime, reduce shifts or try new work patterns rather than ordering plant shutdowns.

    Turnaround plan

    The day-to-day task of turning around Ford's auto operations falls to Scheele and Padilla. The two executives resuscitated Jaguar in the 1990s.

    Scheele defined his new job concisely: "We are a car and truck company," he said. "A car and truck company designs, builds and sells great products. So 'back to basics' means you emphasize product and quality."

    Ford Motor is halfway through the task of creating a turnaround plan for its North American operations, Scheele said. The company has completed a product cycle plan, he said.

    Reichardt described his assignment as "open-ended." "I intend to stay until the automobile side of the business is straightened out," he said.

    Bill Ford repeatedly describes those working for and with Ford Motor as "the extended Ford family." Last week, he made it clear he expects that family to pull together and work harmoniously.

    Staff members Gale Kachadourian, David Sedgwick and Charles Child contributed to this report

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