History waits to write Bill Ford's chapter
Turning Ford Motor around is a formidable assignment for a man who is learning on the job
His predecessor, Jacques Nasser, had angered suppliers, dealers and employees. Wall Street had punished the company's stock.
Bill Ford, 46, is the first Ford family member to serve as CEO in 22 years. He is working hard to fix the company, but he is learning on the job. Not everyone believes he has the right stuff to turn Ford Motor around.
Need for a hit
The numbers are daunting. Ford Motor lost $980 million in 2002 and $5.45 billion in 2001.
Ford Motor's U.S. sales fell 8.6 percent in 2002 compared with 2001. U.S. industry sales fell 1.9 percent last year.
The world economy is sluggish. General Motors is keen to regain U.S. market share and is forcing its competitors to shell out precious incentive dollars better used elsewhere.
Ford Motor needs capital for fresh products, particularly for Ford Division and Lincoln Mercury.
In the 1980s, the Ford Taurus turned the company around. In the 1990s, the Ford Explorer gave the company a huge boost.
But in 2003, Ford Motor's next big thing is still a question mark. The automaker has high hopes for an 800,000-unit car and crossover platform that is planned to debut in 2005.
This is Bill Ford's unenviable position as the company heads into its post-centennial era.
Need for leadership
Bill Ford has fostered consensus management since moving in to pick up the pieces after firing Nasser in October 2001, says Brett Hoselton, automotive analyst with McDonald Investments in Cleveland.
But what the company needs is a strong leader whose message echoes through every layer of its worldwide operations, Hoselton argues. A consensus approach permits individual interpretation and can cause confusion in the ranks, he says.
"The jury is out as to whether or not Bill Ford is the ideal person for what Ford needs to do right now," Hoselton says. "They face a lot of challenges. When you talk to midlevel managers, they don't have a sense that there is a single direction the company is heading.
"I am not certain the message is clear at the top. That is one of the greatest challenges they face at this time. I don't sense a clear message and a clear direction."
But another veteran industry analyst says Bill Ford's performance to date is satisfactory.
''He has not done anything that would make me say he is only in there because of his name," says Michael Flynn, director of the Office for the Study of Automotive Transportation in Ann Arbor, Mich. "He is certainly well within the range of normal CEO performance. They have a doable plan, and he seems to be sticking to it."
Need for product
Bill Ford has pledged to Wall Street that he will deliver a corporate turnaround yielding $7 billion in pretax operating profit in 2005.
But Wall Street is not optimistic about the company. In late May, the stock was trading at $9.57 a share, near its 52-week low of $6.58. A year earlier, the stock was trading around $18.
Ford Motor, Hoselton says, "is not in dire straits but is clearly wounded."
For example, the company is launching a redesigned Ford F-150 pickup this summer, but executives have conceded that the model is costlier to produce than its predecessor.
That means the company has little pricing maneuverability as GM keeps up incentive pressure and Japanese automakers gain strength in segments formerly dominated by the Big 3. The F series represented 22.5 percent of Ford Motor's U.S. sales volume in 2002.
"Ford's product portfolio is particularly weak because it is very old and the cost is out of line," Hoselton says. "They are rolling out product that will actually worsen the situation.
"Ford made the bet that if they added more stuff to the vehicle, people would be willing to pay more," he says. "The fact is people will not pay more. Ford has not been able to recoup those costs so their profitability has gone into the tank."
Flynn maintains that the company's short-term problems are exaggerated.
Instead, he cites longer term concerns, including a pace of decision-making that lags competitors.
"They still tend to lumber along. They move too slowly," Flynn says. "And they are putting so much cost pressure on suppliers that they may wind up with some longer term relationship problems and quality and reliability issues."
Willing to listen
Bill Ford's answer has been to turn to others who have been in the trenches longer than he has.
He called financial whiz Allan Gilmour out of retirement and handed him the job of CFO in a bid to increase respect and credibility on Wall Street.
To battle GM in the showroom, he has turned to veteran sales hands such as Jim O'Connor, group vice president of North America marketing, sales and service; Steve Lyons, Ford Division president; and Darryl Hazel, Lincoln Mercury president.
He has been willing to hear the advice of retired veterans such as Ross Roberts, former general manager of Ford Division, and Robert Rewey, longtime Ford Motor marketing czar.
And he has been willing to cut costs, earning the nickname "Ford the Sword."
Few fault Bill Ford's intentions.
An amiable man who seems determined to move through life without showing off his vast family wealth, Bill Ford took office as CEO vowing to rebuild relationships frayed by Nasser. Bill Ford had been chairman since Jan. 1, 1999.
Unimpressed by wealth
"I was fortunate to grow up around wealth and power and realized how illusory it mostly is," he says. "That doesn't really hold any appeal for me. What does is to get this company back on track and really get us back to greatness."
Nasser vowed to tear up the traditional industrial-heartland underpinnings of Ford Motor. He didn't want to run an auto company. He wanted to run an Internet-paced global powerhouse.
Under Nasser, vehicle-making - the process of designing, engineering and building a car or truck - lost its stature as the premier focus of the organization. The talent pool churned as fresh voices and faces were imported from outside the auto industry.
The organization wobbled under the weight of Nasser's changes. At the time of Nasser's ouster, Bill Ford took over a company saddled with vehicle-quality problems, a costly product development system and widespread unrest in employee, supplier and dealer ranks.
Now it's up to Bill Ford to fix these problems. He says he never envisioned playing such a central role at Ford Motor. But when the job was thrust at him, he shouldered it.
He takes pains to say that he did so for the generations of Ford family members following him. But as he wrestles with turning around the company, it is too early to predict what legacy he will bequeath to his family as the company begins its second 100 years.