Ford 2000: A global program that failed
Trotman's dream becomes a costly nightmare
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The attendees were dressed casually as they entered the converted mansion in London's tony West End. But Trotman was vexed. He was about to hold the most important meeting of his career, and he had lost his voice.
Trotman believed Ford's future was threatened by its own slow-moving bureaucracy, and he was ready for a shake-up.
Each of Ford's regional operations had an array of models. But those regions could not share products, factory practices or marketing strategies. It was a costly and inefficient way to do business.
Could Ford unify its disparate regional operations? Trotman thought so. He was about to start the company's most ambitious reorganization of the last 50 years.
Trotman's Grafton Street meeting and Ford's subsequent upheaval were detailed in a lengthy article in The Detroit News on Sept. 18, 1994. Three months later, Trotman launched Ford 2000, a plan that was supposed to transform Ford into a global operation with unified manufacturing, marketing and product development.
He had hoped that Ford 2000 would make the company the world's largest and most profitable automaker. Instead, Ford plunged into a series of difficult reorganizations that continue to this day.
Report card
None of the executives at the Grafton Street meeting had an inkling of the future. They believed they had gathered in London for a report card on Ford's performance.
As the meeting progressed, Trotman scribbled questions for Vice Chairman Lou Ross to read out loud. The executives pondered charts that compared Ford with GM Europe and Toyota Motor Corp. Then they graded Ford's performance in each sector.
Ford's factories and assembly plants seemed to be in good shape. But Ford trailed badly in product development. The company could not design vehicles as quickly or cheaply as Toyota.
Then Trotman dropped his bombshell: He wanted to know if Ford could merge its North American and European operations.
Ford's European executives were stunned. Albert Caspers, chairman of Ford Werke AG in Germany, feared that Europe would become a backwater. Would all of Ford's most ambitious young executives migrate to Dearborn, as Trotman himself did? Would Ford of Europe have the stature to deal with European trade unions?
To answer those questions, Trotman asked Ford executive Hank Nickol to head a study team. He gave the team only six weeks - until early December 1993 - to sort things out. "Alex was very impatient," said Dick Ogren, a team member. "He wanted us to do it fast."
Three days later, the team occupied a meeting room on the 11th floor of the Glass House, Ford's world headquarters in Dearborn, Mich. The planners soon found themselves mired in controversy.
Should Ford consolidate all its engineers under a single production chief? How would Ford run Jaguar and Mazda? What role would be left to Ford of Europe?
The European executives were especially nervous. "If Ford were truly global, they knew the company would be led from Dearborn," Nickol told The Detroit News. "It was one of the issues we started with every morning."
Despite the arguments, Nickol made progress.
Hawks and doves
On Dec. 8, 1993, Nickol briefed Ford's top executives. According to The Detroit News, 30 managers gathered in the Glass House's video conference center, while six European managers participated via the video hookup.
Nickol made his recommendations: Ford of Europe would design small cars, while Ford's North American operations would develop all other vehicles. Jaguar would become a marketing division, and Mazda would integrate its product development with Ford's.
Most executives backed the plan, but a dispute arose over timing. Should Ford reorganize quickly, or should the company adopt a slower, step-by-step approach? The executives divided into hawks and doves.
Nickol and most of his team were hawks - they favored a quick reorganization. But the doves warned that a hasty reorganization would cause chaos.
Trotman thought things over for a month, then sided with the hawks. The company would begin its reorganization on Jan. 1, 1995. Then Trotman named Robert Transou, vice president of powertrain operations, to oversee the transition. Transou became group vice president of manufacturing in April 1994.
In January 1994, Transou's planning team took over the seventh floor of the Glass House.
For inspiration, Transou benchmarked Toyota and Nissan. Both automakers used a matrix management system to design vehicles. Transou adopted the concept.
To design vehicles, Transou formed five platform teams of engineers, designers and marketers. Each employee would have two bosses: the platform leader, plus the chief of manufacturing, engineering or marketing.
Transou also decided to develop global engines, transmissions and platforms.
These were big changes, but Transou stirred even more controversy when he recommended the merger of Ford's North American and European operations. It created a global sales operation and a global purchasing unit. Suppliers who wanted to do business with Ford would have to be global, not regional.
'Creative chaos'
On April 14, 1994, Ford's board of directors approved Transou's reorganization plan. Five days later, Trotman gathered 350 top managers in Toronto - the first such meeting in six years.
What they heard was unsettling. Trotman wanted to downsize Ford's bureaucracy, so he planned to "invite" 15 percent of them to retire. He would seek similar cuts from Ford's middle bureaucracy of 2,000 managers.
To achieve such reductions, Ford's top brass expected upheaval. Ed Hagenlocker, then president of Ford Automotive Operations, even declared that Ford would be rejuvenated by "creative chaos."
And chaos is what Ford got.
Ford President Nick Scheele recalls visiting a German engineering center when he was head of Ford of Europe. An escalator was broken, and Scheele wanted to know why it remained unrepaired for 18 months.
The engineer accompanying him said that the requisition order for its repairs had gone back and forth between Germany and Dearborn. No one knew what to do. The technical center's boss, who worked in Dearborn, had never visited the building.
Early retirement
In 1999, Trotman retired a year ahead of schedule. Replacing him was Jacques Nasser, a man who was not known for patience. To stem heavy losses in Europe and South America, Nasser restored decision-making power to Ford's regional organizations.
Then he began to tinker with Ford's product development system. Nasser continued to pay public obeisance to Ford 2000, but it was clear that Nasser had altered the original vision.
Ford still designs global vehicles and powertrains, and it maintains a global purchasing operation. But sales and marketing must remain local, Scheele says.
"What's left today of Ford 2000 is what I thought it should be in the first place," he says. "What we discovered about Ford 2000 was that you can't run a corporation as big and complex as Ford from Dearborn."
You can reach David Sedgwick at dsedgwick@crain.com.
