As he nears one year as CEO of Ford Motor Co., Jac Nasser has made his vision clear. He wants employees to think like consumers, and adapt to the fast pace of an Internet-wired world.
Taking his own advice, Nasser has hired executives from outside the industry, decentralized automotive operations, and formed e-commerce alliances.
Nasser talked with Executive Editor Edward Lapham on Nov. 2. Here is an edited transcript of their conversation.
You have had a big turnover in executives this year. Will there be more?
Last year was not a typical year for us because the CEO retired. Alex Trotman decided to go a little earlier than originally planned. That got many people thinking, 'Do I want to sign on for another five years, or make way for the next generation of leadership?'
Is another wave coming?
You are getting into the tire business. You have bought Volvo and Kwik-Fit. You've made an alliance with CarPoint. What is next?
The automotive industry for many years - and even now to some degree - was looked at by many outside the industry as an industry that is smokestack, slow, entitlement-based, hidebound by history. You couldn't be further from the truth. We can't afford to think like that. This is not an industry for the faint of heart. This is not an industry for people who want wonderful stability. This is going to be a fast-moving, hard-driving, high-energy, technology- and consumer-driven industry. Anyone who wants to put a nice little fence around it and say, 'Look, would you mind not changing anything for one or two years? We'd like to relax.' That is the company that is going to get trodden right into the ground. And it is not going to be Ford Motor Co.
What is Bill Ford Jr.'s role in the day-to-day function of the company? Is he in the office every day?
Yes, he comes in every day. If this were any other company but Ford Motor Co., you would say it doesn't feel right. But it is the Ford Motor Co. and the family involvement is one of our strengths, and Bill is one of our strengths. The chairman of the board and a chief executive officer having separate functions is maybe unusual in the automotive business in the United States. But it is standard practice in most parts of the world. You should have an executive team that runs the company. That is me and my team. The board looks after shareholder interests, governance issues, traditional board authority and approval items, and is an evaluator of the overall executive team.
All dealers fear that manufacturers such as Ford Motor Co. want to sell vehicles directly to the consumer via the Internet. Do you want to do that? Is Ford going to do that?
The Internet is here. No amount of hand-wringing by us or the dealers is going to change that. Dealers have an incredible opportunity to now connect with their customers on an Internet basis. Is that going to be all customers? No. Is it going to be many customers? I think it is going to be a high percentage going forward. The good dealers, and that is the majority of dealers, will become Internet literate, will use the Internet to connect to their customer base, and use the Internet to understand their markets and trends a lot better. Our intention is to use the Ford dealer body as the ultimate presenter and deliverer of products to consumers.
If what you are asking is, 'Will the role of the manufacturer and the dealer not change?' It will change.
What I am asking is, can you see the day Ford Motor Co. will sell vehicles directly to consumers over the Internet?
With our dealers, yes. I don't see vehicles being shipped Federal Express direct to customers.
What about the Ford Retail Network or the Auto Collection? Is that under control? Are the dealers still upset?
Whenever you get any manufacturer involvement at the distribution end, you will have anxiety in the dealer body. Most dealers now recognize what we are trying to do. They also recognize that this was an experiment. We said things would change. Bob Rewey (group vice president of consumer services and North America) and his team have been pretty nimble. When it didn't work, they changed it. When it seemed like it was working, they changed it again to improve it.
What is the market outlook for the industry next year?
This year we have had a surprisingly better year than anyone expected. It will be a 17 million-plus industry this year. We see a little bit of a cooling down next year in the U.S. market and probably in Europe. There will probably be an uptick in Asia and South America.
Overall, I'd say we will be down slightly. It will still be a fantastic year. It won't be a record because this year will be. But it has the potential of being the second-best year. The fundamentals are good. You've got high consumer confidence, low unemployment, low inflation, stability of the economic cycle, tremendous product innovation and product prices that have remained flat or declined over a three- or four-year period.
What can Ford Motor Co. do to make money on more than just trucks?
I don't agree with your question. It is not bad when you are making money on over 50 percent of the industry. There are big pieces in that truck market that are very different and appeal to a broad range of people. Also, in the car area, we actually make money. There are car products that are extremely profitable. I wouldn't paint all of the car business with the same brush. In the small-car area, the financials aren't good. One of the reasons is that we are not building to true consumer demand because of Corporate Average Fuel Economy requirements.
Will you be able to use the Jaguar template on Volvo?
Volvo is in very good shape from a brand position and in quality, productivity and future-product strategy. They are helping us in many ways, just like we are helping them. One of the secrets of Jaguar is that a lot of people think Ford saved Jaguar. That is probably true. But I will also say that Jaguar helped Ford in a lot of areas. The brand focus that Jaguar has, that is inherent in their bloodstream, helped Ford shape its brand thinking over the past few years. The business unit concept that Jaguar uses, which is a global business unit, has helped us particularly in the last (organizational) changes we made. It helped us think through how you run a global business around consumers, brand and technology.
With Volvo part of the family, why does Ford need Mercury?
I don't think Volvo and Mercury are related in any way. The product nameplates are the strength of Mercury: The Mercury Grand Marquis, the Mountaineer, the Cougar. There is tremendous loyalty and recognition among the nameplates, probably more than is associated with the Mercury brand itself. We are going to be very careful to nurture those nameplates. Not only are they high-loyalty, high-brand-value nameplates, but they are also very good business for us.
What can you do to raise the price of Ford stock?
We have to continue to show good earnings. We have to get the business structure improved. We also have to show that this is an industry that is capable of transformation and growth, that can deal with cyclical market conditions.
Is there a distinct Ford business model developing that people will look at in a few years the way they looked at the GE business model?
Business models in the 1980s had a life cycle of two or three years. We are now on online business models. You can't say, 'Here is a business model, and I am going to run on this business model for the next five years.' It is going to be more driven by the softer side of the business, by a team that has leadership and edge and that understands the global trends around the world and is able to adapt those into the business model.