In an interview to mark the 100th anniversary of Ford Motor Co., CEO Bill Ford talked about the company, the future of the industry and the importance of Ford family involvement in company affairs.
Like many of us, Bill Ford keeps knickknacks made by his children on his desk, a massive walnut piece that belonged to his grandfather, Edsel Ford. They're not out of place because generations of the Ford family blend easily in the corner office on the top floor of Ford Motor Co. world headquarters in Dearborn, Mich.
Without the family, Bill Ford said, there would be no centennial celebration today. Without the family, the company might not be independent.
The family controls 40 percent of the voting stock, which he said has kept the company out of the hands of corporate raiders over the years - and lately, when the stock price hit bottom at $6.58 a share on March 11, 2003.
"If the family hadn't had its holdings, I think Ford probably would have been acquired,'' he said. "Our market capitalization at one point was down to $10 billion, and our cash, which was at $25 billion at the time, would have made us a very attractive takeover candidate.''
But it's more than that.
Guardian of the legacy
It was the family that supported him when he ousted Jacques Nasser as CEO in October 2001, just as it was the family that supported Bill's uncle, Henry Ford II, when he took control of the company in September 1945.
As the first family member to run Ford Motor in more than two decades, 46-year-old Bill Ford has a big job as guardian of the family's wealth and its legacy. Both Bill Ford and Henry Ford II took over during crises, at times when the company had lost its way.
It is less than two years since Bill Ford took over as CEO and only a year and a half into a revitalization plan that is expected to take at least until mid-decade to accomplish.
The revitalization plan, announced in January 2002, has three major components:
1. Developing new products
2. Cutting costs
3. Making the company smaller by closing plants and reducing North American manufacturing capacity from 5.7 million units to 4.8 million.
In the weeks leading up to the centennial, many critics still questioned Bill Ford's ability to lead the company back to health. But he takes criticism in stride, saying, "Wait and see'' with the same matter-of-fact aplomb that prompted Henry Ford II to express his approach to things as "Never complain, never explain.''
This fourth-generation Ford is different from his predecessors. He keeps a guitar in his office because he sometimes gets the urge to strum. There are pictures of him using karate to smash masonry. He also has a tank of tropical fish and other tributes to his youthful passions. And, unlike most other CEOs, he'll even get up to make you a cup of espresso.
But along the way, Bill Ford has aged. Etched on his face are deeper lines that come from being responsible for revitalizing the family business.
Bring on the fifth
Looking ahead to the family's future, Bill Ford said that he would welcome fifth-generation family members who want to be involved in the company. So far only Elena Ford, granddaughter of Henry Ford II, has taken a job with the company.
"A lot of them are still coming through school," Ford said. "Should they want to do that, it would be great. But this is a tough business, and you have to throw yourself into this with your heart and soul. And we are not going to carry anybody.
"So if they want to come here, they better be ready to roll up their sleeves and get to work, do the entry-level jobs, do the tough jobs, work more hours than they probably thought they would ever work, and earn their stripes. And if they are willing do that, yeah, there is place for them here.''
Elena, who was Mercury brand manager before getting a senior management position in international operations, has let it be known that she would like a seat on the board. But that's not likely to happen anytime soon, Bill Ford said, sounding much like his Uncle Henry when he declared in 1979 that there were no crown princes at Ford Motor Co.
There still aren't any crown princes or princesses at the company, Bill Ford said. "There can't be. We're in a tough global fight, and we need the best people we can possibly get and in all positions, and I don't see that changing in the foreseeable future.''
So what does it take?
"It is most important that a family member have judgment and perspective,'' he said. "If they have experience, that's great, too experience in the industry. But I really do think judgment and perspective are the most important qualities.
"I like what I see so far in the fifth generation - and not just in Elena, who I think is terrific, but a lot of the fifth generation that I am starting to get to know.''
Keeping the clan informed
Even family members who are not directly involved in company business get updates to keep them informed.
"We have very frequent family meetings,'' Bill Ford said. "Just to make sure that we are all on the same page, the family knows what is going on in the business, and that the family has a chance to be informed and feel like they are part of the company.''
The family meetings have become a tradition that has evolved into a social event as well as a business meeting, he said.
Although many think of it as a family business, Ford Motor is a publicly traded company, which restricts some of the things that can be discussed at the family meetings.
"I have to be very careful,'' Bill Ford said, "and I was even before Sarbanes-Oxley."
The Sarbanes-Oxley Act, which became law in 2002, was designed to increase public disclosure of corporate information and strengthen penalties for securities violations.
"We only give them publicly disclosable stuff,'' he said. That's enough because not all of the family members have read the 10-K or the other public filings, let alone the analysts' reports.
"What we do at our family meeting is just pull all that together," he said.
Critics say that part of the company's problem beyond the current revitalization program is that Ford Motor has no long-term vision for growth. That's because Bill Ford doesn't like to talk about it.
But Bill Ford has a reason for not talking about his long-term vision for the company. "I don't want this organization to lose focus for one second on what we have to do today,'' he said.
"I do have a longer-term vision, and I do have plans for where we need to head. But I know this organization, and I know this industry, and as soon as one starts to lay out grand visions and long-term things, people start to ease off a bit.''
Bill Ford does have a clear idea about what Ford Motor Co. is and should be. That means sticking with the core business. And, when asked, Bill Ford will talk about the future.
He has no doubt that the company started 100 years ago today by his great-grandfather will still be in the personal transportation business 100 years from now. "It doesn't matter if it isn't cars and trucks,'' he said. "We are in the personal transportation business - and in 100 years if that is a spaceship, we will be making spaceships.''
He really doesn't think the company will be making spaceships, though.
"We are a car and truck company and a company that finances them,'' he said. "When we do that, we do it very well. When we get distracted, we don't deliver.''
Although other companies have had success in diversification, Ford has not, going all the way back to Philco. "Whether it was Philco or Ford Aerospace or First Nationwide Savings and Loan they all conceptually made sense,'' he said. "But in execution they didn't work.''
Bill Ford said that making Ford Motor a leader in environmental pursuits is part of his vision.
"The next big event for this industry is going to be the creation of a hydrogen economy," he said. "The transition from where we are today to a hydrogen economy is going to be a huge national and international issue that is going to require coordination with governments as well as fuel providers and ourselves, in a scale that we have never seen before.''
He acknowledged that obtaining a hydrogen supply that is not derived from petroleum is a challenge, as are the issues of storing hydrogen aboard the vehicle and at filling stations.
"There are a lot of issues to solve, but I think that is where this world is headed," he said.
Ford's primary role is to develop the vehicle technology that assures it ultimately will be a customer benefit, but the company also could have a coordinating role, he said.
"We may be the convening entity that pulls together the government and fuel providers and says, 'Look, we've got to work on this together,' '' he said. "We cannot work on the technology in isolation, and if we do that, it's crazy. In terms of relationship and policy making, we've got to have a big outreach effort.''
Hybrids and hydrogen
When asked what kind of vehicles we'll be driving in 25 years, Bill Ford expects that petroleum will still be the primary fuel for automobiles but that the nation will be well on the road to the hydrogen economy.
In 25 years, as many as 75 percent of light vehicles produced could be hybrids, with the rest powered by hydrogen, he said.
As far as the hybrid engine technology that will be used, Bill Ford expects Europe to use diesel-electric hybrids. And if the industry can drive acceptance of diesels in North America, the hybrid diesel could be applicable worldwide.
"I don't see the death of the internal combustion engine in 25 years," he said. "I do see the hybridization of the internal combustion engine, and you could be having hydrogen internal combustion engines.''
He also expects vehicles to have real-time information about traffic congestion and parking availability. "You will have much more real time to deal with traffic flows and urban parking, which are big issues today, particularly in Europe," he said. "They are becoming more and more so in the United States as well, but we feel it most acutely in Europe and in parts of Asia.
"You will have more urban commuter vehicles, small commuter vehicles, again particularly in Europe, driven by congestion and fuel.''
Bigger in America
Will Americans still love SUVs?
"A lot of that is a function of fuel availability and price, and, of course, we have different road sizes than they do in Europe,'' Bill Ford said.
He expects Americans to continue to drive larger vehicles than the rest of the world.
"Pickups will still be a desirable thing,'' he said. "One of the things we have seen already is a dramatic - and particularly when you look at the Ford Five Hundred and Futura - a dramatic increase in the interior volume without a corresponding increase in vehicle size. At some point, you hit diminishing returns on that. But that is likely to hold the size of our vehicles down in the U.S. because people will be getting much more utility out of a smaller exterior package.''
Greater use of flexible seating and better use of package space will bring benefits, he said. "We will not see the monster vehicles because people will be getting much more utility from a smaller-sized vehicle.''
Shifting global scene
Twenty-five years from now, Ford still will be selling vehicles in Europe, but the company's global footprint will have changed, Bill Ford said.
"In terms of relative size, Europe will be a slow-growth place, the U.S. will be a slow- to moderate-growth place for us, and Asia will be a high-growth place,'' he said.
In 25 years, he expects China to be at least the No. 2 auto market in the world. It may even pass the United States to be No. 1.
"But the U.S. will remain an enormously important market for us,'' Bill Ford said. "We are not going to concede anything on our home ground to anybody. Today it is really the only truly profitable market for all of us in the industry."
Ford Motor will move aggressively in markets such as China and India, both in terms of sales and production, he said. "We will participate there and grow our business.''
Bill Ford also said the company will not stay in markets in which it can't make money. "Every operation has to pull its own weight,''
he said. "If I think over time a company cannot pull its own weight or a portion of our company cannot pull its own weight, I'll pull the plug on it.''
The shift in world markets likely will change the current pattern, in which the world's excess capacity is funneled toward the U.S. market, he said. That could help bring about more even distribution of profitability among automakers and could lead to more consolidation.
Bill Ford remembers that when he joined the company in 1979, he worked for Allan Gilmour in corporate strategy and that one of his first assignments was to project what the industry would look like in 10 years.
One of the predictions, he said, was for a big shakeout that might leave only three or four manufacturers by 1990. Global overcapacity was one of the key factors.
"Obviously those problems have been exacerbated, and yet we still have a large number of players,'' Bill Ford said. "At some point, it has to rationalize. All we can do at Ford is get our own house in order.''
But he is adamant that Ford Motor will be independent in 25 years.
"We will still be Ford,'' he said. "We will still be an American-based company with arms around the world."