Since taking over the family business on October 30, 2001, William Clay Ford Jr. (usually known as Bill Ford) has worked to turn around the US automaker.
Bill Ford, the great-grandson of company founder Henry Ford, has spent a lot of time trying to undo the damage caused by his predecessor Jacques Nasser's strategy to turn Ford into a consumer company.
When Bill Ford replaced Nasser, Ford Motor Co. was losing billions of dollars, its employees were demoralized and the quality of its vehicles was suffering.
Initially many doubted Bill Ford's commitment to running Ford business. But slowly he is bringing one of the world's top automakers back on track. Bill Ford spoke with Automotive News Europe's executive editor Peter Brown and reporter Amy Wilson at Ford's world headquarters in Dearborn, Michigan, USA.
We're three years into the Bill Ford era. When you started out, you had bad dealer relations, bad supplier relations, morale problems at home and a weak pipeline, by and large.
We really did have fires burning in every area. In addition to what you said, six of our eight auto businesses around the globe were losing money. The product pipeline was very thin, we hadn't had any launches go well in quite some time, and our quality had deteriorated. Everywhere I looked three years ago, it was really kind of all hands on deck, putting out fires.
Three years later, I feel like we've made tremendous progress. We've got the product pipeline restocked. Quality is headed in the right direction. The only automotive operation around the world that really needs fixing is Jaguar, and that's a long way from where we were three years ago.
Would you sell off Jaguar?
No. It's a great brand. And it's a very strong brand that has real clarity in the marketplace. We just need to fix the business.
What is the right volume for Jaguar? Is it less than 200,000?
Ultimately the customers will decide that. I'm actually not going to put a number out there, but I will say, it certainly will be less than the (previous) growth projections.
The Jaguar X-type got a lot of criticism because it was based on the Ford Mondeo. Will we see a second generation?
We're working through that. It's also the volume leader for Jaguar. It's interesting, if you look at the trade-ins on the X-type, customers typically trade up to other Jaguars. So it does what you would like an entry-level vehicle to do.
What is Jaguar's future?
We've got to fix Jaguar and we know it. The good news is the products are pretty good. The bad news is the business case has not been good. I think it was primarily driven by the fact that there was a strategy in place to grow Jaguar's volume irrationally. In retrospect, it was just too big a stretch. I think that end of the market doesn't lend itself to rapid expansion. The business case hasn't worked. When I look at how Ford of Europe has turned around dramatically and we've got a lot of the same players involved now in the Jaguar turnaround. We have people at Jaguar who really understand the brand. It's not just a bunch of financial engineers coming in to fix Jaguar. Frankly, there's going to be some of that. We have to tighten up the business case but we cannot destroy the brand of Jaguar in the process. The pain of fixing any broken business is tough and that's what we're going through right now. It's not like we're having to fix a brand that either has very poor customer acceptance or an empty product display. We're having to fix a brand that's appetite was bigger than it could handle.
Is the Premier Automotive Group a viable business entity for Ford?
The short answer is absolutely. Volvo is doing great. We couldn't be happier with how it's doing.
Land Rover is just entering into a phase where they're having huge product launches. I love what they have coming.
Will you expand the Land Rover lineup?
Yes, but we will not have unrealistic volume assumptions. I think to protect the integrity of the brand, we want to make sure it's a customer pull, rather than a factory push.
What about Aston Martin?
It's a good brand for us and the products are really good. I think Ulrich Bez (Aston Martin CEO) has done a terrific job.
Will PAG make money next year?
Can Ford of Europe make money next year?
Is western Europe too expensive as an vehicle manufacturing center?
It's as much about work practices as wage rates. If you get modern operating agreements and a work force that's willing to be flexible, I don't see any reasons why western Europe cannot be a competitive place. There are some offsets in terms of labor costs, but you get a lot of that back in infrastructure. To me, the biggest issue is work force flexibility. I'm not here to ring the death knell of Europe as a manufacturing center. In fact, we have been very successful in the past in manufacturing in Europe. I think you have to have a blend of plants in different locations. One thing that's probably not helped is to be too dependent on any one individual market. You can look great one year, and then as currencies change, just get whacked the next year.
Will you make or sell Land Rover and Volvo in China?
We're not announcing anything. But I think that clearly we need to have a luxury strategy in China.
What is Ford's future in China?
We've been spending like mad in China, and I've been over there twice this year. It's certainly our feeling that China will resume its growth. It's just come down from breathtaking levels to pretty good levels. We were late to China, but we put the basics in place to have a very solid business. Our volume is growing, our share is growing.
But one of the things I have been cognizant of, though, is to not bring a lot of product in. As I've watched some of our competitors play in China, there have been some who have brought over everything but the kitchen sink.
What we've tried to do is put together a very thoughtful, long- term plan. One of the things I feel I can give this company is that long- term outlook. And that's particularly true in China, where you're starting from scratch in terms of brand identity and customer awareness. I feel that we're being aggressive but not trying to maximize the short term at the expense of the long term.
Are you prepared to do more to help former Ford-owned supplier Visteon? You did something a year ago, but Visteon appears to be in trouble again.
A healthy Visteon is something that's obviously of great interest to us. They're our biggest supplier. Obviously we very much would like them to succeed. But they're an independent company, and they're going to have to chart their own future.
Will Ford make sure that Visteon stays out of bankruptcy?
I shouldn't say it isn't possible. It's not a probability. On the other hand, we want Visteon to succeed, and so where we can be helpful, we will.
Ford's top executives talk about improving supplier relations and wanting to be the the supplier of choice. Are you happy with where you are?
No. I think its something we have to continue to work on. This is a tough marketplace and there are a lot of things that are hitting suppliers and us now that cause tension, like spikes in steel prices and any petrochemically based parts. There always is going to be give and take, and therefore some tensions. We are making progress. But we're not where we need to be.
Can you point to any initiatives or changes that Ford has started.
First of all, we're much more open with our suppliers than we used to be. I think the dialogue we have on a regular basis with all our major suppliers is at a much greater frequency and much more disclosure than it has been in the past. That's something that we have worked hard on and it is paying off.
Are as comitted to the environment as you were three years ago?
What I care about is: Are we on the right road? Are we poised to take a leadership position. And I think the answer is 'Yes.'
Three years a go we had a single hybrid in the cycle plan and there wasn't a great deal of commitment to that. We've added other hybrids now to the cycle plan. We're adding hydrogen internal combustion vans to our cycle plan. I think that's a very interesting bridging strategy between fuel cells and where we are today. Because you can get 99 percent of the benefit of a fuel cell at a fraction of the cost, at a fraction of the complexity, with an internal combustion hydrogen. We're working hard to be a leader there.
Ford has been criticized for bland and conservative styling. Are you happy with the work of J Mays?
I am. I think you will see us get more external styling identity. You would be hard pressed to make that criticism of the Mustang. You have to look at the segment that you're playing in too.
Are you going to develop your own diesels for your heavier duty trucks in the US?
We are looking at the entire diesel strategy of the company, all the way from very small to very large. We have an interesting and very good partnership with PSA on diesels in Europe. As I look down the road 10, 20 years, diesel is going to play a role - at least internationally. It's clear to me that even if gasoline prices fall back to quote 'more normal' levels, oil is going to be an increasingly scarce and dear resource in geopolitically unstable parts of the world.
In a perfect world, you win market share and get bigger profits. You're doing substantially better quarter by quarter while share drops substantially. How much are you willing to lose? You could defend share if you didn't care about profits. Where is the right balance?
It was very important that we re-established the financial credibility of the company. We made a judgment that while we could certainly go ahead and play that game and match dollar for dollar, it would not be rebuilding our financial credibility. Looking back, I know it was the right decision. But it is painful every month to wake up and see Ford lose its share again in North America.
But it's paid off for us. If you're going to build the brand long term, you have to start by rebuilding residual values. There are really two ways to do that. One is to limit our sales to the daily rental fleets. Two, is not match dollar for dollar on the facing competition across the board.
Those first two we knew would hurt us in the short term share-wise. When we get through this launch period, I would expect us to start to see the share stabilize and start to turn.
Is this a year from now?
No. Somewhere in the next six months you'll start to see the share turn.
If you don't see share start to turn in that time period, is there a number that you would set as a limit for bottom-line share?
No, I won't do that. Obviously, we have internal targets. But I've seen our competition have to really do some fairly unnatural things to chase a number that they put out there. And that's not something I'm interested in doing.
Since launching the original Taurus, Ford Division has been the biggest seller of vehicles in the US, but Chevy is gaining on you. Does that matter to you? Would you do anything to defend that?
No, I wouldn't do anything to defend it. Again, it's quality of share, quality of retail share, and it's building the brand for the long term. You know as well as I do that tomorrow morning we could start to turn that around. But I don't think that's the right thing to do, particularly when we have new products launching now.
Visteon will give employees a $1,000 bonus if they buy a Ford to try to keep Ford Division ahead. If they're still seen as the Ford boys, how are they going to be a big independent supplier selling to GM when they're criticizing Chevy?
They are working on that, and they have gained a number of outside sales. We are far and away their biggest customer. And it's not just good for Ford when they do that. That helps keep the Visteon plants working.
Is Lincoln where you want it to be? And what needs to be done with it?
Certainly Lincoln's not where we need it to be today in the marketplace. But we've had our Lincoln dealers through and shown them our future plans and the products that are coming, and they're very enthused.