"Sir Fix-It" goes to work at Ford world headquarters

Affable and recently knighted Nick Scheele becomes COO in post-Nasser era

Jaguar was in a bloody mess when Ford Motor Co. bought it for $2 billion in 1989.

Back then, Jaguar had a reputation for poor quality. Any car with quality problems is bad enough. An expensive luxury car with quality problems? Not right, that.

Ford put its Nicholas Scheele in charge of Jaguar. The price of Jags didn't go down with him in charge. But the quality went up. Mr. Scheele gained the title Mr. Fix-It, then a promotion to head Ford of Europe. He got a royal title, Sir Nicholas, when the Queen of England knighted him this year.

Now, through a series of unusual events, Mr. Scheele (pronounced SHAY-lah) is Ford's new chief operating officer. He's second-in-command to new CEO William Clay Ford Jr., a Ford family member who succeeds Jacques Nasser, fired after three years on the job.

Mr. Scheele faces similar quality problems as COO at Ford world headquarters in Dearborn, MI., that he did when he headed Jaguar. And he plans similar solutions to those problems.

It's getting back to basics, Mr. Scheele tells Ward's in his first interview since becoming Ford COO. That philosophy seems in contrast to Mr. Nasser's vision of Ford as a "consumer" company, doing more than just making vehicles. The new COO explains, "We're in the car and truck business. That's where I start from. We're designing, developing. building and selling cars and trucks.

"If you're going to do that, you've got to have a process that delivers things on time, at quality and at cost. Those are the basics of the business. We haven't had a great track record on doing any of those things."

He says it's a let-down for dealers - and customers - when there's a marketing campaign for a new vehicle that's not at stores in sufficient numbers because the company failed to meet Job One. "And we haven't met too many Job Ones recently."

Mr. Nasser was criticized for many things, from an overly aggressive management style to poor dealer relations. But Ford's nagging quality problems mainly did him in.

Poor quality was a complaint from Ralph Seekins, chairman of the National Ford Dealership Council. In a blunt memo after getting feedback from Ford dealers, Mr. Seekins essentially told Mr. Nasser that Ford quality sucked and his leadership sucked.

Mr. Scheele praises Mr. Seekins for the frankness of his report on what dealers think is wrong with Ford.

"It was a good memo," says Mr. Scheele. "It was done at our request. I think he showed it to me first. It pulled no punches. It was a 'here's what people think.' Those things are very, very helpful. If it's not on the table, you can't deal with it."

Overall, Mr. Scheele believes Ford's relations with its dealers are healthy. Some dealers may dispute that.

They point to various estrangements such as Ford's controversial Blue Oval dealer certification program, a failed experiment with the automaker owning dealerships in competition with independently owned dealerships and e-commerce initiatives that left many dealers suspecting that Ford was elbowing in on them.

"We're joined at the hip," Mr. Scheele says of Ford and its dealers, many of whom he has chatted with in recent weeks. "You've got to have relationships with your partners, and dealers are our partners. We have no different agenda than they do. We will never always agree. There will be instances where we agree to disagree. But in such cases we should be clear about why."

He's says most Ford dealers - especially on the national dealer council - are committed to Blue Oval. "And we have said that any changes to Blue Oval must be approved by a significant majority of the dealer council."

Despite the controversy, he says Blue Oval is working. Ford dealership consumer satisfaction ratings are up, Ford is giving a form of cash incentive for that "and it's clear that unprofitable dealers aren't the way to go forward to have satisfactory relations with either the customers or the factory."

He pauses, then adds playfully, "I could say the same about the factory, couldn't I?"

Jerry Reynolds, outgoing chairman of the National Ford Dealer Council tells Wards, "The changes are an opportunity to fix the dealer relation problems and get the quality back on track."

Although, Mr. Reynolds acknowledges Mr. Nasser received more than his fair share of the blame for the deterioration in the relationship, he believes that "fixing the dealer relations could not have happened with Mr. Nasser still at the helm." He describes Mr. Scheele as connecting better with dealers because he is more informal and relaxed than Mr. Nasser was with dealers.

An example of that, according to Mr. Reynolds, is that in a meeting with dealers, Mr. Nasser showed in a $1,000 suit, Mr. Scheele in a short-sleeve shirt.

Mr. Scheele, an affable Englishman, is open and civil.. One observer says, "It is his ability to present bad news with a smile...that has paved the way for his rise."

Says Mr. Scheele, "You've got to be very honest with your partners. You can't hold back cards. We were open with the unions in Europe in addressing an overcapacity problem. We said, 'Look at the numbers with us.' If you have data, you shouldn't keep it to yourself, and not share it with the people who are potentially affected."

Mr. Scheele is working on a restructuring plan that could lead to substantial cost-cutting, staff reductions, production curtailments and more commonality across car lines "so you're not reengineering everything every time." He says, "We're looking at right-sizing the company. You have to deal with market demands. That's a huge part of the issue...Clearly you don't want to be building vehicles to put up against the fence."

He disputes that layoffs hurt employee morale:

"I don't buy that. Layoffs can have a positive effect if they are done to protect the health of the organization. People know what's right and wrong." A few short years ago, Ford was touted as one of the best-run auto companies with good top management, strong sales and a healthy bottom line. But Mr. Nasser's management style was described as autocratic. Sales dropped. And the company lost $750 million last quarter.

What the heck happened?

For one thing, the company took a huge hit when the Firestone tire fiasco commenced in August of 2000. Ironically, Mr. Nasser and Ford seemed to make all the right moves, including quickly replacing millions of tires on Ford Explorer SUVs.

And even though a government study this year blames the tires, not the Explorers, for all those rollover fatalities, the damage was done to Ford.

"You can look back at August of 2000 as the makings of 'the perfect storm,'" says Mr. Scheele. "And then things built. There's no question the Firestone situation took an awful lot of attention and people resources to analyze and then to handle...

"I'm firmly convinced we did exactly what's right. If we hadn't done it, we would not have been able to look at ourselves in the mirror today. But it was distractive. And then it was accompanied by a full suite of unrelated unfortunate events. They all kind of came together. It's cost us."

Mr. Scheele's management style is clearly different from Mr. Nasser's. But Ford's new COO praises Mr. Nasser's efforts.

"Jac stretched the horizon for this company, says Mr. Scheele, citing his fostering of the Premier Auto Group, his making the company more "transparent" to the outside world and his paying attention to multiple stakeholders, especially customers and shareholders.

"That's a great legacy. And he enunciated Ford's commitment to corporate citizenship," says the new Ford president.

Mr. Sheele, 58, joined Ford in 1966 as a purchasing trainee. What would he like to be his legacy when he leaves Ford?

"I wouldn't call it a legacy, that's presumptuous. But I'd like to contribute to this being a stronger, better company as Ford enters its second century (in 2003)."

He plans to do at Ford World Headquarters what he learned well at Ford of Europe.

Which is: "Develop the plan, tell everyone the plan, set the milestones, re-communicate and stay focused on delivering the plan. And don't try to change it every night and day."

Meanwhile, he foresees 2002 as "a very interesting year" filled with a lot of post-Sept. 11 uncertainties. "We're sailing in uncharted waters right now," he says.

He predicts the auto industry will sell about 15 million vehicles in 2002, "but I could be off - probably will be off - by a million." A million which way?

Alas, "I think the downside is greater than the upside. And I think the impact will be felt more in the first two quarters than the last two."

This has been a good sales year in terms of raw numbers, "but in number of profitable units, not so hot," he says.

He worries about overcapacity causing a supply that exceeds demand. "If you have excess capacity, can't sell it, and have to give it away, that's probably not a good business model."

But he adds that when an auto company is "right-sized," then "good things start to happen."