DEARBORN — Ford Motor Co.'s knight in shining armor doesn't ride a white charger. He drives a '37 Jaguar SS 100.
In fact, he doesn't wear armor, either. Nick Scheele wears his heart on his sleeve — a style that seemed to suit him well the last time he was forced to slay a dragon.
This time, however, the scaly beast has four heads. And they're all cranky — some more than others.
Of late, the menacing monster's been hovering over The Glass House, seat of automotive royalty, and scorching its inhabitants with fireballs. Its most celebrated victim to date: Jacques Nasser, Mr. Scheele's predecessor as champion of the Ford kingdom.
Mr. Scheele has the qualifications to kill the creature. Or at least tame it. For starters, the U.K. native really is a knight, having received the royal nod in July for “services to British Exports.”
He's also a proven leader who's possessed, by all accounts, of clear, unwavering vision. And the vision so painfully clear to him and the automaker's new CEO, William Clay Ford Jr., is the need to get the company into fighting trim.
“Clearly, we are looking at right-sizing the organization,” Mr. Scheele tells WAW in an exclusive interview, his first after Ford's directors made him president and chief operating officer of the world's No. 2 automaker. “And we have to have a right-sized organization for the size of company we are going to be, going forward.”
Which begs the “p.c.” question, which in this case stands for plant closures, not politically correct.
“Everything's on the table,” he says, adding one significant proviso. “One thing that's not on the table is reopening contracts that we've signed. We have a signed contract that we will not close a plant in the period of this current United Auto Workers union contract. And that extends through the fall of '03. So clearly, we're not about to break our trust.”
However, he vaguely suggests the ax could fall after the deal expires.
“I mean, if we don't have demand for a vehicle, we may not close the plant. But clearly, we're not going to produce units to put 'em against the fence. I mean that would be just nuts.”
Outgoing UAW president Stephen P. Yokich, whose survival instincts have served him and the union well for decades, is unfazed. “They haven't come to us,” Mr. Yokich says. “If they need to talk to us, they know where we are.”
But when a global company the size of Ford — 110 plants and more than 340,000 employees — has total net cash reserves of $3.1 billion and falling, something must give.
Enter the dragon.
Ford's white-collar workforce in North America already is reeling from a “voluntary separation” program intended to reduce their numbers by 5,000. And some are still feeling the sting of a performance evaluation system that was recently scrapped against a backdrop of discrimination claims.
Nevertheless, Mr. Scheele suggests they must pay the price again when he reveals a comprehensive restructuring plan next month. This, critics say, will end the honeymoon that greeted the arrival of Mr. Scheele and Mr. Ford following the departure of the embattled Mr. Nasser.
“I actually don't buy that,” says the straight-shooting Mr. Scheele. “Because people know that the health of the whole organization is actually more important than the individual or the individual department or operation of whatever it may be.
“And they also know, and other people know, when something is not being fully utilized, when it's not being fully effective, or if its time has passed. People know that. And I think people, in fact, will say, ‘Yep. OK. Maybe that's sad. But, in fact, that was the right thing to do.’
“And that ultimately improves morale. I've lived through organizations, and I've lived through situations where we've done this.”
As Ford of Europe chairman, Mr. Scheele oversaw restructuring that will, next year, close the automaker's assembly operations in Dagenham, England. Ford says the move will eliminate 1,300 jobs, but labor says as many as 5,000 workers will be displaced when the 72-year-old plant is dedicated solely to engine production.
And these losses are in addition to the 4,000 Ford jobs that have vanished from Germany and Belgium within the last three years.
Such efficiency, however, caught the business community's attention — starting with Mr. Nasser, who heaped praise on Mr. Scheele's accomplishments.
So skilled is the 57-year-old executive, he makes well-worn battle cries such as “back to basics” seem fresh. Perhaps because he interprets the tired mantra in a different manner than those who heard him utter it at a news conference when Mr. Ford introduced him in his new roles.
“There was much misunderstood,” Mr. Scheele says. “To me, first and foremost, we're in the car and truck business. I mean, that's where I start from,” he says calmly and confidently. “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 on cost. Those are the basics of the business.”
Here he takes a short breath and makes an anguished but honest admission about the automaker's quality — arguably the biggest and ugliest head on the unruly dragon that dogs Ford's fortunes.
“We haven't, it's common knowledge, got too good a track record on doing those things,” he says of the aforementioned business basics.
Fortunately, he adds, the remedy is no secret. Ensuring high quality means “an engineer releasing a part on time. And releasing it right the first time. Not releasing it knowing it's got an error that he's got to go back and correct.
“It's a buyer sourcing it on time. At the right price. It's a supplier tooling it, delivering it on time with the right quality, and then sustaining that, and also sustaining the volume. And then the assembly plant putting it all together and meeting Job One on time, at quality, at cost, and getting the launch ramp right.”
Why is timely delivery so important? Because there are other important stakeholders to consider. Marketing campaigns create demand, and if the corresponding products are not on the showroom floor, “it's a bit of a letdown for the dealers and customers,” Mr. Scheele says.
Tell it to Ford fans who wanted their '02 Explorers equipped with V-8s. They had to wait while the automaker rolled out, in measured V-6-powered doses, the all-new version of history's most popular sport/utility vehicle (SUV).
And what about those long-suffering Thunderbird aficionados who cooled their heels while Ford sought to “get it right,” only to discover the vaunted vehicle's engine had a cooling fan flaw?
These are the kinds of delays that suggest widespread systemic problems, shake consumer confidence and get Washington's attention. It's no coincidence that the National Highway Traffic Safety Admin. (NHTSA) chose Explorer, despite its redesign, to be among a select group of '02 models subjected to its rollover rating system.
NHTSA admits public furor over the Firestone fiasco influenced its decision to test the '01 and '02 Explorer. Notably, the latter's performance — when equipped as a 4×4 — represents an improvement, earning a three-star rating over the '01 model's two-star score.
However, the '02 4×2 gets two stars, just like its predecessor.
In addition, would-be buyers won't be impressed by NHTSA's recently released final safety recall tally for 2000. It confirms Ford led the industry with 60 campaigns affecting more than 7.5 million vehicles.
And while such campaigns often involve models built several years before recalls are issued, 50 of Ford's recalls last year involved '00 or '01 model years.
So, does Mr. Scheele's definition of “basic” mean simple — as in reducing the number and complexity of products to ensure high production standards?
“I don't know that you necessarily scale back the number of products you're doing,” Mr. Scheele says. “But I think you certainly use more commonality across the car line. We've got very little commonality across the car line right now.”
Under the new regime, Ford won't be reinventing the wheel for every product launch, he vows.
“Why don't we use the same widget for this, that and the other? Why can't we carry over this proven component and knowledge? Because it helps quality, it helps engineering time. And it should help cost as well.”
And Ford will do so without abandoning the ideal of product differentiation, and without apology.
“In all honesty, I think that differentiation, properly executed, does not impact our ability to commonize. Some of our competitors, one in particular, has commonality between carryover to new of about 50 to 55%. And they actually target it. Another competitor has significant — European in this case — has significant cross-car-line commonality. We have almost no commonality.”
And on the subject of complexity, Mr. Scheele promises Ford will not abandon amenities such as telematics in a bid to focus solely on those features that directly affect driving dynamics.
“Because those are features the customers want. Now, if we're putting in features that customers don't want, and it's adding to the complexity of our business, and almost by inference impacting our ability to do what we should be doing — which is to deliver the basics — that's a separate question.
“It takes time, but we've started some work in Europe on cross-car-line commonality. And it is starting to show some benefits. I'd like to see us start to do that, and Chris Theodore has already started our paths in that direction over here in North America,” he says, referring to Ford's new vice president-North America car, who tells WAW the automaker has some “segment-busters” on the drawing board.
Mr. Scheele also has some tried-and-true weapons in his arsenal against the forces that threaten Ford's future. These will form the foundation for the automaker's comeback, Mr. Scheele says.
“I think some of the things that you would never touch are some of the icons we've got around this place. Obviously, some of the icons are things like T'Bird, like Mustang …”
He goes on to list Focus, Taurus, Escape, F-Series and Explorer — which, he tells WAW, he's using as his personal vehicle.
“You've got to make sure you do everything to preserve those absolute kingpins. And then you look and say, ‘If you're not going to touch those, what are you gonna do?’ and it's there where the debate comes, because you lock in place what you have to have, and then you move on down.”
Other untouchables: Ford's design team, the Rouge complex overhaul and a supplier park planned for the area surrounding Chicago Assembly.
Mr. Nasser was said to roll up his sleeves and affect hands-on control of vehicle design. The result was a renewed emphasis on the discipline under the direction of J. Mays, vice president-design.
“He is like a conductor,” Mr. Scheele says, referring to the relationship between Ford's design chief and those who report to him. “Conductors pull something, if they're great, pull something better out of an orchestra than the orchestra knew it could do. I think J. is doing that. Will it change with Jac not here? I don't think so. I think all of us in this business know how important design is. I can only see that getting better.”
The Rouge project, a favorite of Mr. Ford's, represents the automaker's commitment to the industry — and its approach to corporate citizenship.
And the supplier park, Mr. Scheele adds, will give Ford new resources to enable timely response to changing — hopefully increased — product demand.
And heading into 2002, Ford's products appear to be in high demand. October was a record month in company history that saw consumers buy or least 418,243 cars and trucks from Ford, Mercury, and its primary Premier Automotive Group (PAG) brands, Lincoln, Jaguar, Volvo and Jaguar.
But, as in Camelot, all is not what it appears to be in the Glass House. Sales numbers throughout the industry are inflated by 0% financing, which Ford has said will continue at its dealerships until mid-January.
Re-enter the dragon.
“It will be a very interesting year,” Mr. Scheele says. “We are sailing in uncharted waters right now. We've clearly got an economic circumstance, which you would not call ideal. I'm talking macro. The overall global economy is not looking too rosy. The dollar is still strong, so that will continue to attract imports and will give imports significant price advantage, which will further pressurize the domestics.
“Compounding all of that, you've got Sept. 11, which probably intensified the negative vibes, if you will. Let's face it, the auto industry is a key player in the economy. But you'd equally have to say, unless the economy grows to offset the degree of sales pulled forward, we are probably going to see payback in the first half of next year.”
This leaves two heads on the dragon — dealers and suppliers. And Mr. Scheele reveals he's been courting both since first arriving in August as group vice president Ford North America.
“I've talked to an awful lot of dealers. I was out with dealers in Arizona last week and with suppliers, with a lot of our partners. I was together at various supplier meetings three times last week. You've got to have relationships with your partners,” Mr. Scheele says.
His remarks harken back to these words, told to WAW in 1999:
“If that means working on an assembly line, working in a powertrain plant, meeting with present customers, future customers, dealers, suppliers, that's the business. It's hands-on. It's hearts on. It's getting your mind around the business.”
The speaker? Jacques Nasser.
