CHICAGO – It may not be obvious to outsiders yet – and that’s “frustrating” to insiders, but Ford Motor Co.’s Way Forward restructuring program is making progress, a top executive says.
Ford reported a $457 million loss in North America in the first quarter, compared with a $664 million profit a year earlier.
"Inside we see we're making progress,” says Anne Stevens, executive vice president of Ford and chief operating officer-The Americas. “But people outside don't see it, and that's frustrating,"
During an interview, Stevens writes the word "input" on a sheet of paper with an arrow leading into a box labeled "process" and an arrow leading out to the word "outcomes."
Way Forward targeted "outcomes" include "2008 back to profitability, market share stability and $6 billion cost cuts."
All are works in progress.
"We're working on the ‘process’ now, the dirty work," she says. "We've addressed some structural and cost issues, our manufacturing footprint, and a lot of product scenarios based on the price of oil and possible segment shifts."
But other than a few plant closings and jobs eliminated, nothing obvious is going on.
Stevens was mentored by W. Edwards Deming, the quality control guru who decades ago helped Toyota Motor Corp. set up its manufacturing facilities. Deming preached the philosophy of “plan, do, check, adjust.”
Way Forward has moved past the plan phase and is into check and adjust.
"Our strategy hasn't changed, but we're going back and re-evaluating our investment in a number of things," Stevens says.
General Motors Corp. restated its first-quarter results and turned a $323 million loss into a $445 million profit, prompting folks to wonder whether Ford would as well.
"I hated our first quarter. We could do things to make any quarter look good, but that's not good for long-term health," Stevens says.
"(Chairman and CEO) Bill Ford is worried about the next quarter and wants me to worry about the next quarter, but we're both focused on returning to sustained profitability in 2008, not the short term.
"I want to accelerate our profitability,” she adds. “We have the cash and are committed to a turnaround, but this isn't like making instant pudding. It takes time to shift the culture."
And that means checking and adjusting the future product portfolio.
Ford confirms it has scrapped a planned Mercury derivative of the Ford Freestyle crossover to be built in Chicago. Rumor has it that the Torrence Ave. plant will get a Lincoln sedan instead, the MKS shown in concept form at the Chicago Auto Show. There's also talk only one of two large Lincoln sedans planned will be built. And Ford reportedly has delayed a high-mileage, low-priced small car two to four years.
Ford does confirm it will scrap the Mercury Monterey minivan, which will end production in August. And there are reports the Ford Freestar minivan will go by the wayside, as well, to be replaced by a production version of the Ford Fairlane concept that is a cross between a minivan and SUV.
Stevens is mum. Though analysts insist new product to win back consumers is the key to revival, she says only that all future programs are getting a second look.
Ford has said it will reduce line speeds at its Torrence plant in October because demand for the Five Hundred sedan is soft, a move expected to idle 150 to 200 workers for an unspecified period.
"Torrence is fantastic, but there are a lot of possibilities we're looking at," she says.
Ford, she says, wants to be sure it's not making any mistakes. "The important thing is to make a correction when needed," Stevens says.
