Ford Learns From Past Mistakes

Some say insanity is doing the same thing over and over again and expecting different results.

Mark Fields, president-The Americas, Ford Motor Co., adheres to that adage. “We don’t want to be accused of being insane,” he quips.

Fields knows the auto maker’s future in North America depends on him and his senior leadership team not repeating the same mistakes that have left the storied company on the brink of collapse.

In the midst of its Way Forward North American restructuring plan, Fields says this time Ford is taking steps it never would have considered in the past.

“We spent a lot of time looking in the mirror and saying, ‘What are the key elements that are absolutely going to change the trajectory of this company?’” Fields says in an interview with Ward’s.

“We start with the customer,” he says. “It’s fair to say in the past I don’t think we’ve done that. I think we’ve looked at the constraints around that infrastructure and then had that drive our decisions around product, around volumes and those types of things.”

Not this time, Fields vows. Ford is downsizing capacity in direct proportion to demand for its products, a strategy pulled straight from “Business 101.”

The downsizing is resulting in the loss of thousands of jobs – some 14,000 salaried and 30,000 hourly positions – and will see the closing of 16 North American plants and facilities.

With such a mass exodus of employees, some having worked at the company for decades, the potential for “brain drain” is all too real.

To minimize the effect, Fields and his team have set up a communication strategy to reach out directly to employees and keep them informed during these tumultuous times.

“We’ve gone through great lengths to communicate the Way Forward and our acceleration of Way Forward,” he says.

In addition, Ford plans to reveal to employees its product lineup through the end of the decade, Fields says. The process is similar to one he employed while heading up Mazda Motor Corp. in Japan.

“There’s lots of negativism out there about Ford Motor Co.,” he says. “As part of the senior management team, it’s extremely important to not only tell people the challenges we face but the things we are doing right.”

In some case, monetary incentives will be offered to retain key personnel, he adds.

While retaining the best and brightest is essential to Ford’s future, layers of bureaucracy built up over decades must be eliminated for the 103-year-old company to compete against its leaner, more-efficient rivals, officials say.

Reducing headcount not only applies to mid-level salaried and hourly workers but also to the so-called untouchable management ranks.

In recent months, Ford has experienced a steady exodus of high-ranking executives, including Steve Hamp, vice president and chief of staff; A.J. Wagner, president-Ford Motor Credit Co.; Anne Stevens, executive vice president and chief operating officer-The Americas; and David Szczupak, group vice president, manufacturing-The Americas.

Fields says Ford can overcome the thinning of its executive ranks due to the “depth of the folks we have in this organization.”

“Have we lost talent? Yes, we have,” he says. “But the good news is we have a large reservoir of talent. And it’s amazing how people rise to the occasion. I’m very happy with my management team right now.

“We have a very motivated team that’s focused on, ‘How do we improve the position of the company?’ as opposed to, ‘How do I improve my personal position in the company?’ Because there’s no sense in doing that if there’s no company down the road.”

To ensure the auto maker’s survival, CEO and Ford scion Bill Ford handed over his post to Alan Mulally Sept. 5.

Mulally, a former Boeing Co. executive, is an automotive neophyte. But that doesn’t matter, Fields says, adding Mulally brings fresh ideas and a new perspective to the deeply rooted Ford culture.

“When you come in without a lot of baggage, you ask questions, and sometimes we sit there and say, ‘Wow, I never thought about it that way,’” Fields says. “So from that perspective, it’s very positive. And (Mulally is) keeping us very focused on executing what we’ve written down.”

Fields shoots down the notion Ford is preparing a third, Mulally-inspired, version of its Way Forward plan.

“Don’t hold your breath for Way Forward 3,” he says. “We accelerated Way Forward in September. It has the right elements in it. I think Alan is going to be working a lot on the corporate strategy in our plan.”

A key element to the restructuring scheme is flexibility, Fields says, as the ever-changing automotive landscape is unpredictable. Illustrating that flexibility is Ford’s apparent backpedaling on the decision to build a low-cost greenfield plant somewhere in North America.

When Ford unveiled the original Way Forward plan on Jan. 23, it announced “a new low-cost manufacturing site is planned for the future,” possibly to build small, B-class cars for North America. By late 2006, however, that stance has changed dramatically.

“It’s absolutely still in consideration, but we have to put the businesses case together,” Fields says.

Fields also is keeping an eye on Washington and a Democrat-controlled Congress.

When asked what he expects from the new policy makers, Fields says his primary concern is ensuring Ford’s voice is heard.

“We as a company have been very aggressive in the last couple years in raising our voice in Washington in terms of the issues we want to talk about and engage in with the various political folks that are in D.C. We’re going to continue to do that,” he says.

Fields identifies energy and fair-trade policies as key issues for Ford and the domestic auto industry in general.

Fields also says he would like more government participation in the creation of vehicles that run on alternative fuels, such as E85 ethanol and hydrogen, as well as an infrastructure to support them.

While Fields and his team work on fixing things in Dearborn, Ford dealers are traveling a rough road as well, as fierce competition, aging products and a glut of Ford outlets make profits elusive.

To remedy the situation, Ford says it plans to cut some 600 dealerships from its 4,300 U.S. stores.

Fields admits the auto maker has far too many dealers, considering its U.S. market share has eroded over the past decade.

“The fact is, there are more dealers than the market will bear,” he says. “Part of that is due to the success we’ve had over the past 100 years. The landscape has changed.”

The problem is especially pronounced in urban areas, Fields says, where in the past the strategy was to have dealerships “in most of the major neighborhoods within a certain mile range for the convenience of the customer.”

In today’s world, Fields says, most consumers research vehicles over the Internet before making a purchase, lessening the need for dealerships.

However, Fields says it is essential rural dealers receive support from Ford, since they are the primary sellers of F-Series pickups, by far the auto maker’s most important product line.

“We’re recognized as a truck leader,” he says. “We have to earn that every day; we can’t be arrogant about it, and our rural dealer network is an important piece of that.”

But what all Ford dealers need is product. The auto maker has been criticized most for taking too long to freshen existing vehicles and bring new ones to market.

Fields and Mulally realize the importance of new product, which is why a large percentage of Ford’s annual expenditures will be diverted toward new-model creation.

Some segments, however, have seen competition heat up to the point where they are no longer profitable for Ford. For instance, the auto maker will exit the minivan sector next year.

“For the most part, we’ll continue to have a broad range of products,” Fields says. “I think the composition of the products we have five years out may be slightly different than the composition we have today. And a lot of that has to do with where we think the market is going.”

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