Ford’s Crazy Marathon: Two Steps Forward, One Back

The pace of Ford’s Way Forward restructuring plan for North America seems to be two steps forward, one back.

The auto maker has been touting its global product development process and raft of exciting models on the way, while forging ahead with plans to close plants and reduce the workforce – self-professed giant steps forward.

But a $123 million second-quarter loss has set the auto maker back a stride.

Responding much the way as it did when the Revitalization Plan of 2002 failed to gain traction against adverse external forces, Ford says it will accelerate its Way Forward.

“We’ve got to go faster,” Chairman Bill Ford says, promising an “all-costs attack on all fronts.”

The original Way Forward plan calls for the closure of 14 plants and reduction of 30,000 workers by 2012.

How much more carnage is expected will be detailed within 60 days.

Rapid footsteps are necessary to address circumstances the auto maker says are beyond its control.

Ford says it could not have anticipated how quickly the price of gasoline would increase. But fuel prices have been on the rise since the terrorist attacks of Sept. 11, 2001, and this summer’s trajectory roughly parallels last summer’s.

Ford says it will charge ahead under its latest mantra: “Red, White and Bold.” It promises daring American vehicles from a much-touted Global Product Development System, deemed key to growth and prosperity going forward.

Yet, the GPDS plan extolled in June by Mark Fields, head of North American operations, was merely a recap of a system outlined in August 2005 by former product-creation chief Phil Martens and already under way.

GPDS leverages Ford’s worldwide resources to bring more vehicles to market quicker, Martens explained before leaving the company.

The concept is sound. And certainly it was a “bold” move by Fields to present it as an exciting new initiative, albeit with less detail than Martens provided in the original telling.

Two steps forward, one step back.

It has been suggested one reason the Nissan-Renault Alliance approached General Motors instead of Ford about a tie-up is because Ford’s restructuring strategy is moving at a slower pace than GM’s turnaround plan.

Second-quarter earnings punctuate the point. As stunning as Ford’s disappointing loss was GM’s unexpectedly large operating profit: $1.2 billion. This prompted speculation GM might be doing Nissan the favor in a hookup, given Nissan’s own 26% drop in profit due to slumping U.S. sales.

Whatever happens, Ford still will be running to catch up.

Yes, Way Forward still is in its infancy.

But already Bill Ford says he’s not happy, raising the question as to whether he has the patience to let Fields run with his plan.

Past sprinters: Martens, Greg Smith, Jim Padilla, Nick Scheele and David Thursfield did not complete the marathon.

Until Ford finds a way to take two steps forward, followed by two more, nobody wins.

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