I take no joy in being proved right as Ford slashes 30,000 jobs and closes 14 plants, or a quarter of its US workforce. It is always dangerous to sit back when the going is good, and for a long time, with the F-series trucks selling so well, Ford didn’t look at its car lines.
Once the top sellers in America, with nameplates such as Escort and Taurus, Ford has slipped so far down the top 10 that it’s lucky it’s still there, selling antiquated technology. MG Rover closed down with cars with newer roots than the pensionable 2006 Taurus.
It is fair to remember that Ford has managed to do well in markets such as India, where the Fiesta Sedan (with different bodywork to the Brazilian model) has had a great introduction. But slashing potential capacity by 1·2 million in the US could lead to poorer economies. The solution still seems very ﬁnance-bound, though despite that qualm, I could not say what else Bill Ford could do to keep his shareholders happy.
Ford is a great example of share prices and the old ﬁnancial model driving everything. Bill Ford’s new slogan, ‘Way Forward’ is his second since he became chairman. These are all designed to placate American shareholders in the short term. But why even have slogans if they are directed at a single group of people in the organization? Brands do not work that way: the message goes to everyone.
Mr Ford is at least right about speeding up innovation processes, and I have always felt that its German, I mean, European, operations were growing from strength to strength as a result. Köln’s more expressive designs for 2007 and 2008 will at least prevent Fords from looking like Volkswagens, something that it had been guilty of (look at the CD132 Mondeo and compare it to a Mk IV Passat; or the Fiesta and Polo; or the Five Hundred and an old Audi 100). Some branding work at the company suggests Ford can focus (no pun intended) on its American values (see here)—and to me, that makes sense.
But I worry if the capacity can be regained. The last time I heard such dire cutting of capacity for the reason of meeting demand was with British Leyland. It never recovered from the loss of economies of scale, although it was also true that that company was starved of R&D investment, something that Bill Ford won’t do in Dearborn.
Del.icio.us tags: Ford | branding Posted by Jack Yan, 02:26
Maybe Ford needs to start worrying about making better cars before it can even consider making... well, more cars?
# posted by oblanchard: 1/25/2006 06:13:00 AM
Well said, oblanchard, and I have taken similar stances in many of my earlier blog postings (see this post from 2003, this one from last year, and, most closely to your point, this post from October 2005. Ford has let its passenger car slide while the trucks were selling: a clumsy move. The Explorer gaffe cost it billions. I’m sure the closures would have happened regardless, though I still feel that the decision was swayed most by Wall Street.Post a Comment
I personally like Bill Ford’s decision-making, generally (or, more precisely, I have come to respect him); and I am sure the guy would not have taken this decision lightly. Yet it is still a shame that management, in past years, did not try hard enough. Let’s hope that the recovery plan, with hybrids and bifuel cars on the horizon, will allow Ford to open new factories when the buyers return—and I feel the share rating will improve in six months’ time from its sub-junk-bond rating. But it needs to put the customer ﬁrst, not Wall Street.
A very logical next step would be to challenge the Camry, Accord and Altima hybrids directly by adapting the Mazda system from the Escape and Tribute into the Fusion, Mazda 6 and its variants. I think Camry has the mid-size hybrid stakes won, thanks to the Prius, but Ford needs to put up a ﬁght. Maybe in compacts like the Ford Focus, or in a sports car. It just needs to be ﬁrst in one sector, for a change.
It also needs to look at non-steel construction and other innovations. Cars have not advanced as much between 1985 and 2005; compare that to the same period of 1945 and 1965, for instance, or 1965 and 1985. Ford should be the company to make the leap, and a recent Time interview suggests that W. C. Ford does have this in mind—again, something that I pushed for earlier in blogs (predicting much of what he said correctly).
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