Well, what do you know? When Ford rolls out its new product they will be “very focussed on fuel efficiency.”
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Mark Fields who runs the Americas automotive division, told the world in a press conference at the end of last week (Friday, 15 September) that Ford was shifting its target from the CAFE figures to best possible fuel economy and that the full range of weaponry would be deployed. By 2008 there would be hybrids, diesels, ethanols, flexible fuels and hydrogen. And there would be fuel-saving six-speed transmissions.
If they paid US$16m to their new (ex-Boeing) chief executive Alan Mulally to get the benefit of that wisdom they were done. Politically, socially, strategically and intellectually, Ford has been defying common sense for decades. You could even construct an argument that American panic over Iraq arose from needing sufficient fuel to squander rather than joining those wiser souls who signed the Kyoto pact.
It has taken a doubling of fuel prices over four years and a good old corporate crisis, which pushed Ford within sniffing distance of insolvency, to recognise a moral duty.
The thrust of Ford’s announcement was that its initial rescue plan was too weedy. (The first one always is.) There have to be far more factory closures and far more jobs canned. The targets originally set for 2012 have to be delivered by 2008. The brave part of the plan is heavy investment.
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By GlobalDataMark Fields says that there will be five new vehicle types that have not previously existed and that the whole future of the company will be driven by “bold, innovative product.” Part of the plan will be to use platforms, sold by the group elsewhere in the world, in the US. Toyota sells its Yaris to the economy-conscious perfectly well in the US and Canada. Why can’t Ford do well with an Americanised Ford Europe-designed Fiesta? Maybe they can, but what scares them to death is the idea of having to make a margin on something so small.
Ford has been the US leader in truck sales for 30 years and what is ingrained in the corporate culture is that it’s gotta be big to bring in the bucks.
If that’s the way it has to be, then costs have got to leave the company far sooner and in far bigger lumps. So out go another engine factory and another stampings plant and down once again goes the forecasts of market share in the US. Five years ago Ford had 25%. Now, with barely a flicker of embarrassment, there is a forecast for next year of 14%. It sounds like the Ford decline in Europe all over again.
The response to the crisis by Bill Ford has been to give oversight of it to Alan Mullaly and we now have The Way Forward Mid-Life Update. Thirty thousand hourly and 14,000 salaried jobs will go. Two of the seven assembly plants to be shut, and four of the nine non-assembly plants for the chop, have still to be named. In addition, former Visteon facilities once again owned by Ford will have to shut – that’s 23 plants in total.
Ford lost US$1.4bn in the first half and could lose US$8bn in the second. The balance sheet can just about stand it though – there is US$20m in the bank to fund the downsizing and the market share loss.
Oh, and the final disclosure under questioning was that Jaguar is not for sale. Or maybe its just that the Jaguar that has been for sale is now recognised as unsaleable.
Rob Golding
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