The following is a transcript of remarks delivered by Mark Fields, Ford Motor Company Executive Vice President and President of the Americas, to the Motor Press Guild during the opening of the Greater Los Angeles Auto Show on Wednesday, 4 January.
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Key points:
- 2006: “Somewhat slower growth, higher interest rates and volatile gas prices all add up to auto sales that probably won’t outshine last year’s selling rate in this new year.”
- CUSTOMERS: “It’s imperative for any successful business to have a laser-like focus on its brand and how every part of the business is centered on the customer. That customer focus sets up everything: the products, the volumes, the revenue and the cost structure.”
- MARKET SHARE: “We will stabilize in the near term and ultimately grow our market share by making customer values and attitudes central to our business model.”
- CROSSOVERS: “Today’s fastest-growing vehicle segment in the United States is crossover utility vehicles, or CUVs. They are on pace this year to exceed traditional SUV sales for the first time ever.”
- SMALL CARS: “Another key battleground is small cars. Small is big in America – particularly among the ‘under 30 set.’ And, like crossovers, small cars are ripe for bold design and innovation.”
- AMERICAN CARS: “Americans really do want to buy American brands. There remains a huge – and not yet fully realized – market for American cars in this country. It is waiting to be seized, consistently.”
- AMERICA’S CAR COMPANY: “We at Ford are changing the way we do business. We will compete vigorously to be America ’s Car Company, winning the hearts and minds of even more customers. Our way forward is not a retreat into smaller markets, but a retaking of the American marketplace. It starts today. It’s time to play offense. It’s time to take back our future.”
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Thank you and good morning, everyone. I especially want to thank the Motor Press Guild for inviting me to speak today. It’s good to be back in California , having lived here for a few years in the early 1990s.
I’d like to take a moment, on behalf of everyone at Ford, to extend our concern for the people of California , who have been victims of the heavy rains and flooding. Our prayers are with you for a return of the sunshine and an end to the devastation.
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By GlobalDataI’m pleased to be with a group of people this morning who not only follow the auto industry as a business, but who have a real passion for cars.
And that’s why I’m here: to discuss this passion for automobiles and how re-connecting with that passion through innovation and bold design will increasingly separate the successful auto companies from those squeezed out in the American market.
Everyone has a scorecard for who’s likely to be in and out of the game. And I’m sure some of you have concluded that at least one or possibly both of the American automakers might end up “out.”
But to those people who have written us off, I would simply ask you to keep an open mind this morning. That’s because my message to the open-minded and the skeptics alike is one of both optimism and realism. Optimism because I believe in the future of Ford Motor Company and the American automakers. Realism because I understand that it will take fundamental changes in the way we do business to secure our future.
The auto industry here in the U.S. always has had its ups and downs. It’s a cyclical business. You all know that. What is different today from previous downturns is the confluence of powerful economic and global competitive forces, and the cumulative impact of business decisions made – or not made – in Detroit over the past several years, or in some cases, decades.
Just think about what we encountered last year alone. Steadily rising interest rates after a period of historically low rates. A significant increase in oil and gasoline prices. High material costs, especially steel. Bankruptcies among major suppliers.
The American auto industry? What ails us? It goes beyond economics. In short, we lost our way. We lost touch with our customers – particularly our car customers.
I’m amused, in fact, about the debate in Detroit as to who’s in or out of the Big Three. It makes for great headlines and PR stunts, but it’s the wrong debate. It’s old thinking, and it’s irrelevant.
The real focus should be the up-for-grabs Big Six – the battle among six huge North American, European and Asian companies for growth and profits in the North American market.
I can assure you that’s our focus at Ford. It starts with the commitment we’ve made at Ford to driving American innovation – in design, in safety and in environmental technology.
At Ford, innovation is our heritage. But, more importantly, it’s our future. And it can be the future of the entire American industry.
As Bill Ford said last fall, we will continue to cut our costs and improve efficiency. But we cannot win the hearts and minds of the American consumer with efficiency alone. It’s an important message to remember, and it’s driving every part of the plan we’re developing at Ford.
We call it our “Way Forward” business plan, and it’s the roadmap for transforming our business in North America . It includes a huge investment in clarifying and leveraging the brand identities of Ford, Lincoln and Mercury – and better connecting with more customers than we do today.
Equally important, it includes an investment in innovation – and in bold American design – to provide that emotional connection with more customers. I’m not here today to reveal all the details of our Way Forward plan. That comes later this month – on Jan. 23 to be precise.
But what I do want to talk about is one of the most important elements of our plan – and that is how we will stabilize in the near term and ultimately grow our market share by making customer values and attitudes central to our business model.
It’s a lesson not just for Ford. It’s important to the entire industry.
First, let’s look at the economic environment in which our customers will make their car-buying decisions this year. The economy is projected to grow at a good pace of 3 percent or better. Gas prices have come down from the highs following the hurricanes last fall. But oil futures suggest a price between $60 and $65 a barrel this year, which means there won’t be much relief at the gas pump. So, fuel economy will continue to be a factor for buyers.
We will have to wait until we get a complete look at 2005 sales this week. But, right now, somewhat slower growth, higher interest rates and volatile gas prices all add up to auto sales that probably won’t outshine last year’s selling rate in this new year.
But one thing I can tell you with a high degree of confidence is that 2006 will not be the “year of the truck,” as I saw in one of my competitor’s press releases recently. That “build it and they will come” attitude is not only business as usual, it’s the old thinking that we need to shed as American automakers.
Instead, the consumer will be in the driver’s seat more than ever before, and that will cause the shift in buying patterns to accelerate dramatically.
And it will mean one of two things. Either the American automakers, including Ford, will begin to change, play far better offense and truly connect with customers. Or it will be the beginning of the end for some companies.
Those of you who reported on Mazda during my years there know that I was even blunter a few years ago. I told the Mazda team very directly, Change or die. This applies to the American automakers today just as powerfully as it did to Mazda five years ago.
And I’ve given the Ford team the same challenge. It’s time to play offense. It’s time to reestablish our American auto industry as our symbol of pride in this country. It’s time to take back our future. And the clock is ticking.
That sense of urgency will be very evident when we announce our “Way Forward” plan on Jan. 23. You will, of course, hear how we at Ford plan to make a fundamental shift toward greater quality and productivity.
But, more importantly, you’ll hear how our product investments will clearly establish what we stand for as a company and how that will help us connect with more customers in the future.
I want to begin with the Ford brand, because it is inextricably linked to the image and success of Ford Motor Company. Then, next week, at the Detroit auto show, we’ll share more on Lincoln and Mercury.
And, while these examples will be specific to Ford, the insights about the brand and the customer are applicable to this entire industry.
That’s because, to me, it’s imperative for any successful business to have a laser-like focus on its brand and how every part of the business is centered on the customer. That customer focus sets up everything: the products, the volumes, the revenue and the cost structure.
Growing companies, the ones that are increasing their market shares today, think like their customers, and they see the world through their customers’ eyes. Too often, we in the auto industry dismiss this. Many people, including many of you in the media if we’re being honest, view brand-speak as irrelevant.
I’d like to challenge that thinking today, and I’d ask you to think again. Because brand-speak is only irrelevant when it’s just a slogan or an advertising tag line.
I’d point you to the latest Interbrand ranking of the companies that are building their brand images, and their fortunes: E-Bay, Apple, Motorola. Guess what? Apple and Motorola had been written off less than a decade ago, just like the American auto industry. The headlines were grim.
But Apple and Motorola went on the offensive. They redefined themselves, they refocused on their brands, and they connected like never before with more customers. They did it with products like the iPod and the Razr phone – products that have excited customers with bold design and innovation.
Bold design and innovation. I’ll come back to that.
The Boston Consulting Group recently polled senior executives in 68 countries and developed a top 20 list of the most innovative and, as a result, most successful companies. Guess who’s on the list? It’s the same companies that focused on their brands and their customers. And, no surprise, Apple is at the top of the list.
Now, I give you this context because it is the same thinking that we’re adopting at Ford. When we started out on our “Way Forward” plan, our first step was a reassessment of what people think of us today. What are our weaknesses? What are our strengths?
Our research confirmed for us what we knew in our hearts. Ford’s strength and identity are defined by three words: bold, American and innovative. Yes, we are a global company. And we proudly sell premium brands like Volvo and Jaguar.
But Ford is best in this market when our cars and trucks embody the American spirit – and that means bold and innovative. Interestingly, the same is true for Apple and Motorola – two other American companies that have rebounded with great success.
At Ford, we’ve come up with a phrase that we’re using internally to define that spirit. We call it “Red White & Bold.” This phrase is not about wrapping ourselves in the American flag. And it’s not an advertising tagline. It’s an internal rallying cry that reminds us what will drive us to success.
Visually, in our products, it means bold American design. But “Red White & Bold” is not only about design. It’s about the way we think, the way we make decisions, the way we invest in our future.
And that’s what powerful brands are all about – aligning all aspects of your business to meeting the expectations of your target customer. Let me give you some examples.
Today’s fastest-growing vehicle segment in the United States is crossover utility vehicles, or CUVs. CUV growth is now outpacing the remarkable growth SUVs achieved in the 1990s.
CUVs surpassed 2 million U.S. sales last year, and they are on pace this year to exceed traditional SUV sales for the first time ever. Two distinct market trends have helped fuel this explosive growth. Car buyers are seeking more spacious and flexible interiors, along with the security of all-wheel drive.
And many traditional SUV buyers are seeking more maneuverable and fuel efficient vehicles that still make it possible to have an active lifestyle. But this growth hasn’t fostered much in the way of bold design – not yet anyway.
So far, just about all of the CUVs on the market have been variations on familiar themes: CUVs disguised as station wagons or SUVs. We’ve even seen minivans disguised as CUVs.
Ford’s next crossover, by contrast, is going to chart its own course. When we unveil the new Ford Edge on Sunday in Detroit , you will see the continuing influence of the bold and unmistakably American Ford 427 concept in its design – and it will make the Edge both distinctive and unmistakably a Ford.
Another key battleground is small cars – often called B-cars. Mark my words: Small is big in America – particularly among the “under 30 set.” And, like crossovers, small cars are ripe for bold design and innovation.
As some Asian and European brands have shown, buyers are looking for more than just the small, fuel-efficient vehicles patterned after the ubiquitous econo-boxes of the 1970s and ‘80s. But no company today is putting an American stamp on the small car segment. That means there’s a huge growth opportunity if only someone is willing to seize it.
Ford plans to seize it. Work on some bold American small cars is already under way at our California Advanced Product studio, just down the road in Irvine .
You’ll also see a new concept at the Detroit auto show next week that proves small cars can be bold, American and innovative. And this concept will underscore just how serious Ford is about being a major player in this segment going forward.
We’re also reaching out to new sources of inspiration. This fall, we commissioned a long-term exploratory project at The Art Center College of Design in Pasadena , challenging students to create an all-new entry-level car for Ford customers. I encourage you to visit the Art Center ’s display in the convention hall today to see what the first group of students came up with – including several small-car proposals.
I have to be honest with you. Without American Innovation and “Red White & Bold” to guide us, the small-car opportunity is one we probably would have missed. Before we had a clear vision of what the Ford brand should be, there was a very real risk that our product planners would simply try to “out-Korean” the Koreans. In my mind, that would be a recipe for customer confusion and failure. But with a bold, American small car, we will have more than a just fighting chance to win.
You don’t have to wait for future Ford small cars for proof that bold American design is a winner. Just look at the success of the Ford Fusion. I’m not telling you anything you don’t already know when I say we took our eye off the ball for years when it came to sedans. They just weren’t attractive enough when we were feasting on the addictive profitability of trucks and SUVs.
But, when we made the decision to play offense, to fight back, to reenter the mid-size car market with a bold American design, people took notice.
In developing Fusion, we recognized we had a real challenge to re-establish Ford brand relevance in the mid-size car segment, so we made an extra-ordinary effort to assure customer and brand alignment. And it’s paying off.
It’s still early days, but the Fusion is proving itself a winner. Sales are growing, and we’re leasing more than one in four Fusions because the residual values are so strong. Fusion customers say “bold design” is the number one reason they embrace the car.
With this early success and with an all-wheel drive version coming this year, we’re so bullish on Fusion – and the Mercury Milan and Lincoln Zephyr, too – that we’re announcing today that we’re going forward with our plans to add a third production shift starting next month.
Fusion sales were up substantially in December from November, and we only just recently started our marketing efforts. The third shift and added capacity will allow us to continue this momentum going forward.
Some of you are probably wondering how we can be so sure that the Ford brand is back on the right track. I would ask you to think back to September, when Bill Ford declared that American innovation is the compass by which Ford will set its future direction. The compass, you see, was not set by Bill Ford, or by me, or by our Way Forward plan. It was set by customers themselves.
Customer input has always been important to the decisions we’ve made on products, designs and features. But, this time, as we developed our Way Forward plan, we wanted to know more – to take the same type of approach we did with Fusion for all our products.
In fact, we’ve started applying the same kind of intelligence to car buying that campaign strategists have been applying to voters. Who’s most likely to buy our products, who’s least likely to buy them and who’s up for grabs. This has given us a much deeper insight than we’ve ever had before using traditional demographic or vehicle segment-based models.
One of the most important findings from this research is that there remains a huge market for American cars in this country. And the potential is significantly larger than the roughly 55 percent market share that GM, Ford and Chrysler together command today.
Americans really do want to buy American brands, as long as they are competitive with the imports. We know this, because it’s already working in some segments today. Again, look at the success of the Ford Fusion.
Or the Ford Mustang. Mustang remains hottest car in the industry, and it has the magic combination of high conquest sales – with more than 50 percent of customers coming from non-Ford brands – and high loyalty.
Or the F-Series pickup. Despite the much talked about new competition, we just sold 900,000 F-Series trucks for the second year in a row. 2005 was, in fact, the third best sales year in our history.
And, even here in the import-dominated Californian market, we set an all-time record for the F-Series, which remains the best-selling vehicle in the state.
We also shouldn’t overlook the Ford GT when we think about the potential that exists today for American automobiles. We have been gratified by the large number of Ferrari owners who have purchased the Ford GT in recent months, many of them citing its uniquely American character as a motivating factor.
And what do these vehicles have in common? Quite frankly, they’re bold, they’re American and they’re innovative. And they are all in market segments where Ford knows its customers best.
Many brands want to be American. However, there is no uniquely and consistently American brand in the auto industry. Not yet.
It’s interesting that Toyota is desperately trying to cast itself as an American brand. Toyota is trying to be American because they realize the market potential is huge.
And Toyota has scored points by investing in the U.S. But that doesn’t make it an American brand. In fact, our research shows, the qualities that draw customers to Toyota vehicles are Japanese qualities.
Again, I go back to the research that has validated our thinking at Ford. There remains a huge – and not yet fully realized – market for American cars in this country. It is waiting to be seized, consistently.
Of all the leading automakers, I believe Ford has the strongest legacy claim to be “ America ’s Car Company.” In part, it’s because of where we’ve been. In terms of economic and social influence, there is no other company that’s had a greater impact on the lives of people in this country and in the 20th century than Ford.
Customers identify with Ford and its uniquely American story – even if they’re not buying cars from us today. The innovations and life of Henry Ford are taught in our grade schools. Ford vehicles from the Model T to the Mustang are part of the national consciousness. They’re in our museums and in our art galleries.
The challenge going forward is to give more customers in this country a reason to believe in us again. And that is going to be our focus at Ford. In short, we are changing the way we do business.
We will compete vigorously to be America’s Car Company, winning the hearts and minds of even more customers, from the young buyer looking for his first car, right on through to the family driving their kids to school and the farmer hauling wheat.
We will maintain our commitment to our loyal American truck customers, while delivering innovative and boldly styled cars that will appeal to those people who are still inspired by the American dream – people who live in every town and suburb of America , and at every age and stage of life.
Our way forward is not a retreat into smaller markets, but a retaking of the American marketplace.
And it starts today. It’s time to play offense. It’s time to take back our future.
We, at Ford, know what we have to do. Hopefully, you’re seeing a sense of candor and commitment that you’ve haven’t seen in a while from Ford people.
And we’re going to do it by being bold, American and innovative. It’s a big challenge, but I speak for the entire Ford team when I say we’re eager to take it on, in fact, it’s the opportunity of a lifetime.
Thank you, and enjoy the auto show.
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How we at just-auto reported it:
Small cars emphasised in planned Ford turnaround
