Alan Mulally concentrated on two things when he was describing the dominant brush strokes in the big picture of Ford’s half year financial results. One was the One Ford new model programme. The other was the decision not to sup with the devils at the fountain of free money.
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In both cases, he had bet the ranch. There is no guarantee ever that making a bunch of cars that the car men like is going to guarantee success in the market. And this lot of new Ford cars not only had to work; they had to work everywhere in the world at once. Had they not worked, lost access to government cash could have been fatal.
There was some incredulity from one of the auto industry journalists at the post results announcement meeting. He listened to the tale about One Ford and all models being built and sold everywhere to all of the people all of the time and then extrapolated: ‘You mean that the US will get the cars that are also built for Europe with lots of features and high European prices?’
The US will. In fact it does already. And it pays up. And it likes them
The stupidity of the US auto industry was that it squandered its world lead in car making by selling disposable goods into a durables market. American customers became used to the idea that its large, low-tech, fuel hungry cars aged or failed quickly but could be replaced cheaply.
Done properly, the US could have been the world’s low cost producer. Scale alone would have been enough to ensure that. It could have been a massive exporter. But the European market grew used to luxury and quality. The Asian markets grew used to reliability and the US was prepared to offer neither.
Instead, Ford established separate businesses in the rest of the world – supposing that US buyers would never want small or luxury cars.
At long last, light has dawned. As chief exec, Mulally was the man who pushed through the new policy. He believes that it needed an industry outsider (he’s from Boeing) to spot the obvious and force the pace.
His new cars are doing well. Better cars are selling at a better mix and higher margin. “As you go through the new model year, pricing usually starts to fade. But this time it has not. Product attributes are in line with the Japanese and we can take full price advantage.”
In part, the success is due to not renaming FMC the Free Money Corporation and taking up position with outstretched hand beside the two traditional rivals of Government Motors and Crisis Corporation.
“We are getting a very positive response for not taking the money and for the fact that we are repaying our loans.
“We have a 17% improvement in favourable opinion and great purchase intention figures. The US consumer is really moving to appreciate the smart features in all the new vehicles. They really have moved to quality and efficiency. And our customers will pay more.”
We’ve heard this all before from Ford of course. But it does seem that Mulally might be telling it like it is this time. Furthermore, he has added an international dimension to his vocabulary which is great technique for spreading the message.
Once the quick fire response to anything he approved of was always the midwest mannerism, “you bet”. Now there is a range. We distinctly heard an “exactly” and we are pretty sure that there was at least one “absolutely”.
Stone the crows, old chap. You’ll be getting Lincolns into the members’ clubs of Pall Mall before you know it.
Rob Golding
