Ford Tough: Bill Ford and the Battle to Rebuild America's Automaker
Narrated by Chris Ryan
David MageeUnabridged — 3 hours, 26 minutes
Ford Tough: Bill Ford and the Battle to Rebuild America's Automaker
Narrated by Chris Ryan
David MageeUnabridged — 3 hours, 26 minutes
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Overview
Ford Tough is the contemporary story of a company fighting to position itself in a new era of business, with the founder's visionary great-grandson as the leader of the new Ford Motor Company.
Bill Ford Jr. is the first Ford family member to run the company since 1979. A self-professed environmentalist and by all accounts a "nice guy," he might not seem the most obvious choice for a hard-nosed corporate leader. But his vision of the company's future, his genuine care for his employees, his well-timed toughness, and his obvious concern for the long-term well-being of Ford Motor Company have proven to be essential characteristics for the leader of America's most famous brand.
Ford watched the company decline beginning in 1999 as then-CEO Jacques Nasser tried to remake the automaker into a new economy business. When the plan did not work, Ford stepped in to rebuild the automaker and restore faith from employees, consumers, and dealers. He guided Ford Motor Company through its troubled times and a successful centennial celebration.
With its massive size and a troubled economy, leading Ford Motor Company into the twenty-first century will be no easy task. Ford Tough looks at the modern rebuilding and the future of a company that defines American know-how and American culture.
David Magee (Lookout Mountain, Tennessee) is a former newspaper editor and columnist, as well as an automotive expert who has been featured on National Public Radio, Bloomberg TV, and the Discover Channel, among other news and media outlets. He has written for the Associated Press, the Clarion-Ledger (Jackson, MS), and the Oxford Eagle (Oxford, MS), and is also the author of Turnaround: How Carlos Ghosn Rescued Nissan.
Product Details
BN ID: | 2940169443073 |
---|---|
Publisher: | Penton Overseas, Inc. |
Publication date: | 01/01/2005 |
Edition description: | Unabridged |
Read an Excerpt
Chapter Six
Thousands of automotive and business print and broadcast journalists from
around the world flock to Detroit in the first days of January each year to
mingle with company executives and to see, touch, and feel the hottest new car
and truck products global automakers have to offer. From Honda to Toyota,
Chrysler, and Ford, all companies participate in the world's most important auto
show, giving vehicles a rock star treatment with splashy entrances and
accompanying silky smooth promotional materials. Journalists quickly discern the
handful of winners and losers of this annual product warfare, in spite of the
best spit-shine PR efforts from every company, and rapidly relay the vibes
throughout the world, shaping the thoughts of consumers, Wall Street analysts,
and investors. The result is that tomorrow's winning products are rarely a
surprise, having been detected typically one to two years before during
preproduction viewings at the Detroit show.
When Ford Motor Company revealed
its best and brightest at the 2002 North American International Auto Show-less
than three months after Bill Ford and team took over operations-its overall
upcoming product lineup was so depressing in comparison with competitive
products, particularly those shown by foreign automakers Nissan and Toyota, that
top tier journalists began to suggest out loud that perhaps the day of American
doom had come-the end of Detroit. Chrysler was long gone, gobbled up by German
automaker Daimler in what was called a "merger of equals" but everybody knew was
an outright foreign acquisition. With little to show and in financial distress,
Ford Motor Company appeared headed down a difficult road, the biggest thing it
had to reveal being a long-awaited operations restructuring plan instead of a
stable of cutting-edge, future products.
The one product that turned heads
was a high-priced concept car, a modern version of Ford's historic GT40. That
super sports car had made Ford Motor Company the international racing
manufacturing leader in the 1960s with its stunning first-second-third sweep of
the 24-hour Le Mans race in France in 1966 and its repeat victory in 1967. The
modern concept car version unveiled in 2002 was a spectacle for auto
enthusiasts, but it did not signal a turn in fortunes for the beleaguered
automaker because nobody thought the money-losing company could afford to
actually engineer and manufacture a roadworthy version of the car for sale. The
GT40 is cool, they said, a real novelty. But Ford won't be able to do anything
with it because they've got no money to spend on product development.
Ford
Motor Company was hurting financially, and the world was waiting to see Bill
Ford's plans for reviving the automaker. The widespread assumption was that
risky, expensive research and development had no place in the company's
short-term future. The best Bill Ford and company could do was to slash expenses
to restore bottom-line results quickly. Of course, the problems at Ford Motor
Company in the first year of Bill Ford's reign as chairman and CEO had more to
do with a lack of focus for the previous three years than with overcapacity and
a bloated budget, but these by-products of trouble were crippling the company
and had to be immediately fixed if the automaker was to avoid slipping to the
level of second tier.
Times at Ford had gotten so bad, so fast that nobody
could believe how far the automaker had fallen in just a few short years. The
company that two years earlier had seemed poised to become the world's biggest
and best was, in the early days of 2002, a near disaster and on display for the
entire world to see. Ford Motor Company was poorly invested from its
diversionary plans, core auto operations were losing money, and product
development had few immediate hits in the pipeline. So ailing was Ford that the
company even had to tinker with its hands-off dividend, lowering the payout for
Class B and common shares, and find the means to save its way to near-term
survival. The only choice for Bill Ford was to formulate a long-term
restructuring plan in a very short time, unveiling it during the auto show where
the thousands of interested journalists were gathered.
Automotive management
models were available to study during the two-month revitalization blueprint
planning process, since Nissan's Carlos Ghosn was in the midst of a
much-publicized and highly successful turnaround of the Japanese automaker. That
company had been in no better shape in 1999 than Ford was in 2002, but, through
its Nissan Revival Plan, had returned to respectability in less than two years.
Ford Motor Company had also undergone a turnaround of its own in 1991 and 1992
when Bill Ford was on the company's board, offering vital lessons to learn from
experience. Ford says he and the company's management team studied "a few pages
from Ghosn's playbook" and looked back over Ford's history for previously used
strategies in formulating a restructuring plan, but ultimately did not rely
heavily on any one source.
Ford Motor Company, due to its size, history, and
the unique issues faced in 2002, was unlike any available automotive case study.
The company was big and global, with multiple brands and 340,000 employees
spread over six continents. It was also very American, bound by decades of
employee legacy costs and 1999 union labor agreements that provided extensive
job and income protections for UAW member employees.
Nick Scheele, who had
previously helped put a restructuring plan in place for the ailing Ford of
Europe, directed the plan effort. He and the Ford executive team decided the
plan should span five years, ultimately resulting in Ford Motor Company's return
to world-leading automotive profitability. The heart of the blueprint involved
cutting from company payroll 35,000 employees, closing five plants, and
eliminating four low-market car models, including the Mercury Cougar and the
Ford Escort. Ford Motor Company also cut roughly 330,000 vehicles from its
production lineup by eliminating shifts and slowing assembly lines; eliminated
white-collar jobs in North America through early retirement; and aimed to
eliminate $1 billion in noncore assets, including an assortment of companies
like Kwik-Fit as well as dot-com shares acquired by Nasser during his remake of
the company. Ford Motor Company also said it would reduce general and supply
costs by $3 billion.
The Ford Revitalization Plan, aimed at boosting profits
a lofty $9 billion by the middle of the decade (management committed to
generating $7 billion in annual pretax profit within five years), was, however,
built almost completely around the one big thing missing from the 2002 auto
show-product. Bill Ford was troubled that all his company had to talk about at a
car show was its restructuring plan and vowed to his management team it would
not happen again under his leadership. He announced a product-led program
designed to result in dozens of new or significantly freshened products in the
United States during the restructuring plan.
"If you look at Ford's history,"
Bill Ford said, "one of the most obvious lessons it teaches is that great
products are what drive success in our industry."
Instead of taking the easy
road, restoring short-term profitability by slashing bottom-line product
development investments, Ford Motor Company would more than double the money
spent on creating new and exciting products while costs were reduced in every
other area of the business. New computers on the desks of employees could wait.
New product could not. A billion dollars was added to the capital expenditure
line.
"The easiest thing we could have done," Ford says, "is cut capital
expenditures on product, but we actually stepped it up. Today, we are spending
more than General Motors and they are one-third bigger. We're building for the
long-term."
Scheele, who once revived Jaguar through head-turning new product
and coined the "back to basics" phrase at Ford Motor Company despite the
objection of then-boss Jac Nasser, could not have agreed more with Ford's
approach. "We are a car and truck company," Scheele says. "A car and truck
company designs, builds, and sells great product."
A simple statement, but
one that the thousands of people associated with Ford Motor Company wanted, and
needed, to hear. The American car manufacturing industry is unique in that most
executives, managers, and people who work on manufacturing lines or in
dealerships are romanced by the automobile. It is a passion they all share, no
matter what level of hierarchy they occupy in the company. They may specialize
in design, engines, or product development-but most of them love finished cars
and trucks. At Ford Motor Company, this passion often runs even deeper, perhaps
because of a century of lineage, product, and family continuity. Say "Mustang"
to a room full of Ford employees and attention quickly moves to the
center.
The employees needed a leader to stand before them and say that the
company was once again staking its future on providing innovative, well-built
vehicles for the masses. They could live without a free computer or low-priced
Internet service or company-owned European service centers and junkyards. They
could not, however, bear working for a product-starved Ford Motor Company that
was built on the back of a legacy involving some of the world's greatest
automotive names, including the Model T, the Thunderbird, the Mustang, the
Taurus, and the F-150.
"We do have icon products to build on," says Bill
Ford, "and that is an incredible advantage."
Bill Ford and his new management team took this message-that the company was
putting excitement back into its North American product lineup-to the same
dealers that were alienated during the three years of turmoil in Dearborn. A
leader in delivering the good news was longtime executive and dealer ally Jim
O'Connor. Ford had approached O'Connor in late 2001 and asked him to serve as
the company's vice president of sales and marketing, his primary charge being to
rebuild dealer trust and relationships. O'Connor's locker at Grosse Pointe
Country Club in the suburban Detroit area is next to Bill Ford's, and he often
runs into Bill Ford Sr. on the golf course.
"He'll say, 'Hey, man,' "
O'Connor says, " 'what's going on down at the shop?' "
O'Connor was going on
40 years with the company and not far removed from seriously considering an exit
during the company decline under Nasser when Ford called, but when given the
opportunity to stay at Ford and help, there was only one answer to give.
"I
told my wife," O'Connor says, "this is Bill Ford saying 'I need you on my team.'
"
O'Connor began visiting with dealers, promising new waves of upcoming
products and pledging a renewed spirit of cooperation under the company's new
leadership team. He took fellow executives, including Bill Ford and Jim Padilla,
to meet with individuals and groups of dealers to show commitment to North
American auto operations, hoping to ease escalated tensions.
"Some of our
best dealers," Padilla says, "did not feel we treated them as valued members of
our team. Ford [Motor Company] is personality, and it was not good for the face
of Ford to be pissed off."
Executives held a closed-door meeting with the
owners of 900 franchises at the 2002 NADA convention, admitting mistakes and
pledging more openness and respect. And by February 2002, Ford Motor Company had
only five of its almost 50 dealerships remaining and was close to selling
those.
"They realize," said Fernando Garcia, president of Fall River (Mass.)
Ford, "they took the wrong course. They told us at the meeting that it's their
job to build quality cars and it's our job to sell them. That goes a long way to
improving relations."
As a sign the focus was back on the products, the
company also made a surprise announcement. Just one month after the GT40 concept
car was unveiled at the Detroit Auto Show among whispers that Ford Motor Company
could never afford to build it, O'Connor announced on a stage at World
Headquarters that the automaker would in fact put the GT40 into production. His
words drew cheers from a standing-room-only crowd of Ford Motor Company
employees. Broadcast live to dealers by satellite, the announcement was a
message from the company's new leadership team that product investment was a top
priority and romance was very much a part of Ford's vehicle affairs. It was also
a commitment to building new, exciting products faster than ever before, as
O'Connor committed that the car would be ready in time for the company's 2003
centennial celebration-just 15 months away.
"When O'Connor said, 'We're gonna
build it,' " a Ford employee remembers, "it was almost as big as when Bill Ford
took over. You knew things were different."
While product development raced into place, Ford Motor Company's human
resources department's three-year rush of activity was coming to a grinding
halt-in new initiatives, that is. Under the new leadership of Joe Laymon, Ford's
single new HR policy for 2002 was that no new policies would be put in place
internally during the entire fiscal year. As the company worked to settle
lawsuits resulting from previous turmoil, Laymon stopped initiatives so
employees could relax and focus on the important tasks at hand-designing,
building, selling, and financing cars and trucks.
"We had too many people
involved in strategy," Laymon says. "We did not take the time to find out if new
policies and procedures worked. I put a moratorium on it. My point was that this
will not result in us selling one fewer vehicle."
Laymon says much of what
was being done in people management at Ford Motor Company was good, but "few
gave it a chance to work" before seeking more change, and therefore the company
was in constant churn with employees, its most prized possession.
"If you
take the time," Laymon says, "to get to know the people and the products and
understand ._._. that we have the best dealer body in the country, this culture
will take you in and embrace you."
The company, Jim Padilla says, had
"effectively pissed off" three out of four employees with multiple and rapidly
changing personnel policies since 1999. "We took our biggest asset and
juxtapositioned the thing," he says. "It was nonsense, the whole thing about A
players and B players-thank God we have B players, because we could not stand
having all A players.
"B players [at Ford] are making a comeback," Padilla
says. "We've thrown all those processes out and gone back to seeing people as
people. Even though times have been tougher, we've had more with us."
The realization by Bill Ford and other Ford executives during the 2002 auto
show that the focus was on the pains of business rather than the company, its
products, and its heritage was a harsh reality that needed to be dealt with in
short measure. Ford Motor Company was an automaker and, despite its problems,
still produced some of the best-selling vehicles in the world, including the
perennially best-selling F-150, the Explorer, and the increasingly popular
Focus. Something had to be done to remind the American people that the company
was more than a nuts-and-bolts business story on the financial pages.
It had
become apparent from the swell of pride among employees and dealers during Bill
Ford's ascension to CEO that having a Ford at the helm of the company was one of
its strongest assets at the moment-a stabilizing blend of past, present, and
future that gave Ford Motor Company a competitive advantage. General Motors was
a big, strong auto company, but who was GM? Ford Motor Company's strength was
the legacy it shared with American history.
"We needed to take back the voice
of Ford," said Rich Stoddart, Ford Division's advertising manager. "Lawyers
[and] the media were being heard louder than we were."
Another Ford insider
put it more bluntly: "We had no fucking product. All we had to sell was
Bill."
Working with the company's advertising agency, J. Walter Thompson,
Ford executive and marketing team members came up with an idea, suggesting to
Bill Ford that he should be the center of an advertising campaign designed to
"rearticulate" Ford Motor Company values. Because Ford is uncomfortable in
heavily scripted settings and had no desire to be seen as an attention-seeking
CEO, he heartily resisted the idea at first. Longtime Ford
executive-turned-Chrysler CEO Lee Iacocca had become an American celebrity in
the early 1980s because of commercials he starred in, personally urging
consumers to buy from him. Ford had no interest in looking into a camera and
saying, "Buy from me." But close aides worked to convince him that it was in the
company's best interest because the face of Ford needed to be a Ford. He agreed
to participate in an advertising campaign, but only if he got to do it his way,
relaxed and unscripted.
However, when Ford went for the ad shoot, he found a
Hollywood-style setting with hundreds of bright lights, a teleprompter, a stool
to sit on, and a script-hugging director. Despite the efforts made to set up the
studio for Ford Motor Company's "No Boundaries" campaign star, Bill Ford was so
uncomfortable with the sterile setting that he walked out.
"I can't do this,"
he told Jim Vella.
Realizing that Ford is more comfortable in an intimate and
off-the-cuff setting, Vella asked him to try it another day, another way. This
time it was Bill Ford talking for two hours to a rolling camera about what he
knows best: the history and heritage of the company, its products, and its
founding family. The ad agency easily got four commercials out of the one-take,
from-the-heart footage.
In the first 60-second spot, titled "Legacy" (it
aired nationally in February 2002), the camera zooms in tight to Ford's face,
revealing new lines from three years of stress, but eyes that glisten when he
talks about the company's past relating to family knowledge.
"My
great-grandfather Henry Ford," Bill Ford says in the commercial, "really
redefined what it meant to live in this country. 'No boundaries' applied to
everything he did, and that's the part of him that really inspires me. It's a
wonderful legacy.
"For me, it's really a great honor to be able to try and
advance that legacy and redefine it in the 21st century. This company has always
been about looking forward and anticipating the future and actually helping
shape that future ._._. and that's what gets me up in the morning."
In
another spot, pictures are shown of Ford's great-_grandfather on one of his
well-documented camping trips with Harvey Firestone.
"They used to take these
camping trips every year," Ford says, "with Thomas Edison and whoever the
President was. They called themselves the vagabonds. They sort of invented
SUVs.
"I love the outdoors._._._. I won't even stay in a hotel if I can't
open the windows, and so our SUVs provide a great deal of freedom. You can't
accept limitations._._._. SUVs are what people want, and we do them better than
anybody else."
In "Family," he talks about how the automaker was not "just
another nameless, faceless company," suggesting Ford Motor Company has a
soul.
"[Employees and dealers] are third, fourth, fifth generation," Ford
says, "and people have stories. The stories are, 'My grandfather worked with
your grandfather' or 'My aunt, my uncle, my cousins, my brothers, my sisters
._._. they all work here.' That really sets us apart from other
corporations.
"To me, the litmus test of whether we've done a good job here
really is going to be the stories the next generation is going to tell."
The
ads were an immediate national hit, scoring strong results in advertising
consumer polls that interpret viewer likeability. Auto company ads, because of
their frequency, typically rate low in positive response, but USA Today reported
through its Ad Track poll in 2002 that 21 percent of consumers familiar with
Ford Motor Company's ads "liked them a lot."
"We were not trying," says
Ford's Jim O'Connor, "to make Bill Ford a celebrity. But the dealers really got
behind it, and it allowed us to break through all the clutter at the
time."
But interwoven among the successes were frustrating lessons in
celebrity for Bill Ford to learn. Like any youth worth their salt, his children
found the television commercials intriguing and half-jokingly asked their father
about appearing in one. Ford promised his daughters a gig in an upcoming ad if
their team won a state soccer championship. They did, earning a background-only
appearance in a commercial with a soccer mom minivan and a minimal paycheck. And
even in such an innocent incident, Bill Ford attracted controversy. Ford's
children wore practice sweats instead of uniforms in the commercial, and
positively identifying them during the brief spot is almost impossible. Yet when
a parent from a rival team heard about the commercials, he called the
sanctioning soccer association in Michigan to complain that by appearing in a
paid commercial wearing soccer uniforms, they had violated amateur rules and
should have to forfeit their championship and be barred from further
participation. The matter was resolved, but only after Bill Ford was forced to
engage a lawyer and deal with the reality that he was no longer just a parent
with children who could easily involve them in fun and interesting parts of his
job without heavy scrutiny.
In every way possible, Bill and Lisa Ford have
tried to avoid such situations and keep normalcy at home by giving their
children advantages without entitlement. When his oldest daughter, Eleanor, got
her driver's license, Ford could not bring himself to bestow her with a flashy
new vehicle, despite having a stash of products from Aston Martins to Land
Rovers, Volvos, and Lincolns at his immediate disposal. But as a straight-A
student and a multisport athlete constantly on the go, she needed
transportation. The Fords compromised by getting a "pretty stripped down"
Mercury Mountaineer as a third family car, saying she could drive it on an
as-needed basis. Ultimately, it was always needed and her regular use made the
SUV essentially hers. Ford said that was fine, but he hoped the point was driven
home with his children: that very few things in life-like keys to a car when
your father is head of the world's second largest automaker-are given
automatically. They may be due an inheritance, but that does not relieve them
from sweat equity in their chosen fields, especially later in life.
"I hope,"
Ford says, "that I have been able to impart to my children that not working is
not an option."