Ford's North American Chief Sets Sights on Restructuring
RENEE MONTAGNE, host:
Time now for our business news.
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MONTAGNE: Ford made a bet that SUVs and heavy trucks would stay popular into 2005, but gas prices soared and that cost the company. Ford's North American division lost 1.6 billion dollars last year. For several years now, the company has been losing market share to foreign competitors, like Toyota and Honda. Earlier this week, Ford announced a major restructuring plan that includes 30,000 job cuts, and 14 plant closings.
Mark Fields is the plan's chief architect and also the new head of its North American operations. He says it's not enough for the company to get smaller, it has to change the way it does business.
Mr. MARK FIELDS (President, Ford North American Operations): When we talk about the culture of the organization, what we're really talking about is behaviors and beliefs. But there are number of things that just are outdated, our strict hierarchy, in terms risk aversion, things of that nature.
MONTAGNE: So, you've got 100 year old company...
Mr. FIELDS: Well, you know, in any company, in any 100-year-old company, I kind of liken it to a person. You're going to build up some cholesterol in the veins, some blockages. And what we're trying to do is kind of unclog those blockages.
MONTAGNE: Give us an example. What's in this restructuring plan? And Ford did restructure just four years ago. What's in this plan that would do what just what you're saying, unclog the artery?
Mr. FIELDS: It starts with how the plan came together. We essentially had people in all levels of the organization, we asked people to put their stripes at the door. So at the end of the day, this is a plan that myself, the management team, and the organization owns. It wasn't given us down from, you know, the World Headquarters Building. And that's very counter-cultural here at Ford Motor Company.
MONTAGNE: To an outsider, part of the problem at Ford, which seems to be a plan to put a lot eggs into the basket of SUVs and trucks.
Mr. FIELDS: Mm-hmm.
MONTAGNE: How glaring of a mistakes does that look to you all now? I was sitting on the West Coast over these last few years watching a lot of reaction against SUVs, even as they were selling like mad.
Mr. FIELDS: Hmm-mm.
MONTAGNE: Was there anybody trying to think differently?
Mr. FIELDS: Well, I think hindsight is a beautiful thing. Clearly, when the original plan was developed, nobody would have thought that gas prices would be anywhere from two-fifty to three dollars a gallon. But I would push back for a moment in saying, you know, we recognized two or three years ago that the world was going to start dampening their enthusiasm for truck-like SUVs. That's when we invested in things such as crossovers. Crossovers like the Escape that we produce today and our Freestyle. So we did foresee that.
Clearly we didn't foresee it as quickly as it happened. And we're going to build on that in this way forward plan and we continue to see crossovers as a major opportunity for us going forward.
MONTAGNE: How much faster will your turnaround be in this new Ford, this new company, if you do spot a trend that's dramatically changing?
Mr. FIELDS: Well, I think from a product development standpoint, we will be faster than we have been in the past and we'll do it a couple of ways. What we're trying to do is reduce the time it takes to get to market with a new product anywhere between six and 12 months, depending upon the size of the program.
Secondly, what we're doing in the industry, and here at Ford, is sharing global architectures, or what the sheet metal sits on, on a vehicle. And that's where a majority of the investment goes, both the architecture and the engine and power train. And we're going to be sharing more of those throughout our lineup so that we can spend most of our money in investment on changes in the sheet metal and packaging that give the vehicle its unique presence in the marketplace.
MONTAGNE: Let's talk about for a moment about Ford workers. The current contract guarantees that laid off workers still receives most of their pay and benefits. That's, it's quite striking, actually, to a lot of people would seem like a good deal. Ford says that cost the company $130,000 for each worker.
Mr. FIELDS: Yeah, it is a significant issue for us. It is contractually what we agreed to and we will honor that.
MONTAGNE: Is Ford trying to eliminate this provision when you renegotiate next year?
Mr. FIELDS: Well, I'm not going to speculate on how we're going to negotiate next year. We do that in private with our UEW colleagues.
MONTAGNE: Although, I think it's a fair question to ask if you don't try and renegotiate that, why wouldn't you?
Mr. FIELDS: We have to work on both the revenue and the cost side of the business and that includes all of our costs. And I'll just kind of leave it at that.
MONTAGNE: How much would you place blame for Ford's problems on the workforce. If you're trying to sort of balance out all of the areas of concern with contracts that force you to pay health benefits and generous pensions to work?
Mr. FIELDS: Well, you know, I'm not going to get into a blame game here, because I don't think that's productive for anybody at Ford Motor Company.
MONTAGNE: I'm actually not thinking of blame. I'm just trying to say if you're just evaluating it reasonably objectively?
Mr. FIELDS: Well, reasonably objectively as we've said, this has to be a comprehensive plan that, number one, fixes and improves how we come to market with appealing products and do so at a very attractive price and with quality. And that forces you to look at both sides of the profit equation, working on the revenue side and working on the cost side.
So, you know, what we didn't want to do is this coming across as just a cost cutting plan. Sure, that's an important piece of it. But it's also a plan that really focuses our brand and makes sure that we be very targeted in the products that we come out with so that it cuts through the clutter, and we appeal to a certain type of car customer.
MONTAGNE: Well, then what have you learned from complaints that Ford isn't building cars that people want to buy?
Mr. FIELDS: Well, I think one of the things that we've learned the most is sometimes in the past we tried to be all things to all people. And the one thing that we have learned through this process is tightening up what the Ford brand, the Lincoln brand and the Mercury brand stand for, and making sure we target appropriately, which means being not all things to all people.
MONTAGNE: With the recent cutbacks and the idling of plants, Ford has gotten smaller. Is it willing to become a smaller company with a smaller market share into the future?
Mr. FIELDS: Well, you know, based on where we were ten years ago, we are a smaller company both in terms of people and market share. And I think we've done a lot of shrinking over the last ten years, and it's time to stop.
MONTAGNE: Mark Fields is president of Ford North American operations. Thanks very much for talking with us.
Mr. FIELDS: All right. Thank you.
MONTAGNE: You can follow Ford's ups and downs through the years on a timeline at npr.org. This is MORNING EDITION from NPR news. I'm Renee Montagne.
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