Monday, October 29, 2012

FORD ... One Global Auto Company Stood Upright on Its Own and Did What It Had to Do When It Had to Be Done

We've written about the travails of several global auto companies such as GM, Chrysler, Fiat, Mercedes, Peugeot, Honda, Toyota and Nissan recently. They've all pretty much engaged in 'can kicking' and 'slow played' addressing their all too real problems during much of the past several years.

And many of these companies, including their unions, have looked to their respective governments for financial support along the way.

One automaker company, however, "took care of business" all by itself and continues to do so today. In that regard, Ford didn't seek taxpayer backed government bailout funds, unlike many of its global competitors, including GM.

So let's take a few minutes and review how Ford did what it did in the U.S. and now is doing in Europe. There's an old saying that if you have to swallow a frog, it's best to close your eyes and get it over with asap, even though it won't taste so great at the time. Ford's a great frog swallower.

Ford Caps Turnaround Effort has the details of Ford's amazing and unique story:


"The sale of a small air-conditioning and heating parts plant (Monday) marks the final step in a 2006 plan to slash Ford's North American workforce and sell its Visteon Corp. parts plants put in place by Mark Fields, the head of Ford's North American operations. That effort helped Ford avoid the government-financed bankruptcies that befell rivals General Motors Co. and Chrysler Group LLC.

Mr. Fields, 51 years old, is widely seen as the likely successor to CEO Alan Mulally, 67, who is nearing retirement. Completing the North American downsizing, which closed 16 plants and cut more than 39,000 employees, likely further enhances his candidacy. . . .

(Fields) said that he learned over the past seven years the value of creating a plan and sticking to it. "You lay out a sound strategy and have a relentless focus on execution around that strategy and perseverance. Because over six, seven years we went through some interesting times," Mr. Fields said.

If Mr. Fields is named to Ford's top job, he will quickly have to deal with another downsizing, this time in Europe. Ford last week said it would close three plants to stem losses in Europe there that are expected to reach about $3 billion over two years. . . .

In January 2006, Mr. Fields outlined his plan, which called for the closure of seven Ford plants and the elimination of a quarter of Ford's North American workforce. It also called for selling or closing the Visteon factories. The plan was supposed to make Ford profitable by 2008.

Just six months later, however, Ford acknowledged the plan was insufficient to stop its losses, Mr. Mulally was brought in as CEO and a tougher turnaround plan was developed. In the end, Ford reduced its North American car-making capacity by 25%, or the equivalent of one million vehicles a year.

It paid off in 2009, when Ford earned $2.7 billion, despite that year's deep drop in U.S. auto sales. . . .

"Our whole approach is to make sure we deal with reality and we deal with it in a positive proactive fashion," he said.

Ford's result contrasts with that of GM and its handling of Delphi Corp., its own parts spinoff. GM chose not to rescue Delphi and it filed for bankruptcy reorganization that dragged on for five years. In the end GM spent as much as $14 billion by some estimates and still ended up with some Delphi operations that it had to sell off."
Being able to get to a better reality is always preceded by being willing to see clearly the current reality for what it is. Only then can it be known what needs to be done to create an even better reality. So step #1 is to know that first we need to get real.
And that's just what Ford's leadership did several years ago in the U.S. --- it faced up to the ugly truth. Then Ford's management proceeded to take the required action and did what it had to do in its U.S. operations, painful as it was at the time. Now Ford is taking the same "get real" approach  to its problems in Europe.
In the U.S., Ford turned itself around, asked for and received no government bailouts, and as a result stands tall today as a somewhat unique, stable and profitable global auto manufacturer with a solid future.
In my MOM based view of the world, Ford is clearly the best positioned of the U.S. automakers and is also among the best in the world, too.
U.S. taxpayers should be happy that companies like Ford still exist. May many others learn to follow their example.
Thanks. Bob.

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