Word: autos
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...Bill Ford, great-grandson of the auto company's founder, take on this responsibility when he could have left it to hired professionals? It helps to understand that he is a man of epic contradictions. His family practically invented the auto industry, not to mention blue-collar consumerism. Brilliant, cantankerous Henry Ford made the first mass-produced car, the Model T, and paid workers enough so they could afford to buy one. That makes great-grandson Bill industrial royalty: he comes from a competitive, dynastic clan that cannot be separated from the nameplate on your Mustang. But he also...
...worries about his employees, Ford Motor's boss believes--belatedly, perhaps--that nothing short of a cultural revolution will save the family firm, which, like General Motors, seems to have all but lost a 30-year war with Toyota and other foreign companies for dominance of the U.S. auto market. This week he is unveiling a plan, which he calls the "Way Forward," a last-ditch effort to save the company by taking some big chances. Ford has surrendered market share in the U.S. but figures that a smaller, more innovative company can stir more passion among its customers...
...company's new drive for innovation includes a painful restructuring plan--closing perhaps as many as 10 of 43 plants with some 25,000 job cuts out of a total of 123,000 in North America. The cutbacks are designed to halt the company's losses on its domestic auto operations--$1.2 billion in just the third quarter of 2005--and shore up a credit rating that began to deteriorate last year to junk-bond status. Turning that around while pursuing his philosophical imperatives will be a fancy juggling act. Previous CEOs have repeatedly tried to reinvent the company without...
...sense of confidence, both externally and internally, in the company," he says. Despite an emotional new ad campaign that stresses innovation, the turnaround is complicated. Brands like Toyota have better reputations; their cars resell for as much as $2,500 more than American cars, according to Ronald Tadross, auto analyst with Banc of America Securities. "Ford has a revenue problem, not a cost problem. Their products just can't command enough value in the market," he says. Total sales were $164 billion in 2003; estimates for '06 are around $150 billion. Ford Motor hopes several new midsize cars with crisp...
Will the new designs be enough to stop the rot? Ford Motor's share of the U.S. auto and truck market has been steadily declining, from 24.1% in 2000 to 17.4% last year, while GM's shrank from 28.3% to 26.2%. To put that into perspective, Ford last year made 3.15 million vehicles, although it has the infrastructure to make 3.9 million, by Harbour Consulting's calculations. That kind of capacity utilization--79%--is hideously inefficient. The company's stock price has fallen 39% in a year--wiping out more than $10 billion in shareholder value...