BUSINESS

Ford Motors: an underdog story

CATHY GULLI September 25 2006
BUSINESS

Ford Motors: an underdog story

CATHY GULLI September 25 2006

Ford Motors: an underdog story

BUSINESS

A new documentary on Ford shows the reality behind the turmoil

CATHY GULLI

Inside a dim boardroom at Ford Motor Co. in Dearborn, Mich., senior executives are negotiating with unlikely partners: documentary filmmakers who want full access to the company so they can expose Ford’s problem’s and post the footage online. “There’s no secret,” one of them says. Mark Fields, executive vice-president for North and South American operations, sits forward in his leather chair. Camera operators circle in front of him, a boom mike hovers overhead. “The one thing we’re trying to do throughout this organization is rip out the BS, rip out the political posturing, and get the issues out on the table, and have constructive conflict,” Fields says. He a, smacks his hand on the table.

A cameraman interjects, “No fear about letting it all hang out?” Fields shoots back,

“The American people love the truth. And they love an underdog. That’s us.”

At least that’s how the company is trying to position itself in the eyes of consumers, and the Ford Bold Moves online documentary is all part of that plan. The film launched in June as one piece of a new advertising campaign, and in the 11 videos posted since this introductory “webisode,” production company Radical Media Inc. has interviewed gloomy detractors, union work-

ers and even executives, all of whom bemoan the company’s biggest problems—deteriorating market share, dull product design, overproduction and rising costs. “Ford is obviously in a challenging environment today and in a difficult business situation. We don’t necessarily think it’s the time to sing and dance,” says George Rogers, president of advertising agency JWT Detroit, which developed the campaign. “It’s designed to demystify what’s going on in Ford. We’re telling the inside story about [the company’s] turnaround.”

That turnaround, dubbed the “Way Forward” plan, was announced injanuary by then-CEO Bill Ford (who

remains chairman) with the pledge to close 14 plants and cut 34,000 jobs by 2012, but it has been wholly unimpressive. (This plan replaced another ineffective restructuring strategy that Ford proposed when he took over the company in 2001.) In the last quarter, Ford lost US$254 million, and its shares sit at

around $8 today, down from an all-time high of $37 in 1999. “[Ford] cannot afford to post losses forever,” Jay Palmer, a senior editor at Barron’s, warns in one episode. What’s more, its U.S. market share has continued to drop for more than a decade, and Toyota Motor Corp. is aggressively threatening to take over Ford’s place as the No. 2 auto manufacturer behind General Motors Corp. According to Kevin Tynan, an analyst with Argus Research Corp. in New York, Ford’s market share has fallen to 17-9 per cent so far in 2006 from 19.I per cent last year; Toyota has climbed to 15 per cent. “We’re in trouble because we sat still while others ploughed ahead,” says Robert Shanks, vice-president and controller for the Americas, in one video.

Ford’s complacency in creating energyefficient vehicles comes up repeatedly in the documentary. “Ford has the worst fuel efficiency of any automaker in America,” charges Jennifer Krill, director of Rainforest Action Network’s zero emissions campaign, in an episode, adding that its products consume some 1.8 million barrels of oil every day. While its perceptive competitors invested in innovative technologies and hybrids, Ford has hoped that the success of its sports utility vehicles and F-Series trucks (which currently constitute 30 per cent of the company’s annual sales) will continue indefinitely. As Richard Kassel of the Natural Resources Defense Council says in the doc, “Ford has

a business model that depends on selling gas guzzlers at a time when people don’t want gas guzzlers,” whether that’s because of environmental concerns or the increasingly expensive price of gas.

And, adds Tynan, Ford’s dated production models means that the company is unfortunately set up to mass-build one kind of vehicle rather than various types of customized products, which is the way he sees the market shifting. “You have more brands, more technology, more options, so to drive the cookie cutters is not necessary anymore.” Where other car manufacturers have taken risks with unique designs, Ford has created similar versions of the same mass-market

vehicles for decades. “The cars that are being produced now have no style to them. They all look the same,” complains Anthony Dettore, a collision repair centre owner, in one episode. Ford’s attempts at cutting edge design get watered down, and “so you go to the market with vanilla instead of rocky road,” admits Hau Thai-Tang, director of advanced product creation at Ford. As Fields puts it in one episode, “We have to get that design mojo back. Today it’s about what does the customer want, not what does the factory need. And that’s a big change for Ford.”

That kind of blunt honesty is disarming, but Bold Moves does manage to promote many of the changes happening at Ford. The rebirth of the Mustang Shelby GT500

‘WE DONT THINK IT’S NECESSARILY THE TIME TO SING AND DANCE’

is documented with nostalgia and frothy anticipation as a hedge against GM’s Cámaro reincarnation. The latest F-Series trucks are sentimentalized by customers whose grandpappies also drove a Ford. Cabbies bid enthusiastically for fleets of Ford Escape hybrids (new to the product mix) that will save them money on fuel.

The webisodes don’t, however, take on some of the most interesting recent developments at Ford. To date, there is no “inside story” on the new CEO, Alan Mulally, who was lured over from Boeing Co. earlier this month. While he will likely understand the manufacturing side of the business, Tynan wonders if Mulally will appreciate the importance of giving customers what they want. “You and I jump on an airplane and we don’t really have a choice what kind of plane we get on. But I certainly have all the power when it comes to choosing what kind of car I drive,” he muses. Mulally’s arrival could also blunt the advantages of a proposed Ford alliance with Nissan-Renault, which was partly attractive because it would have given floundering Bill Ford access to Nissan’s star CEO, Carlos Ghosn. There have been no videos about Ford selling off its luxury vehicle brands such as Jaguar, Lincoln or Volvo. Nor is there any coverage of Ford’s August decision to cut fourth-quarter production some 21 per cent, to its lowest level in 25 years.

The effectiveness of Bold Moves, says consultant Alan Schulman of Brand New World in New York, lies in its ability to reveal truths to consumers in an emotional way. “This will cause someone to say, ‘Em rooting for these guys.’ ” But he is cautious about Ford putting too much effort into ads, and not enough into its cars. “The greatest advertising in the world can’t sell you a product you don’t want.” M