Ford fix-it plan off track
DEARBORN -- Ford Motor Co. is failing to meet key goals in its turnaround
plan and employees are losing confidence in the company's ability to save
itself, according to an internal report released to employees and obtained
by The Detroit News on Thursday.
Titled "Report Card: Ford North America," the report paints a grim picture
of a company unable to stop its downward spiral.
Ford missed its retail sales goal in the United States for January by 10,600
vehicles -- or nearly 1 percentage point of market share -- and now expects
to miss its retail market share goals for February and March, the report
shows. The company hit its material cost reduction target for January, but
will miss its targets for February and March by a wide margin, according to
the current forecast.
"These metrics are key indicators of progress toward achieving profitability
by 2009 for North American automotive operations," the report states.
Ford's problems are not lost on employees, only 47 percent of whom say they
have confidence in Ford's long-term success. And less than 45 percent
believe the automaker's "Way Forward" plan is working, according to the
results of an employee survey included in the report.
The failure to meet the plan goals is the first sign of real trouble for CEO
Alan Mulally's new regime. While Ford lost more money in 2006 than ever
before -- $12.7 billion -- most of that damage was done before the former
Boeing Co. executive was tapped to lead Ford last fall. Since then, Mulally
has stressed the need for unblushing honesty and rigorous accountability,
urging his executives to set realistic goals for 2007. However, Ford's
Americas team failed to meet these supposedly more realistic targets.
That is bound to put more pressure on Ford Americas President Mark Fields
and his team.
Wall Street is likely to be more indulgent with Mulally, according to
Bradley Rubin, who follows Ford for BNP Paribas.
"He's already done the hard thing, which is raising the capital and getting
enough cash in there to fix Ford's problems," Rubin said. "It's not about
how much they lose in '07. Earnings have taken a back seat to whether or not
they have enough cash and financial flexibility."
In December, Ford put up all of its U.S. assets to secure more than $23
billion in financing to fund the turnaround plan.
Workers losing faith
Ford spokesman Oscar Suris confirmed the authenticity of the report and said
it demonstrates the company's commitment to keep its employees informed of
the progress Ford is making in its effort to revive its struggling
"One of the hallmarks of the Way Forward effort has been robust
communication with our employees, and that is continuing," Suris said. "Part
of the value of understanding how you're performing against your plan is
that you can make decisions today about what you do tomorrow to affect your
performance in the future."
Fields went over the report with employees Wednesday as part of his regular
weekly Webcast, but acknowledged that he is having a hard time convincing
them to keep the faith.
According to a quarterly survey of employee morale, results of which were
included in the report, most employees have a dim view of Ford's future.
Just more than 50 percent were optimistic about the future a year ago, and
Ford set a goal of increasing that number to 60 percent this year. But it
has already fallen to below 50 percent.
Product -- or the lack thereof -- is a major cause for this pessimism. Only
38 percent of workers surveyed said they believe Ford has "the right
products to move the company forward." That was four points higher than
before the automaker invited employees to see its future product lineup in
Better marketing next step
Fields said during the Webcast that getting employees to buy into the "Way
Forward" plan will be a key goal of the coming year. Improving Ford's
marketing will be another.
"Marketing and Sales has developed a marketing plan to generate increased
showroom traffic and improve customer consideration by aggressively telling
the Ford story with confidence and consistency and highlighting our great
products," the report states.
It has been a long time since Ford's marketing division delivered
game-changing campaigns like "Have you driven a Ford lately?" or "Quality is
Job One." Its most recent "Bold Moves" campaign riled dealers, forcing the
company to rethink its strategy.
Mulally is also continuing to hold weekly meetings with top executives to
monitor progress on Ford's turnaround plan and deal with problems as soon as
According to the report released to employees this week, the shortfall in
retail sales was "due to greater-than-expected segment shift out of pickups,
unfavorable share performance related to SUVs and lower-than-planned
availability of (Ford's) new products."
Among the few bright spots in the report was news of a strong launch for the
new Ford Edge and Lincoln MKX crossovers, as well as real progress on
improving cost performance.
"The forecast for the first quarter of 2007 reflects lower-than-expected
warranty costs," the report states. "The forecast also includes further
reductions in manufacturing-related expenses, particularly fuel and utility
costs for plants."
Ford is well on its way to meeting its goal of cutting some 44,000 jobs in
the United States by 2008. The company also plans to idle 16 factories by
Ford report card
Here's a summary of status report Ford sent to employees this week.
Missed its retail sales market share goal in the United States by 10,600
vehicles and expects to miss its retail share goals for February and March.
Expected to miss its material cost reduction goals in February and March.
Employee confidence in its turnaround plan has fallen. Fewer than half of
employees say they believe Ford's Way Forward plan will help it achieve
sustainable business success.
Only 38 percent of employees said they were confident Ford has the right
products to compete.
Ford expects to achieve cost gains through lower than expected warranty
costs and lower fuel and utility costs.
Ford Marketing and Sales is implementing a new plan to drive more showroom
"The king of Israel answered, "Tell him: 'One who puts on his armor should
not boast like one who takes it off."