Ford fix-it plan off track

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 automotive business.
"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 December.
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 they appear.
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 2012.
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 traffic.
-- "The king of Israel answered, "Tell him: 'One who puts on his armor should not boast like one who takes it off."
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