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The word around Detroit these days is that Alan Mulally, the chief executive officer with the ah-shucks way about him that belies the staggeringly difficult task ahead, has a vision for Ford Motor Co. and it boils down to this: Ford becomes a customer-driven, Dearborn, Mich.-based version of Toyota Motor Corp.
Some have mistakenly based that view on a single and exceedingly important decision: hire Jim Farley away from Toyota.
Farley is a good hire, say analysts, but he's just one sign of where Mulally is taking Ford — one of many. Farley, of course, headed Toyota's Lexus luxury brand until last October, when in a surprising move he gave up his Santa Monica, Calif., lifestyle — where he rode a bicycle to the Toyota offices four or five times a week — to return to his Michigan roots and help Ford rebuild around the Ford blue-oval brand worldwide with a one-global-brand strategy.
Farley will lead an effort not just to bring a consistent Ford message globally, but also to make over Ford's marketing ranks in each market around the world. Farley is the first senior-level hire made by Mulally since the CEO arrived at Ford from Boeing 16 months ago. Ford has had global marketing executives of a sort before, most notably Hans-Olov Olsson who came out of retirement briefly to help Mulally's predecessor, William Clay Ford Jr.
Ford marketingi chief Jim Farley introduces the Explorer America Concept vehicle at the Detroit auto show earlier this month. (FORD)
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Whatever work went on behind the scenes to bring sense to Ford's global marketing, it apparently did not meet with much success.
Up to now, each of Ford's business units around the world — Ford of Europe, for example — has had its own sales and marketing chief, and the marketing efforts of them all were never really co-ordinated with those at home in North America, which as a region last year lost $3.5-billion (U.S.), down from a $6-billion loss the year before.
Now, the days of Ford going off in six different directions are over. Mulally has said that Farley will work closely with Derrick Kuzak, Ford's global product development chief, to bring consistency to Ford's offerings and how they are brought to a dealer near you.
Kuzak, in turn, will rub shoulders with Ford's new factory czar, former Ford of Canada president and chief executive officer Joe Hinrichs, who is now a group vice-president for global manufacturing.
If there is a consistent theme in all this, it would seem that Mulally has been putting in place a team of young executives who will shape Ford through its products — how they are developed, how they are built and how they are marketed from here to Timbuktu. Farley's arrival and Hinrichs' promotion in December are huge signals that Ford, in the midst of a restructuring that dates back to 2001 — though it's been done in fits and starts — is about to launch a product offensive designed to lift Ford to profitability and respectability by 2009.
No small feat, that. Ford lost $2.7-billion in 2007, which was an improvement over a dismal 2006 when the company lost a staggering $12.7-billion. So far, the Ford story has mostly been about cost-cutting and asset selling, and in announcing the latest financial results, Ford officials conceded more financial losses and more job losses lay ahead in 2008.
In fact, Ford says it may trim up to 13,000 more hourly and salaried jobs this year, on top of the 44,000 jobs cut since 2006.
Meanwhile, the Jaguar and Land Rover brands are likely to be sold to India's Tata Motors. The rumour mill says a memorandum of understanding for that deal could be signed at any moment. Aston Martin has already been sold and Ford is also said to be shopping Volvo, its Swedish premium brand, which has been a consistent source of profits since Ford bought it in the late 1990s for $6.5-billion.
Ford is not throwing around that kind of money any longer. On the contrary, Ford is trying hard to manage a huge cash hoard to fund this turnaround — $34.6-billion raised by leveraging virtually all the company's assets, from the factories to the blue oval. That gives Ford a comfortable cushion for buyouts and restructuring, not to mention the mounting economic headwinds buffeting the U.S. and its beleaguered automotive industry. But the money will soon run out if Ford does not stanch its market share losses and incentive-laden marketing.
Ford does appear to be steadily getting its house in order, though some say Ford should move with more urgency. Mulally, in reporting the 2007 financials, said Ford has made improvements in quality that helped reduce warranty costs by $1-billion last year and gain the praise of Consumer Reports magazine. Greater use of common components has also helped offset rising raw material prices.
And then there are the products, which next year, he said, will really move ahead quickly to reflect a simplified global lineup. Farley leads the marketing, Kuzak heads all the development and Hinrichs oversees the plants around the world that will build the new cars and trucks and crossovers.
Any one of those three has, perhaps, the inside track on succeeding Mulally, 61, when he steps down. Hinrichs, 40, and Farley, 45, represent a youthful presence at the very top of Ford that is in sharp contrast to the way things used to happen in Dearborn. In the past, Ford's corporate structure most closely resembled the army, with senior officials rising to the top ranks not necessarily based on performance and achievement, but as a reward for longevity and loyalty. Under Mulally, that appears to have changed.
In separate interviews in and around this year's Detroit auto show in mid-January, both Farley and Hinrichs came across as energetic and committed to the plan Ford now has in place — the plan to become "one global Ford," in the words of Mulally.
Hinrichs said his job is to create a common manufacturing system at Ford's 105 factories around the world. The idea is to integrate them and ensure that best practices are followed everywhere — a strategy that reflects the more-centralized approach followed by Japanese auto makers.
Hinrichs said he works closely with Kuzak to create a single worldwide product plan that can be built affordably and with high quality — not unlike what Toyota has a done in becoming the world's richest car company.
"It's very important that we line up our manufacturing plans," he said.
Hinrichs is, apparently, a Mulally favourite. During the launch of the Ford Taurus (the former Ford Five Hundred) at the Chicago Assembly Plant last June, Mulally publicly praised him, clapping and saying, "He's the man. He's the man," when Hinrichs was introduced to a crowd of workers while celebrating the launch.
"Joe has been successful in leading the restructuring of our North American manufacturing operations and was a key participant in the recent contract talks with the [United Auto Workers]," Mulally said in promoting the former Ford Canada chief who was in Oakville only for nine months, but in that time made an impact on dealers and staff alike.
Hinrichs, who earned an electrical engineering degree from the University of Dayton and an MBA from Harvard University, has a down-to-earth demeanour that belies his dynamic automotive career. Before he came to Ford in 2000 as manager of a transmission plant, he worked at General Motors Corp. At age 29, he became GM's youngest plant manager and was so successful in his role that the nation's top business schools still study how he performed in that post. He is one to watch at Ford.
Above all, though, what bears watching is the new models Kuzak, Hinrichs and Farley will be designing, building and selling.
