Howes: Rebuilding Ford | Michigan Radio
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Howes: Rebuilding Ford

Sep 1, 2018

The Blue Oval is stuck in neutral. Again.

Credit Daniel Howes / Detroit News

Just a few years after superstar CEO Alan Mulally retired and left town, Ford Motor is embarking on another 25 billion dollar restructuring. If you think this sounds like déjà vu all over again, that’s because it is.

What happened?

Ford’s second largest business – China – is in free-fall.

South America remains a money loser.

Its European business -- just a couple of years ago hailed for its turnaround -- is losing steam.

Without the F-Series pickup franchise and a stable of popular SUVs, Ford would already be hitting the panic button in Dearborn.

Well, they should be. Moody’s downgraded the automaker’s credit this week, ranking it one notch above so-called “junk.” Wall Street analysts are clamoring for more details about a promised restructuring. Suppliers and dealers want to know now, please how all this turmoil will affect them.

And skeptics are wondering whether Ford CEO Jim Hackett -- and his executive team -- have the right stuff to finish what Mulally started.

They’d better, because existing processes are making too many mistakes. Don’t take my word for it. Look at the record. In China, Ford missed the compact SUV boom.

In India, on track to be the world’s No. 2 market, Blue Oval metal often proved too large and too expensive. In Europe, the company that built its modern franchise on SUVs missed the SUV craze sweeping the Old Country in favor of an array of euro-style people movers.

In Britain, Ford is getting walloped by plans to bolt the European Union… which, in effect, would raise the cost of vehicles built on the Continent only to be shipped back across the Channel.

Back home, Ford has clung to its car lineup long after it’s become clear consumers prefer a different direction. And we haven’t even begun to talk about next-generation autonomy, mobility and electrification.

Just this week, Ford’s top 300 executives from around the world gathered in Dearborn for their Global Leadership Meeting. The theme was ‘Creating Tomorrow, Together” but the message was more direct: change while the company has the ability to change.

Ford escaped the ignominy of bankruptcy nearly a decade ago. But it’s paying a price now. Costs are too high, senior management says. Processes for developing new vehicles aren’t working. And, unlike rival General Motors, Ford no longer has the option to sell its European brands and leave.

Selling the 115-year old Blue Oval would be impractical … and unthinkable.

That means Ford has two choices: Fix what’s broken. Or shut it down.

The good news is Ford’s reckoning is arriving amid a strong national economy that’s still generating profits in Dearborn. That’s the bad news, too. Because creating change is far more difficult when collective backs aren’t against the proverbial wall.

Not yet, anyway.

I’m Daniel Howes of The Detroit News.

Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.