THE AUTOEXTREMIST
Tuesday, October 26, 2010 at 11:40AM October 27. 2010
More.
By Peter M. De Lorenzo
(Posted 10/26, 11:45 a.m.) Detroit. The good news just keeps rolling on for the Ford Motor Company. It has just reported a $1.7 billion profit in the third quarter – the best third quarter result for the company in 20+ years – and its sixth consecutive profitable quarter. The company is paying down debt in huge chunks, $2 billion in September and the rest of its pension obligation to the UAW - $3.6 billion – this coming Friday, in cash. And yesterday, Ford announced that it would spend $850 million in Michigan – creating around 1,200 engineering and manufacturing jobs – in a drive to makeover at least four Michigan plants by the end of 2013.
Alan Mulally continues to have his troops – the most talented and driven team in the business at this very moment – focused on the big picture. That means the brain trust at Ford has their eye on three things every single day.
1. Designing and engineering outstanding and desirable products that bristle with innovation and overall operating efficiency.
2. Executing smartly-targeted marketing programs with strong consumer appeal.
3. And, as Alan Mulally says: “…an unrelenting focus on improving the competitiveness of all our operations.”
That last point says it all about Mulally’s operating style and his vision for the Ford Motor Company since the day he walked through the front doors four years ago. His unwavering focus on “One Ford” has streamlined the company, focused its resources, energized the talent and is now yielding tremendously impressive results.
But it’s more than that too. It’s focused consistency – one of my fundamental industry axioms for success that I’ve hammered away at since I started this publication – executed at a level not seen since the heyday of the “old” General Motors, when that company dominated the industry. Good enough is not good enough for Mulally & Co., and whatever hoary residue was left from the old broken down and limping Ford of the bad old days has been permanently expunged.
This is a new, ultra-competitive company hell-bent on building the most desirable cars and trucks in the world while understanding that the work is never done, that complacency is always the Bad Dude hiding in the corner ready to wreak havoc on all of the accumulated achievements and accolades at a moment’s notice, and that keeping focused on the tasks at hand must take precedence over absolutely everything else.
Heady stuff indeed, but as CEO Alan Mulally and Chairman Bill Ford Jr. are well aware, the journey is not only just beginning for Ford, it’s just beginning to get interesting.
Believe it or not despite all of its success the Ford Motor Company is at a crossroads - not a crisis per se - but a definitive choice in direction is looming for this newly-energized automobile company.
How can this be, you might wonder? Aren’t they doing everything they possibly can and aren’t they heading in the right direction? And the answer to that is yes, absolutely, they’re doing everything they possibly can based on what Ford used to be.
But what Ford used to be no longer applies. I’m more concerned with where Ford is headed.
This is a cruel business. An automaker is only as good as its last quarter, or its last product hit. The concept of lead time – that unrelenting and demanding mistress that consumes this business – and the gut-wrenching decisions that a company must make every day in order to be able to live on to fight three and four years down the road is brutally unforgiving and can, in some cases, be disastrous if they get it horribly wrong.
My point being is that if good enough is truly not good enough at Ford then I expect more.
I expect Mulally & Co. to aim higher and put the pedal down harder. Ratcheting-up competitiveness across the board is one thing - executing best-in-class products in every segment they choose to compete in is quite another.
While I’m at it, what does Ford stand for? What will its persona be in the future? Is it the industry’s new technological leader? A new beacon of light for the Shiny Happy Hordes looking for the next Green panacea? The scrappy American automaker that always under promises and over delivers? Or will Ford be a force to be reckoned with, one that’s willing and capable of setting the tone and tempo for the entire industry?
Let me give you an example of what I mean. Right now Ford is claiming that its various technologies – EcoBoost, advanced electrification, hybrids, etc., etc. – are class leading if not world class. But let’s look at EcoBoost, for instance. EcoBoost is Ford’s name for turbocharging with direct fuel injection. It allows smaller displacement engines to deliver impressive power with excellent fuel economy. A clever name but is it fundamentally different from other manufacturers’ turbocharged, direct-injected engines? In a word, no.
What would make EcoBoost different? Let’s take a look at what Audi did with regard to their diesel engines. Diesel engines are tremendously popular in Europe and other parts of the world because of the nose-bleed high fuel costs and associated taxes on engine displacement, among other things. And compared to Mercedes-Benz – a longtime industry leader in diesel power – Audi had been a laggard in the market with their diesel engines.
So what did Audi do? The VW Group - Audi’s parent company - decided that their moniker for diesel - TDI - needed street credibility. And what did they determine was the best way to go about getting it? By racing it. But not just racing it in some second- or third-tier racing series, but racing it on the world’s grandest road racing stage: The 24 Hours of Le Mans.
What Audi was contemplating was heretofore unthinkable. A major manufacturer racing diesels in the toughest competitive environment in the world? Crazy.
And what happened? Audi came up with the most advanced thinking in diesel power they could muster and stuffed these super-high-tech engines in their ultra-successful Le Mans prototype racers, and won convincingly and repeatedly. And now “TDI Power” is a name that bristles with integrity, technical gravitas and most important, success.
In short, Audi wanted it more, they demanded more of themselves and they knew it would take relentless focus and total commitment to get it done.
My point being – again – is more.
Is Ford going to be content to be America’s Best, the scrappy little-engine-that-could company that delivers excellence in a world of reduced expectations?
Or is Ford going to be about more?
Is EcoBoost going to remain a clever marketing moniker for Ford or is the company going to demand and strive for more and imbue it with a level of integrity that no other manufacturer can match?
The 50th Anniversary of Ford’s stunning overall victory at the 24 Hours of Le Mans – the first of its four consecutive victories and still the only American manufacturer to do so – is coming up in 2016, and it remains one of the most glorious achievements by an American automobile company in history.
If Ford is the scrappy American company that delivers great results, they will mark the anniversary with a proper acknowledgement to past glory days and past achievements. And that will be it.
But if Ford is the global force to be reckoned with, the automobile company that lives and breathes focused consistency, a passion for excellence and a desire to achieve greatness in every endeavor it chooses to participate in, then I expect to see a brace of Ford prototypes - advanced technical statements glittering with innovation, ingenuity and efficiency - on the grid at Le Mans in June, 2016.
And I expect that company to win.
Which fork in the road will the Ford Motor Company choose? Stay tuned.
But I for one am going to expect more.
That’s the High-Octane Truth for this week.
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