RANTS #455

July 23, 2008

Ford’s radical transformation signals a dramatic shift for the company – and the American automobile industry.

By Peter M. De Lorenzo

Detroit. Now that the story is starting to get out about Ford’s dramatic future product plans due to be announced tomorrow, I can safely say that Ford, under the leadership of CEO Alan Mulally, will be the best-positioned American automaker for this still-new century.

That’s a strong statement, but an accurate one. No automobile manufacturer has undergone a more fundamental internal transformation than Ford. And by fundamental I mean everything, beginning with a philosophical shift in the way the company approaches this business led by Mulally, whose laser-like focus has altered the company to such an extent that it’s barely recognizable in less than two years.

Mulally has purged the paralyzing bureaucratic fiefdoms that thrived for years at Ford, he has eliminated the classic Detroit policy of designing, engineering and producing vehicles in a vacuum – something that has absolutely crippled the domestic automakers for years – and he has trained his entire team’s focus on the one thing that can in fact save the company, which is, of course, The Product.

I know what you’re thinking, that all of this stuff is so obvious that it really shouldn’t even be noteworthy at this point, but believe me, what will come out in tomorrow’s announcement from Ford can’t even begin to tell the story of what has gone on behind the scenes. The announcement will only address the obvious future direction of Ford’s product transformation; but the rest of the story is still being written, because it’s an ongoing process that gets refined, pushed and tweaked every single week by Mulally and his team.

The short story behind the announcement is this: Alan Mulally has completely abandoned what worked for the previous 30 years (and what has been made painfully obsolete over the last three months in this new “real price” energy world we live in) and has taken Ford in a new direction that basically eliminates the distinction between what Ford is in Europe and around the world, and what Ford is in the United States market, in terms of the cars offered.

In the old days of Detroit, Ford (and GM) made cars for different markets around the world, and what worked in Europe was never even considered for the U.S. except in a few individual instances, because the driving was different “over there” and the price of fuel was dramatically higher, which thus forced the need for a completely separate range of products than what we were used to.

In Ford’s case, American driving enthusiasts whined for years about the terrific Fords available in Europe that were never available here, and when Ford did venture to bring one of their stellar European products over here, they would never stick with them long enough to make a difference in the larger scheme of things because the company was designed to make money on producing large cars and even larger trucks.

All of that has now changed in one tumultuous quarter.

Mulally could have made a series of incremental steps, which is part and parcel of the Rick Wagoner school of “managing the downward spiral,” but he knew if he hesitated or made only gradual moves then Ford wouldn’t be around long enough for it to matter. So instead Mulally emboldened his team with marching orders that did away with the word “transition” and instead focused their raison d’etre on the word transformation, and the results will be truly breathtaking to see, to the point that Ford’s product lineup will bear little resemblance to today’s lineup in just 24 months.

The only way I can best describe just how radical Ford’s future product push is in terms that even the casual observer of the auto biz can understand is that what Mulally and his team have done is actually skipped a model cycle with these new cars headed for the U.S. market, so instead of doing a series of baby-step changes over the next three years, Ford will bring its 2012-2014 products forward to the 2010-2011 time frame in a blaze of models and configurations that will set the U.S. market - and its competitors - on its ear.

We’re talking a full range of smaller, more efficient sedans, sport coupes, crossovers, people movers and even urban delivery vehicles that will change people’s perceptions of what the Ford Motor Company is almost overnight.

Will Ford still make trucks and some larger vehicles? Absolutely. There will be a core group of American pickup buyers needing the vehicles for work applications, so that business will remain steady for the foreseeable future. It will be a much smaller market than what it once was, but it will still be viable for years to come nonetheless.

But the everyday “face” of Ford on America’s streets and byways will be radically transformed by these dramatically designed and executed new passenger cars, and it will be a refreshing sight to behold.

It’s actually fitting that an ex-Boeing engineer has led Ford’s fundamental transformation, given the fact that Henry Ford’s exploits into the aviation business were so noteworthy.

And it’s fitting, too, that the one American automobile company that basically pioneered this industry and that is celebrating the 100th anniversary of its vaunted Model T this year will be the company that will lead the domestic automobile business into the future.

Things are about to come full circle for the American auto industry, and for the legacy – and the future - of the Ford Motor Company, the timing couldn’t be better.

Thanks for listening, see you next Wednesday.

(Ford)
The shape of things to come for Ford. The Verve Concept revealed at the Detroit auto show conveys the design and package direction for Ford's future passenger car lineup.