Is There a Future in Ford's Future

Is There a Future in Ford's Future?

By MICHELINE MAYNARD
January 8, 2006

NYTimes.com

DEARBORN, Mich.

MARK FIELDS has no time to waste - and no time to become acquainted with employees at Ford Motor, where he is the new president of its American operations.

That is why Mr. Fields, who recently returned to Ford's headquarters here in October after three promotions that had taken him to Argentina, Japan and England in the last eight years, has been firing off "Dear Team" e-mail messages to employees, outlining the steps that he thinks the company needs to take, and serving as host for internal Webcasts.

Borrowing tips from the business books he devours as late-night reading, Mr. Fields has also written long lists, which he keeps in a binder that sits on a shelf behind his desk, of what he expects from his staff - and what they should expect from him. He displayed them last week in his first interview since his promotion; the lists cover topics like the way he wants to run meetings (no secret BlackBerry surfing, no wall-sitters who do not take part in decision-making) and his personal values (candor, humility and a sense of humor). He wants reports on white paper, and memos delivered ahead of meetings - so that executives know what they will discuss. And he wants managers to wear enameled pins bearing the blue Ford oval insignia.

All of those might seem like the latest executive whims at a company that has been through every management trend to hit the business world in the last 25 years, from Japanese-style quality circles to global development teams. But Mr. Fields has an enormous challenge ahead in fixing the sickest part of Ford - its sprawling operations in the United States - and he does not want employees to spend months figuring him out. The detailed instructions are necessary to speed up his acclimatization, he said, because "they can't read my mind." Indeed. But no one can misread Mr. Fields's challenge.

The difficulty of his task was underscored just last week, when Standard & Poor's cut Ford's credit rating an additional two notches deeper into junk status, moving the company even further away from regaining the top investment grade rating it had used as a competitive tool throughout much of the 1980's and 1990's.

After meeting with Ford officials last month about the turnaround plan that Mr. Fields is drafting, S.& P.'s analysts warned that Ford could also be swamped in the event of a bankruptcy filing by General Motors, which is grappling with its own radical restructuring program. G.M. would be able to cut its labor and other costs under court protection, giving it an advantage.

Further crowding Mr. Fields's plate is the strength of Toyota, which is poised to pass G.M. this year as the world's biggest auto company, and which, at one point last year, came within a hair's breadth of catching Ford to become the second-biggest auto company in the United States market.

When William Clay Ford Jr., the company's chairman and chief executive, was asked what he wants from Mr. Fields, he replied bluntly: "I want him to turn the place around."

JUST five years ago, the talk in Detroit was about whether Ford could eventually outsell G.M. Now the talk is about which of these two companies is worse off.

Dealing with G.M. is particularly treacherous these days for Ford, which is about a third smaller in the United States. G.M. proved again last summer that it was still willing to sacrifice long-term performance for short-term gain, offering consumers the deep discounts it usually reserves for employees.

Ford and Chrysler were forced to match the deals, which caused sales to soar. But sales crashed just as quickly when the offers ended, and the gimmick did little to help G.M. or Ford stave off the threat posed by Toyota. By contrast, Ford found a way in the mid-1980's to confront Toyota, by introducing the Taurus sedan, which initially outsold Toyota's Camry.

"It feels like a lot of obstacles hitting a weakened company when the competition is moving from strength to strength," said John Paul MacDuffie, an associate professor of management at the WhartonSchool of the University of Pennsylvania.

Today at the North American International Auto Show in Detroit, Mr. Fields will take a big step in trying to reverse that momentum by introducing the first of Ford's next wave of new vehicles aimed at recapturing at least some of its lost sales. They include a crossover vehicle called the Edge - no relation to the U2 guitarist - as well as the MKX, a replacement for the Lincoln Aviator sport utility, and an eye-catching concept car, the Ford Reflex, whose low-slung lines and rear-hinged, flip-up doors are meant to show that Ford believes a small automobile can still be imaginative.

The tougher - but equally crucial - job comes later this month. On Jan. 23, he will give the details of the Way Forward, a name he chose for his turnaround plan at one of his earliest meetings after his arrival in Dearborn. The plan is expected to include plant closings, thousands of job cuts, new brand images for the Ford and Lincoln-Mercury divisions and a renewed effort to streamline the company by paring expenses and eliminating white-collar workers.

"He's got a lot of things to do," Mr. Ford said in an e-mail interview last week. "But I believe he can do them."

The details that Ford executives shared on the plan did not convince S.& P.'s analysts, who issued their downgrade last Thursday, nearly three weeks before Ford officially introduces the program.

While S.& P.'s veteran analyst, Scott Sprinzen, declined to discuss the plan's details, he said that Ford had to overcompensate for anything G.M. might do as it worked out its own strategy for survival. "G.M. is one factor in the marketplace that Ford has to consider in setting its own restructuring plan," Mr. Sprinzen said. According to news reports, G.M. will soon announce extensive price cuts on its cars and trucks. Rick Wagoner, G.M.'s chief executive, declined to comment on the reports.

Many of the elements in the Way Forward were part of Ford's last comeback, deployed in 2002, soon after the company's chairman, Mr. Ford, ousted Jacques Nasser as chief executive and took the job himself. In that turnaround, Ford cut billions of dollars in costs, shut factories and returned to profitability. But its market share in the United States, which Mr. Nasser had once pushed above 25 percent, kept falling as the S.U.V. lineup that Mr. Nasser had championed faded in popularity.

Ford ended 2005 with just 17.4 percent of the American market, its lowest level since the early 1980's. And for the first time since then, Chevrolet beat the Ford division last year as the top-selling brand among Detroit companies. "In some ways, Ford never recovered from the woes of the Jacques Nasser era," Professor MacDuffie said.

Now comes Mr. Fields, who owes Mr. Nasser some of his reputation as a rescue artist, albeit one who has historically been sent someplace else before he could see his plans fully bear fruit. Mr. Fields, a former I.B.M. manager whose first job was selling Selectric typewriters, was running Ford's operation in Argentina when Mr. Nasser phoned in 1998 and convinced him to transfer to Japan to help run Mazda, of which Ford had gained management control.

Four years later, Mr. Fields was on the verge of introducing an entire new lineup of Mazda vehicles when he received another phone call from Dearborn, this one asking him to move to England to run the Premier Automotive Group, the collection of luxury brands including Volvo, Jaguar and Land Rover that Mr. Nasser had assembled in hopes of expanding Ford's profits.

Mr. Fields was still in the midst of a turnaround effort at Jaguar last year, when Ford was hit by a wave of executive departures, including those of seven senior managers who retired or quit. That turbulence resulted in his latest promotion, which sent him back to Ford's home office for the first time in more than a decade.

There, the woman who became his No. 2 executive, Anne L. Stevens, the chief operating officer in the Americas, was already in place. Trained in manufacturing, Ms. Stevens had never before worked with Mr. Fields. But they shared two things: a mentor in James J. Padilla, Ford's president and chief operating officer, who had worked with both in different parts of the world, and a fondness for New York-ese.

Both Mr. Fields, who was born in the Canarsie section of Brooklyn and raised in Paramus, N.J., and Ms. Stevens, a Pennsylvania native who has lived in Manhattan and Hoboken, have the same "you gotta problem with that?" chemistry that allows them to cut through red tape and get to the point. No need for any black binders here: the pair can sit down, "talk fast, have a drink and talk New York," said Ms. Stevens, who was in charge of Ford's operations in Canada, Mexico and Latin America before her own promotion last year. The executives have become inextricably linked with each other; Mr. Ford refers to them in one breath as "Mark-and-Anne" and calls their skills "a great fit."

Mr. Ford wrote in an e-mail message: "In some ways, they're so much alike. They're both tough, but personable. Their skills are very complementary. He's very strong in sales and marketing, and she's strong in manufacturing and product development."

And they have become the latest celebrities in Detroit, a city where senior automotive executives are akin to Hollywood stars.

"Now it's the Mark-and-Anne show," said James P. Womack, the author and expert on manufacturing efficiency, who has studied the company for 25 years.

People are watching closely, to the point where many Ford executives have taken to wearing blue rubber inspirational wristbands like those prominently sported by Mr. Fields and Ms. Stevens.

Recently, The Detroit News breathlessly described Mr. Fields, with his jet-black hair, as "movie star handsome," although his slightly rough-edged demeanor may be best suited to a Martin Scorsese film or an episode of "The Sopranos." ("You don't sound professional when you say 'uh' all the time," one employee said in an anonymous e-mail message to Mr. Fields during a recent company Webcast.)

That's all fine, Mr. Womack said, but given the drain of executive talent and the mounting problems at Ford, Mr. Fields and Ms. Stevens still have to prove that they are more substance than style. "The history of Ford is that nobody is able to make any decisions, and they go down all kinds of irrelevant cul-de-sacs," he said. "Within the next year, an awful lot of this has got to get resolved."

Mr. Fields has to do that with an admittedly skeptical work force. Privately, Ford executives said they were alarmed when a proposal that would make modest cuts in the company's health coverage for blue-collar workers was barely approved in late December by members of the United Automobile Workers union. Last week, three union members said they would demand a recount, although U.A.W. officials have said they stand behind the results.

While Mr. Fields does not have direct responsibility for union relations, he will have to develop relationships with union leaders, including the U.A.W.'s president, Ron Gettelfinger; contract talks loom in 2007.

That is where his time overseas is a drawback, said Brett D. Hozelton, an analyst at KeyBanc Capital Markets and a former financial analyst for Ford. "The U.A.W. is going to look at Mark and say: 'Mark, you're a whiz-bang guy. You may even be a likable guy. But frankly how do I know that if you tell me you're going to close this plant, that will be the last one?' " Mr. Hozelton said.

Mr. Fields, however, said he had had experience with unions elsewhere in the world and did not consider dealing with the U.A.W. a daunting prospect. He added that he had received hundreds of e-mail messages of support for his efforts, although Ford's salaried staff, which was already reduced under Mr. Ford's first turnaround effort, is also seeing its benefits cut.

Mr. Fields acknowledged that Ford's business is "under stress," but both he and Ms. Stevens expressed a resolve to restore Ford's profitability. Details are scant, though determination is not. "There is no 'can't,' " Ms. Stevens said, a touch sternly, when asked last week if the pair had a backup in case the Way Forward did not pan out.

Mr. Fields can take heart from the turnaround at Chrysler, which was the only Detroit company to increase its sales and market share last year. After two waves of job cuts and cost-cutting programs this decade, the comeback at Chrysler has taken wing, largely on the strength of a single car: the eye-catching 300 sedan, which has made the company seem hip again.

"There is a formula that can be very, very effective," said Jeremy P. Anwyl, the chief executive of Edmunds.com, a Web site that offers car-buying advice to consumers. "You have to decide what you are going to be." He said that Ford had good products, notably the new Fusion midsize sedan, but added that they had been ill-served by its lackluster marketing efforts, which have failed to create a clear image for the company or its products.

IN a speech last week, Mr. Fields vowed that that would change. Ford, he said, wants to be known as "red, white and bold," stressing its American heritage and its latest emphasis on innovation. Mr. Fields said that the phrase, which is embossed on the company's blue wristbands, "is not about wrapping ourselves in the American flag." But Ford, he said, cannot escape the fact that Ford, Lincoln and Mercury are American brands - even if the industry in which they were born has inextricably changed.

Like Dieter Zetsche, the former Chrysler chief executive who recently took the helm at its German parent, DaimlerChrysler, Mr. Fields said he believed that the Big Three's years of dominance were over - as were Ford's chances of getting back to one-quarter of the domestic market. "Those days are gone," he said. "We have to act like a smaller company - not necessarily be a smaller company. But we have built up the bureaucracy of a company that once had 25 percent, and we don't any more."

To him, the market is the Big Six - G.M., Ford, DaimlerChrysler, Toyota, Honda and Nissan - and to think otherwise is foolhardy. "This is not a cyclical change," he said of G.M.'s and Ford's decline. "This is a secular change."

And Mr. Fields does not expect it to be easy. On one of the sheets in his black binder is a definition of "what a turnaround feels like." The sensation, Mr. Fields told his managers, is "uncomfortable and exhilarating at the same time."

Depending on whether the Way Forward actually is a way forward, Mr. Fields may end up wondering when the second part of that description begins.