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Thread: Bill Ford in Business Week

  1. #1
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    Bill Ford in Business Week

    Ford (and Bill Ford) are featured in the August 11th edition of BusinessWeek magazine.

    In an interview, Maria Bartiromo asks:

    Quote Originally Posted by Maria
    Bill, the company reported the worst single quarter in history last week, a loss of $8.7 billion. What's happening, and why did we see such a loss?
    His response was:

    Quote Originally Posted by Bill
    We had a good first quarter, we made money, and we thought we were on our way. Even though fuel prices were rising in the first quarter, we didn't see a big change in customer behavior. But when gas crossed about $3.50 a gallon, that was the tipping point. And, of course, we had no idea where that tipping point was going to be. Literally overnight people stopped buying trucks and ig SUV's and came into the dealerships demanding the smallest and most fuel-efficient vehicles they could find, and the fall-off [in sales], therefore, was very dramatic. What you saw in the second quarter was not only the result of that but also the result of falling residual values of trucks and SUVs.
    I guess my comments to this are:
    • You couldn't foresee that with steadily increasing gas prices, people were going to start buying smaller vehicles soon?
    • And so why did you let the F-150 & Expedition assembly lines run as long as they did before releasing one or more of their shifts?
    • And you had no plans in place to scale up production of the Focus, and/or bring in smaller models from overseas?


    This is what's known as 'lack of vision', and is a bad thing to have in a leader.

    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

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    Senior Member misterdecibel's Avatar
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    Re: Bill Ford in Business Week

    In other words, "we knew it was coming, we just didn't know when, and we got caught with our pants down".

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    Vulture of The Western World Eric's Avatar
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    Re: Bill Ford in Business Week

    Quote Originally Posted by chiph
    Ford (and Bill Ford) are featured in the August 11th edition of BusinessWeek magazine.

    In an interview, Maria Bartiromo asks:

    Quote Originally Posted by Maria
    Bill, the company reported the worst single quarter in history last week, a loss of $8.7 billion. What's happening, and why did we see such a loss?
    His response was:

    Quote Originally Posted by Bill
    We had a good first quarter, we made money, and we thought we were on our way. Even though fuel prices were rising in the first quarter, we didn't see a big change in customer behavior. But when gas crossed about $3.50 a gallon, that was the tipping point. And, of course, we had no idea where that tipping point was going to be. Literally overnight people stopped buying trucks and ig SUV's and came into the dealerships demanding the smallest and most fuel-efficient vehicles they could find, and the fall-off [in sales], therefore, was very dramatic. What you saw in the second quarter was not only the result of that but also the result of falling residual values of trucks and SUVs.
    I guess my comments to this are:
    • You couldn't foresee that with steadily increasing gas prices, people were going to start buying smaller vehicles soon?
    • And so why did you let the F-150 & Expedition assembly lines run as long as they did before releasing one or more of their shifts?
    • And you had no plans in place to scale up production of the Focus, and/or bring in smaller models from overseas?


    This is what's known as 'lack of vision', and is a bad thing to have in a leader.

    Chip H.
    Very revealing, Chip - thanks for posting this.... .

    It shows just how fogged up the mirror is in certain boardrooms. Sheesh. I mean, seriously - my wife could have intuited what was coming based on obvious external factors and made better decisions - and she knows as much about cars as The Chimp knows about English grammar!

    Meanwhile, Bill - who is a nice guy, incidentally; I've met him a couple times - gets paid millions annually for such sage business acumen!

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    Re: Bill Ford in Business Week

    I think a better answer to the question should have addressed what they did do in anticpation of higher prices and a change in customer buying patterns.

    Because right now, he (and the company) appear to have a very reactionary attitude, which as we & they saw with the speed of the change in buying habits, you can't have if it takes a 2 year lead time to change over a factory or introduce a new model. You have to have a plan 'B' in place, especially when fundamental business factors such as the price of gas consistently headed upwards.

    While Ford isn't as vertically oriented as they once were (back when River Rouge was producing cars starting from raw iron ore & quartz sand), they're still more insulated from the price changes in steel & aluminum than most other car makers. That will only get them so far -- what's his plan to deal with future raw material shortages?

    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

  5. #5
    MikeHalloran
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    Re: Bill Ford in Business Week

    We've all become accustomed to a certain amount of inflation in everything, but the rate of change of fuel prices clearly surprised everyone.

    To some degree, Ford saw this coming ten years ago, when they started designing and producing 'world' cars that could be produced anywhere and sold anywhere, but trucks were still selling and making money until quite recently, so they didn't invest in domestic capacity to produce something else, that wasn't selling.

    I think an assembly plant could be converted from truck to small car production in a matter of months, maybe less. It's really just a cavernous space filled with conveyors and short- term storage, with relatively little specialized tooling.

    The automated machinery to make engines and transmissions and such is a different matter. Because of the production levels it's designed to work with, it's not usually made flexible enough to deal with other than minor changes. E.g. it's simple enough to change the size of the cylinder bores a little, but changing the spacing between bores, and hence the overal length of the engine, is a really, really big deal. It typically takes three years to design, build, install and debug machines like that, no matter how badly you want them immediately.


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    Vulture of The Western World Eric's Avatar
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    Re: Bill Ford in Business Week

    Quote Originally Posted by MikeHalloran
    We've all become accustomed to a certain amount of inflation in everything, but the rate of change of fuel prices clearly surprised everyone.

    To some degree, Ford saw this coming ten years ago, when they started designing and producing 'world' cars that could be produced anywhere and sold anywhere, but trucks were still selling and making money until quite recently, so they didn't invest in domestic capacity to produce something else, that wasn't selling.

    I think an assembly plant could be converted from truck to small car production in a matter of months, maybe less. It's really just a cavernous space filled with conveyors and short- term storage, with relatively little specialized tooling.

    The automated machinery to make engines and transmissions and such is a different matter. Because of the production levels it's designed to work with, it's not usually made flexible enough to deal with other than minor changes. E.g. it's simple enough to change the size of the cylinder bores a little, but changing the spacing between bores, and hence the overal length of the engine, is a really, really big deal. It typically takes three years to design, build, install and debug machines like that, no matter how badly you want them immediately.

    A real source of trouble for all of America's automakers is none of them developed a line of top-notch smaller cars (as opposed to the occasional model) to add diversity to their product portfolio and to establish a buyer base for such vehicles. For example, Chrysler had the Neon - a successful small car - but they failed to develop it, so it became outdated and quickly lost all they buyers/market share it had built up. Toyota and Honda never make that mistake. They consistently build up their models over time, making them better and creating an unbroken "history" that establishes the position of the car in the minds of consumers and the marketplace. The Civic and Corolla are examples.

    Also, while it's true not many could have predicted the dramatic surge in gas prices that occurred over the past year, the signs had become pretty obvious that prices were trending upward significantly by 2004-2005. GM, Ford and Chrysler had several years' notice, at least - yet took no real action to deal with until this year. Inexcusable.

    Toyota has been selling the hybrid Prius for ten years now, don't forget.

    Perhaps GM's biggest business failing, though, is its failure to reorganize itself in accordance with the realities of the 21st century and its 20-something percent market - as opposed to continuing to do business as if it were the mid-20th century and it still had a 50 percent share of the North American market.

    Six full line divisions with a 20-something percent share of the market is.... ridiculous. At least three (and probably four) GM divisions need to be folded up and GM's product line trimmed and made coherent in relation to its share of the current marketplace....


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    Re: Bill Ford in Business Week

    OK, another quote from the article, about the small cars & designs ford will be bringing in from Europe:

    Quote Originally Posted by Maria
    On a scale of one to 10, with 10 being the most confident, how confident are you that this switch to smaller cars is going to work?
    Quote Originally Posted by Bill
    I'm very close to the 10 end of the scale because we're basically bringing over our European product, which has been very, very successful. They're extremely profitable, have won lots of awards, and are very fuel-efficient -- plus they're extremely well-appointed. It's not like we have to create these products from scratch. They're there, and they're ready to come over here. These are not what you think of when you think of small cars, which we used to produce here, which tended to be stripped down and not very desireable.
    Finally, someone realizes that small cars don't have to be penalty boxes.

    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

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    Re: Bill Ford in Business Week

    I noticed an uptrend in fuel prices as early as 2000. I remember gas going from around $1.15 to $1.65 by the end of the year. They have trended higher year after year except for 2001-2002.

  9. #9
    MikeHalloran
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    Re: Bill Ford in Business Week

    Quote Originally Posted by Eric
    Six full line divisions with a 20-something percent share of the market is.... ridiculous. At least three (and probably four) GM divisions need to be folded up and GM's product line trimmed and made coherent in relation to its share of the current marketplace....
    I don't believe GM needs to get rid of divisions, and with them, brands.

    None of them have to be full- line divisions; that was a stupid idea. Dealers already had it covered, selling multiple brands. Providing a full line of vehicles within each brand promoted internal competition and otherwise dissipated their resources in ways that didn't make them better.

    They could probably get rid of six levels of management/ indirection/ indecision, which would improve the responsiveness problem, and save some ongoing costs, too.


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    Vulture of The Western World Eric's Avatar
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    Re: Bill Ford in Business Week

    Quote Originally Posted by Henry
    I noticed an uptrend in fuel prices as early as 2000. I remember gas going from around $1.15 to $1.65 by the end of the year. They have trended higher year after year except for 2001-2002.
    Exactly. You had to be asleep not to notice - and for a car industry executive not to have noticed this trend (and acted) is just grossly incompetent.

  11. #11
    Vulture of The Western World Eric's Avatar
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    Re: Bill Ford in Business Week

    Quote Originally Posted by MikeHalloran
    Quote Originally Posted by Eric
    Six full line divisions with a 20-something percent share of the market is.... ridiculous. At least three (and probably four) GM divisions need to be folded up and GM's product line trimmed and made coherent in relation to its share of the current marketplace....
    I don't believe GM needs to get rid of divisions, and with them, brands.

    None of them have to be full- line divisions; that was a stupid idea. Dealers already had it covered, selling multiple brands. Providing a full line of vehicles within each brand promoted internal competition and otherwise dissipated their resources in ways that didn't make them better.

    They could probably get rid of six levels of management/ indirection/ indecision, which would improve the responsiveness problem, and save some ongoing costs, too.

    I disagree; there's just too much overlap. So many of these cars are so essentially similar (often, with identical powertrains). I think it would make a lot more sense to offer a range of options/equipment within a single given model of vehicle rather multiple separate models as a way to address different needs/price point within a given segment.

    I mean, does GM really need to have three versions of the same mid-size crossover? (The Buick Enclave, GMC Acadia, Saturn whatchamacalit - etc?) Three or four versions of the same Tahoe-based SUV? Two version of the same pick-up (Colorado/Canyon)? Etc...




  12. #12
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    Re: Bill Ford in Business Week

    Quote Originally Posted by MikeHalloran

    The automated machinery to make engines and transmissions and such is a different matter. Because of the production levels it's designed to work with, it's not usually made flexible enough to deal with other than minor changes. E.g. it's simple enough to change the size of the cylinder bores a little, but changing the spacing between bores, and hence the overal length of the engine, is a really, really big deal. It typically takes three years to design, build, install and debug machines like that, no matter how badly you want them immediately.
    I would say that if it takes three years to change the spacing between cylinder bores then Ford is doomed.

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    Re: Bill Ford in Business Week

    I think if GM got rid of the model overlap, they'd find that they don't need as much middle-management as they've got.

    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

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