In a heartfelt memo to employees, Ford Motor Co. Chairman Bill Ford Jr. said Friday the automaker can only survive if it makes fundamental changes in the way it does business.
In the memo, obtained by The Detroit News, Bill Ford acknowledged the concerns many employees have and offered a hopeful vision for a stronger Ford in the future.
The key, he said, is implementing a three-point strategy for addressing Ford's problems: fix Ford's North American business, leverage its global assets and bolster the leadership team, including recruits “from outside when we need additional skills.”
The memo offers new clues to how the automaker is approaching its upcoming restructuring, expected to be announced later this month.
“Behind all of this is the simple fact that the business model that sustained us for decades is no longer sufficient to sustain profitability,” Bill Ford wrote before detailing his three-point program.
“We must change to a new business model that requires greater bottom-line contributions from cars and crossovers, continued leadership in pickups in North America, healthier profits from all other business units, growth in Asia, greater integration of our global operations and an evaluation of strategic alliances.”
Ford lost $1.44 billion in the first half of this year and recently announced it was cutting production by 21 percent in the fourth quarter to counteract sliding sales and large vehicle inventories.
The company has put its Aston Martin brand up for sale and cut its dividend. But those actions are only a start to what appears to be a radical overhaul in the works.
The first step, Bill Ford said in the memo, is accelerating the North American restructuring effort launched in January. Dubbed “way forward,” the plan called for cutting 4,000 salaried jobs, eliminating as many as 30,000 hourly jobs and shuttering 14 factories by 2012.
Ford now appears to be preparing to step up the pace of job cuts and factory closures.
“Clearly, the return to profitability in North America — our largest business unit — is a key to our success around the world,” Bill Ford said, adding that he has put in place a plan to rapidly cut costs and develop new vehicles that will drive revenue.
The second part of Bill Ford's strategy is to do a better job of leveraging its global assets.
With major foreign brands like Mazda and Volvo in its stable, Ford is one of the most global companies in the world today. But Bill Ford said the organization needs to do a better of job of integrating its far-flung operations into a cohesive corporate structure that takes the best from each part to build a better whole.
Finally, Bill Ford said the company needs to concentrate on developing strong leaders from within the company and as well as recruit talent from the outside.
“It is important to note that all of the issues that some onlookers view as “problems” for our company are issues that I view as opportunities,” Bill Ford said. “The way to turn critics into believers is to demonstrate progress on all three of the areas outlined above.”
David Cole, chairman of the Center for Automotive Research, said strengthening Ford's leadership is a crucial priority.
Ford has been plagued by high turnover and instability in its executive ranks for much of the past decade. It has had four heads of its troubled North American operations in the past four years.
This has cost the company talent at a key juncture in its history.
Cole said Ford needs new leaders that understand the business realities facing the company and are willing to embrace a new business model.
As an example, Cole cited Mark Fields, 45, president of Ford's Americas group, as an executive who has been promoted faster than he would have been in more stable times.
“I think he feels he's where he'd like to have been 10 years from now,” Cole said.
Bill Ford needs an experienced industry veteran at his side as he prepares for the sort of radical surgery that is needed to save the company, Cole said.
Ford officials said Friday's memo is part of a broader effort to communicate directly and candidly with Ford employees. The company is also producing regular Web casts and holding face-to-face briefings to make sure workers understand what is at stake.
“These should not be days of 'fear' for the people of the Ford Motor Company as one headline put it recently,” Bill Ford wrote in closing. “While I certainly understand the sense of uncertainty over specific tactics until some key decisions are made, our general course is clear: we are changing Ford Motor Company for the better. We are updating our business model and altering our structure to execute it accordingly. Ultimately, that will make us a stronger, more competitive company.”
