Ford Makes New 'Bold Move': Get Smaller

• by Karl Greenberg , September 18, 2006

Expect more from less is the latest "Bold Move" from Ford Motor Co.

Instead of attempting any return to behemoth status, Ford announced on Friday that it will focus attention on remaining profitable stars like Mustang and segments such as crossovers, pickup trucks, and small cars.

New CEO and President Alan Mulally, CFO Don Leclair and President of the Americas Mark Fields were all present to deliver the anticipated announcement to employees that Ford will accelerate its "Way Forward" plan to shed 44,000 jobs and cut costs by $5 billion.

What took the industry off guard was another Friday announcement from cross-town rival Chrysler Group of a $1.5 billion third-quarter loss.

Fields and Mulally told employees that Ford will cut production and let market share drop from current 16 to 17 percent levels to 14 to 15 percent of the U.S. market. But that assumes they can get consumers to buy from a company that is clearly struggling.

Earlier in the week, Ford had launched an Internet effort titled "Driving American Innovation" via Ogilvy & Mather, Dearborn, to put as positive a spin as possible on things. The site features a video of ex-CEO (and now Chairman) Bill Ford touting Ford technology and urging viewers to watch animated features on safety, design, and fuel innovations.

Brand consultant Jack Trout says Ford's announcement will do more to reinforce the message of a brand in limbo than any ads can possibly offset.

"It doesn't say Ford is a hot car company, and it's not enough to say things are going to be great, partly because they have mucked up their brands to a large degree intermingling the corporate name with product names," Trout says.

That sentiment is echoed by Robert Passikoff, author of the forthcoming book Predicting Market Success and president of New York-based consultancy Brand Keys. He says that from a branding perspective, Ford, like GM, is just a "placeholder."

Ford and GM "don't mean anything to car buyers," he says. "The fact that they find themselves in a situation where they are now forced to downsize, or rightsize, doesn't come as a surprise to consumers, either." Consumers are savvy, "and there's an unsaid 'what took so long?'

Also last week, Anne Stevens, executive vice president and chief operating officer of The Americas, and David Szczupak, group VP-manufacturing, The Americas, elected to retire. The brain drain at Ford has already delayed programs--such as a badly needed redesign of the Ranger mid-sized pickup--and contributed to a misreading of the market. Fields admitted that Ford missed the hybrid SUV/auto crossover market.

The company's current ad campaign for the Ford Division uses "Bold Moves" as a tag line. Wesley Brown, a consultant with research firm IceOlogy, Los Angeles, thinks it will backfire because it isn't credible. "What's bold?" Brown asks. "The Edge crossover isn't here yet."

Mark Fields, in his Friday morning address, touted Mustang and the F-Series trucks, as well as the new raft of mid-sized sedans like Fusion, as vehicles that would turn Ford's fortunes around.

Tom Libby, of JD Power & Associates in Detroit, pointed out that the Ford divisional brand (versus all Ford brands) has market share of 14.8 percent through August. That means any of its vehicles grabbing more share than that are helping the company.

Libby points out that Mustang, to which Fields gave special attention in his address, is No. 1 in its segment, with 51 percent of the sports car market--outselling the No. 2 Toyota Solaris three to one. And in large pickup trucks Ford retains No. 1 status with 23 percent of the segment.

"Unfortunately, they have not reached bottom," maintains IceOlogy's Brown. "It will be worse than they predict because they have very few products creating buzz and creating showroom traffic. The new Edge is all they have. Imagine walking into Barnes & Noble and for the next four months they have two new books to sell."