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Ford restructuring--Shock and Awe, Part 1
2006 January 24
© 2006, Libertiny Financial LLC
After watching Bill Ford Jr. and his team on Monday, January 23 release the details I was struck by a few things:
Shock--Closing plants and firing between 25,000 and 30,000 people is a shock no matter how long people have been anticipating the announcement. People's lives and the communities surrounding those plants will forever change as America’s auto industry continues to shrink. This is yet another step in the dismantling of America's manufacturing capability in the face of world competition.
Awe--There wasn’t any. I hope that Bill Ford Jr's team didn’t spend much more then a few days on the plan, because that’s about the depth of content that it contained. It’s easy to hit your revenue generation and cost cutting marks when you have no plan.
Muddled message--The entire message was muddled with thin details and the stringing-out of difficult decisions over a long period of time. That leaves both the workers that are the soul of Ford and potential investors in a lurch.
First, Ford management owes their workers information today via the application of Human Resources 101: Tell workers today the situation with their jobs. It's difficult to focus on doing a good job and building world-class vehicles when you haven’t got a clue if you’ll have a job tomorrow.
Second, lead by example. Talk about passing the buck, the news conference basically had Bill Ford Jr. (Chairman and CEO) telling you what Jim Padilla was going to say. Then Jim Padilla (President and COO) told you what Mark Fields was going to say. Then Mark Fields (President of Ford's Americas Division) eventually gave the plant closure information and some vague news on how the situation with Mazda allegedly applies to Ford and then passed the baton to Don Leclair. Don Leclair (CFO) then gave a very brief overview of Ford finances and called for a break. Instead, the entire presentation could have been given in less than 30 minutes by Ford and Leclair if they hadn't decided to pass the buck on down the line--one of the very management issues that they implied was going to change with "The Way Forward" plan.
Everyone agrees that Ford’s market share is shrinking and that their cost structure is too high to successfully compete in the world arena--health care costs, wages, pensions, and material costs to name a few. However, their product lineup and quality continues to improve as illustrated at the recent North American International Auto Show.
Fix the problems:
1) Announce the cost cutting plan, in detail today, and execute the plan during the next two years.
2) Have a single person that communicates both internally and externally in clear, easy to understand language.
Managers, workers and investors need to understand what’s going on. That's the way forward.
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