Just yesterday Ford took the wraps off the all-new 2011 Ford Explorer. In case you haven't already heard (what, are you living under a failed BP top-kill attempt?), the new Explorer is going in a totally different direction from the past version...yet Ford wants it to be seen as meeting the same needs this highly recognized brand name has always met (competent people and cargo mover with genuine off-road/towing capabilities).
I was given a walk-through of the Explorer by the company's VP of Engineering, Paul Mascarenas, and I'd venture to say the new crossover will meet those goals. It should have enough cargo/people-moving abilities to handle the bulk of Explorer customers while retaining enough off-road/towing abilities to satisfy the minority of buyers who actually do those things. This, despite having a unibody platform and standard front-wheel drive. If you want to read more details about the new 2011 Explorer start here and follow the many links to our coverage.
However, the subject of this post isn't Ford's latest SUV but Ford's longstanding effort to turn the company around. The Blue Oval has been running at a breakneck pace; how much longer can it last?
When you look at Ford's activity over the past four years it's clear the company has had a plan and executed on it. In fact, that would be obvious via the company's busines and product actions, but in case you don't notice those you'll hear almost every Ford employee quote "the plan" whenever pressed about why Ford is experiencing such success these days.
Okay, so Ford was on the ropes, it came up with a plan (thank you Alan Mulally) and the company has been executing on the plan for over four years. Not a particularly unique chain of events, right?
No, thus far Ford has followed the traditional turnaround process to the letter. Where it gets tricky is maintaining that intensity even as you're gaining market share and posting impressive quartely profits (Ford's doing both).
If you watch this industry (or any industry) long enough you're bound to see the success-failure cycle. I've seen it at least four times from Chrysler between the original government bailout of 1979 and today. Ford and GM have also gone through varying cycles of success-failure over the past 30 years, though Chrysler's always seemed to swing a bit wider on the extremes.
Regardless, these cycles are familiar. What isn't familiar is having any of one of them last for more than a few years. When a car company has lost its way it usually gets its act together after about 4-5 years of drifting toward the brink. Then it works like a company possessed to address its issues, but even the best company efforts usually stall out and fall into a period of complacency after four or so years. If it's lucky, an automaker can live off those intense years of hard turnaround work for an additional 4-5 years of relative stability...before it inevitably falls behind the competition and starts drifting toward the brink, again.
It's a bit of an oversimplification, but the fundamental pattern is undenable.
Which brings me back to Ford's current turnaround and what I see as different. If the company were producing competitive (or even class-leading) product at this point they would be following the standard turnaround pattern. But Ford seems to be doing more.
First, the company is getting more creative in is launch efforts, such as the Fiesta Movement of last year or the nine-city launch of the Explorer (with no auto show tie-ins) yesterday. The concept of using today's alternative media outlets (particularly today's social media outlets) is one area where Ford has distanced itself from the typical corporate pack.
Second, the company's product isn't just impressive from a design or technology or perceived quality standpoint, it's impressive from all three. Ford is clearly not putting its eggs in one basket but trying to be the leader in driver interface technology (Sync and MyFord), fuel-efficient engine technology (Ecoboost and hybrid) and perceived quality (design, interior materials, body panel gaps, etc.). And the company is doing this across a wide range of markets, not just in the compact car (Fiesta) or mid-size sedan (Fusion) or large crossover (Flex and new Explorer) categories, but all of them.
In past turnarounds I've seen car companies focus on one or two areas of product design and/or one or two product segments during the turnaround process. For instance, when Chrysler was facing its brink in the 1990s (they average about one required turnaround effort a decade) the company responded by creating the highly anticipated, and well executed, LH sedan platform. This was the basis of the Chrysler 300, Dodge Intrepid and Eagle Vision (remember those?) and the sedans were largely responsible for bringing Chrysler back from that particular brink.
Sure, the company had the relativley well-received Dodge/Plymouth Neon coming out during this period, not to mention the game-changing 1994 Dodge Ram, but it was really the LH cars that provided both a real and perceived shift in Chrysler's fortunes. Of course, by 2002 Chysler had lost much of its LH momentum (despite the fabulous LX platform hitting in 2005) and, well, we all know how things ultimately worked out for the Pentastar.
I could draw similar parallels to past GM and Ford turnaround efforts, but my point is that Ford's current turnaround effort is arguably more intense than any I've seen in the past. The company is aggressively and comprehensively pursuing success, which is to be applauded and points to the effective leadership of Alan Mulally and "the plan."
But it also raises the inevitable question -- how long can this level of turnaround intensity go on? I'm not willing to make a call either way, as Ford has already accomplished more than I would have thought possible four years ago.
But we are at a critical crossroads -- the dreaded 4-year cycle of turnaround effort. You could argue Ford is still just following the typcial turnaround pattern. The next year or two will be very telling.
What do you think? Will Ford's cycle of success continue for another 4 (or more) years?
By wrinklebump
on July 27, 2010
04:49 AM
Looking at the sales numbers, I sense just a little misplaced Mulally worship. Lots of the cheddar still comes from the trucks division, including the ancient Escape and other SUVs, which Ford has been banking on since our boy Alan was in diapers.
Ford sells a lot of Fusions though, which is arguably its most competitive and by far most important model. So far, the refresh of that midsizer has been the most thing to happen under Mulally's reign, so give him the credit there if you think it's due.
The Focus still sells too, but no one would give Ford a pat on the back for craftsmanship or attention to detail after driving one of those. The Not to mention that Lincoln is still completely worthless, barely outselling Jaguar.
And you should still address the lingering distrust of GM and Chrysler after going belly-up. That doubtlessly drove some domestic buyers to Ford, regardless of competitive concerns. Same with the Toyota recall fiasco. And Honda's ugly, ugly, ugly, ugly cars.
There's a lot of good-looking product in the pipeline -- Fiesta, Focus, Explorer -- but those aren't even out yet. Hard to pin Ford's success on stuff you can't buy yet.
If anything, I'd look to Ford's European operations for evidence in your case. It has been building quality vehicles there for years, and that's where the most efficient engine technolgies are even today.
By pushrod
on July 27, 2010
05:24 AM
To sustain this level of success, Ford needs to do a few things and avoid a few things. They need to avoid becoming complacent, assuming their current product is good indefinitely (see Chrysler as an example). Ford needs to continue to refresh and rejuvenate what is succeeding, and pay close attention to what people want. Be ruthless in culling product that isn't doing well enough, or doesn't serve some other purpose from a branding perspective. Be brave enough to continue to make "they built that?" products like the Raptor, but don't expect them to carry the whole company. They need to continue to have many great products, and not fall back on a single model to carry them forward (see Chrysler again).
if Ford can do those, I think they can continue to succeed as a company. The biggest risk is complacency, assuming that what they are doing or building today will continue to work indefinitely. They need to read and react quickly to an ever-changing landscape, and try to set the trend and tone from time to time.
By blueguydotcom
on July 27, 2010
07:21 AM
Hmmm. The release of the Explorer reminded me of why Ford sank in the first place. I'm not seeing what's special or even good about it vis-a-vis the competition.
While impressed with the Fiesta and to a lesser extent the Mustang, Taurus and Fusion. The SUV division seems to be living in the past with the Flex, Explorer and Edge - all around mediocre from seeing them in person or in the case of the Exploder reading the press releases which fail to make the vehicle seem impressive.
I look at Hyundai and think "there's a company that's pushing things along." Ford right now has become competitive but I can't say they're pushing anything along except in-car tech (which is worthless) with MyTouch.
Not sold yet.
By ahightower
on July 27, 2010
11:41 AM
What Ford has done is only so impressive because of the contrast from where they were 10 years ago. No disrespect, they have some really nice product, which I would totally consider buying. But it's up to par, not heads above the competition, and you don't deserve a cookie just for not sucking any more. In fact, they're not even a full line manufacturer yet, and neither is GM, because no American brands truly competes with Audi/Lexus/BMW/Benz at the top end of the market. When that happens, I will be relieved and proud to see America as good as anyone across the board. In the meantime, VW and the Japanese aren't going to just sit there and wait to be overtaken. So, yeah, they (both Ford and GM) need to stay full steam ahead and not rest on their laurels or they'll fall right back into fourth place behind Japan, Korea, and Germany.
By 1487
on July 27, 2010
01:18 PM
There wont be any major let down. Ford's share gains will slow up because the market is just too competitive, but they will still make money and churn out nice products. This is whats expected of Honda, BMW, Toyota, etc. and that's what Ford is going to do.
ahightower:
4th place behind Korea? American automakers have NEVER been behind Korea in terms of sales, innovation or anything else. Hyundai is finally at the point where they can match and occasionally exceed the competition in terms of technology but they reached this point just as American automakers were recovering from years of trailing the competition. And they still dont have parity since they dont compete in the truck market or make any truly high performance vehicles.
BDC:
What is Hyundai doing that Ford isn't? Nothing, thats what. Hyundai's recent engines are pretty nice but they are still making derivative looking cars that essentially sell based on value. Price is always the bottom line at Hyundai. When you're on the upswing you start selling your vehicles for more money and people are happy to pay some sort of premium. Ford's are more expensive than ever and incentive spending is down and yet Ford's sales are still increasing.
By mcloffs
on July 27, 2010
02:27 PM
Ford has come a long way, but a lot of the current success is based on a bit of smoke and mirrors. The Taurus, Fusion, Flex, Edge and Explorer are all based on old Volvos and Mazdas. I'm curious to see what happens when they switch over to Ford-developed platforms. And the Focus and Escape are ancient; their replacements look promising but can't come quickly enough.
By zcalvert
on July 27, 2010
04:46 PM
Mulally's efforts cannot be discounted. Aside from product, his financial/strategic leadership decisions are what kept the company out of bankruptcy in the first place.
By blueguydotcom
on July 27, 2010
07:58 PM
@1487, um there's a 2k rebate on the 2010 Fusion right now. Even then it's overpriced as a 2011 Sonata GLS offers more power and better MPG than a Fusion S.
Once you get to the Sonata turbo v. the Fusion 3.5 V6 it's really not fair as the Sonata offers far better MPG and power for less.
To each his own. But Ford still doesn't sell a car in the USA I'd ever consider. Shame as some of their euro models are pretty awesome.
By blackadder5639
on July 28, 2010
03:42 PM
Blueguy, I've noticed you have expensive taste in cars! Every car that doesn't have the build quality of at least a VW seems disappointing to you. So perhaps Ford isn't the right brand for you.....LOL!....I'm just saying......
I have been very impressed with Ford's turnaround. The only serious issue they still have is the Lincoln brand; sure, the new models are better than the old, but they're nowhere near as compelling as the Euro brands, Lexus, and Infiniti.
Karl, I agree with you. I think the next year or two will be very telling. I would say the next four years. It would be interesting to see how the new Fiesta and Focus compare with the competition. It would also be interesting to see how the new Fusion (not the current refreshed model) and the Expedition's replacement compare with their competition too. Lastly, while the F150 is great, I believe it needs more power, something close to 400 hp.
I believe that if Ford maintain a good attitude and update/improve/advance ALL their models every 5 years or so like the Japanese have been doing, they will be fine, assuming the financial management is also well done.
By verdi942
on July 28, 2010
08:53 PM
The new Explorer is NOT a real SUV? Get a Jeep! Or a 4-Runner. Ford is doing and will do just fine. Older fans of imports are largely a lost cause; Toyota & Co. make very good products and sell them at, especially right now, VERY competitive prices. They have little reason to change. But a large and growing number of "buy American" customers should have no trouble buying any Ford model - the function, looks, content, build quality and value are all there, now, with more to come. Complacency, as Toyota, never mind Chrysler, shows, is always the foe of continued success. Right now, Ford has a way above average head of steam, with the added plus of no government bailout negatives. And, most buyers care nothing about platforms, name badges, marginal mpg or 0-60 differences and other auto press obsessions, IMO.