A Man and a Plan

A year ago Tier One suppliers were riven with doubt Today, there are numerous examples of turn-arounds in progress.

Everybody’s got problems. Take a casual look at any magazine, newsletter, or website aimed at business operators or executives and you’ll find some well-reasoned theory for identifying problems, overcoming obstacles, or expanding success. Hundreds of books are published every year to serve the very receptive market for these ideas. Management theories are great for discussion, but taking action is much more difficult, and risky, than writing a about it.

In part, this is personal. Most of us cannot characterize our problems in ways that make interesting reading. The problems are usually too petty or mundane, or they’re uncomfortable or embarrassing. A lot of problems go unsolved because the people most closely associated with them just can’t see the problem, or a solution, apart from themselves.

That’s been the situation at Ford Motor Co. for the past several years. I do not think executive chairman Bill Ford is the reason for that company’s problems, but developing and implementing a solution became impossible because he felt such a personal obligation to get it right. He understands the gravity of it all, because he represents a dynastic restoration at what obviously still is the world’s most significant family business. That made his task harder.

And, of course, automakers like all complex organizations have a penchant for exaggerating the significance of personality in their success or failure. This has always struck me as a cruel irony, given the centrality of engineering to their business.

Even when Ford Motor Co. finally introduced its re-engineering plan — “Way Forward” — earlier this year, everyone saw it as Bill Ford’s plan. In that light, it was no surprise to me that Bill Ford felt it necessary to displace himself as CEO of the company in early September. That move may not have been necessary to implement the next, more radical stage of Way Forward, but it makes clear that the company is not the man and the man is not the plan.

The automaker is promising to slash operating costs by approximately $5 billion, including reducing the salaried workforce by one-third, buyout offers for all hourly workers, extensive manufacturing capacity reductions, and plans to sell or close all its Automotive Component Holdings plants within two years.

More encouraging is that Ford intends to accelerate its product upgrades and deliveries. Still, the plan is radical. It will be difficult to execute and difficult to endure, because (another irony) it can be just as difficult to take apart something as it was to build in the first place. “We’ve taken a sobering look at the industry and our own business, and the entire team in North America has a renewed sense of urgency and a clear view of what it will take to position this business for profitability,” said Ford’s president for The Americas, Mark Fields.

There is no guarantee this plan will work, but there is reason to be hopeful. Less than a year ago the auto industry’s Tier One supplier community was riven with doubt for reasons related to those plaguing Ford and its cohort. Today, that market has numerous examples of turn-arounds in progress. One company, Metaldyne, recently engineered a billion-dollar merger and elevated itself into the global supply chain.

Metaldyne was formed in a different merger just six years ago, and though it has been buffeted by rising material costs and a customer base in flux, it has adhered to its strategic plan. It identified a market for itself — automotive — that is not going to go away, even if some companies within it do.

It helps to keep reminding ourselves how solid the automotive market remains; Honda, Toyota, and the other transplant producers are thriving and growing in North America. Building cars and trucks has not been Ford’s problem; understanding how to do it competitively has been. Now, they have a plan for that.

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