After Ten Months On the Job, Mulally’s “One Ford” Becomes Reality

By Igor Holas

07.23.2007

This is a rendering of the upcoming 2008 Ford Falcon from Australia. Under the “One Ford” strategy, the Falcon architecture will be developed into a full range of cars including the next Mustang.

Over the past month, weeks, and days, there has been a series of announcements of future product from Ford:

Ford will begin selling its new sub-compact, the Fiesta, in US in 2009; the concept of this car will be revealed in Detroit next winter. The car is practically identical to a new generation of the Fiesta in Europe, and will be assembled in Brazil

The Ford Focus will be all new in 2011, built on a new global platform, and assembled in Wayne, Michigan

The Focus-based Kuga and C-Max will be introduced in the U.S. in 2011 or 2012

The Fusion and the Mondeo will be merged into a single project in their next generation, forthcoming in 2012 or 2013

The Australia-only inline 6 cylinder engine will be replaced by the US-assembled Duratec 3.5l and 3.7l V6 engine, starting in 2010

Ford will develop a full line of rear-wheel drive vehicles, such as Mustang, Falcon, Crown Victoria, and Explorer on a new global platform developed in Australia. The first vehicles on this new platform should appear in 2012

There are some interesting common themes among these introductions, the most obvious one being the global scope of each one of them. Every one of the announcements above makes Ford’s lineup more global, unifying models and platforms and engines. All of these introductions fall in line with the new mantra brought to the company by Alan Mulally: One Ford. Under this philosophy, managers are made to think of the Ford brand globally as a single global brand, instead of conglomerate of similar, yet unrelated local Ford brands. Under this philosophy, Ford now has a single product development department, with sections for each market, and under this philosophy, Ford is changing significantly, and changing for the better.

Mulally brought to the table the kind of matter-of-fact attitude Ford has been missing for years. Previously the status quo was often the guiding principle and this principle led us to such inefficiencies as two completely unrelated Focus cars, two completely unrelated midsize sedans (Mondeo and Fusion), three unrelated RWD architectures (Panther, Mustang, and Falcon), and so on. Very few insiders were surprised when Mulally started questioning the status quo, but quite a few of us were surprised at the quick results the new boss is getting from the underlings.

The most important of the One Ford changes are the Fusion and the Falcon programs. In the early spring, when the Mondeo was being revealed in Europe, rumors were flying wild that Mulally would quickly push for the car to replace the Fusion in the United States. A lot of enthusiasts were deliriously happy in the typical “Europe is best” fashion, ignoring two critical flaws of such a plan: 1) the North American Fusion is all new and doing very well, and 2) the Mondeo, as good as it is, lacks two core features of the Fusion: a V6 option and an all-wheel-drive option.

Behind the scenes the discussion was much more rational, simply swirling around a core question – why are Fusion and Mondeo, while identical in size and target market, based on two completely unrelated architectures? Ultimately, and logically, the decision was made that the next generation of both models will be designed together; if not as a single project, then at least as “siblings” on the same platform.

Similar questions arose upon review of the Orion program from Australia. There was no question that there should be cooperation between the Mustang program, the Panther program (if there is one) and the Orion/Falcon program; but there wasn’t. The Mustang is loosely based on the discontinued Lincoln LS, and was planned to continue on updated version of its current platform. The Panther cars (Crown Victoria, Grand Marquis, and Town Car) are all based on body-on-frame platform dating back to the eighties, and due to their high profitability there have been no plans for changes or replacements. Finally, Ford Australia, in desperate need to continue the successful Falcon rear-wheel drive large sedan, was forced to go it alone, funding expensive redesigns on a product selling a measly 50,000 units a year. Clearly, Australia could use more demand for their product, and North America could use some new product. Mulally ordered a plan that would outline the needed time, cost, and labor involved in merging all the rear-wheel drive programs into one; a global rear-wheel drive program. In June, this program got the nod of approval and starting in 2012, North America will see the first vehicles based on a new Australia-developed rear-drive platform.

Not all credit goes to Mulally, however; two crucial decisions were made well before his arrival by the much-maligned Bill Ford Jr, and the-then new VP of Americas – Mark Fields. Fields, upon review of the product “pipeline” for North America, was stunned by the plans for two models – the Focus and the upcoming EcoSport. While the rest of the world was gearing up to ready a third generation of the Focus, for North America, Focus was to continue on the first-generation platform without a replacement planned. Fields considered this ridiculous, and with the backing of Bill Ford, enrolled Ford North America as a member of the team developing the third generation Focus – we will get it in 2011.

This rendering represents a possible look of the third generation (2012) Ford Focus. Whatever the results look like, thanks to recent changes at Ford, North America and Europe will get the same car.

Similarly, Fields reviewed the planned EcoSport – a small SUV-type subcompact built in Brazil. The car was powered by an unrefined engine, the interior was cheap and the whole car was de-contented to keep costs down. Fields publicly announced that with that car, Ford was trying to “out-Korean the Koreans” and simply cancelled the program. Despite prolonging Ford’s absence in the B-segment, Fields was confident his plan was better. Again, with the backing of Bill Ford, he asked Ford of Europe to design two cars for the U.S.: a version of the brand-new upcoming Fiesta, and the brand-new upcoming version of the EcoSport, with more competitive design, power trains, interior and amenities. The concept of the Fiesta will debut in Detroit Auto Show this coming winter, and the production for US will begin in Brazil in the summer of 2009 – about eight months after production begins in Europe.

Without the might of Mulally at the very top, his “One Ford” philosophy and this new corporate structure, Fields’ power to change things had been limited by his position of the chief for Americas – he had no power over other divisions and their “willingness to share” – after all the old Ford was all about local fiefdoms protecting “their” products. With the new structure – sharing went from undesirable to mandatory; and Ford finally started taking advantage of its global scope and power.

This all might seem like expected, if logical development by an automaker in crisis, but it all just points out how deeply Ford is changing. Moreover, this new unified model portfolio has profound implications for the Ford brand and for Ford Motor Company in general.

Initially, the arrival of so many European models to North America will quiet down the most vocal critics of Ford – the “Euro is best” whiners, who ignore any accomplishments of products from North America as long as there is a different (not necessarily better) product across the Atlantic. We can see this enthusiasm building for Saturn as they gradually become “Opel U.S.” However, unlike Saturn, which is still just a boutique brand in the GM empire, the Ford product-unification will have profound effect on models with large sales volumes, and more importantly will simplify the model lineup for the core Ford brand – not just an offshoot brand. Given the scope, and volume, this move will have significant effects on development costs, saving Ford billions of dollars.

Finally, with the continuous fall of the US dollar compared to the Euro, the unified product lineup might help Ford once again strengthen their position as a US manufacturer, producing models in U.S. and exporting them to Europe or even Australia. Currently, while Ford North America would certainly have the capacity for production of such global models, the fact that North America production shares no models with the “outside world” makes this capacity academic. However, Ford’s new product plans are quickly opening doors to this possibility; the first North American component to make the trip overseas is Ford’s new 3.5l V6 engine. Ford is eliminating an Australia-only inline-6 engine and replacing it with the V6, imported from the USA; inside sources indicate Ford Australia will be able to cut the cost of each vehicle by as much as $2000 AUS thanks to the new engine. We can only assume that in the future, more and more Ford components will be exchanged between continents to take advantage of favorable exchange rates – and if the weak U.S. dollar persists, Ford might just start exporting fully-assembled Focuses, Escapes, and Fusions from U.S. to Europe and other destinations.

So where do the new product announcements from Ford leave us? Clearly the recent transition at the very top of Ford Motor Company was a welcome change for those inside Ford trying to better the company. People like Mark Fields got stronger, more vocal backing for their ideas and concerns, and we can see clear acceleration of the move to rid Ford of the redundant complexity and lack of global cooperation. With Mulally, Ford got a new corporate structure, where local-market divisions of Ford are responsible for little more than marketing, sales and market research. They no longer have a hold on manufacturing, or product design. Those two functions became global under a single, worldwide boss for each whose clear task is to transform previously disjointed local operations into unified global department working together to bring efficiency to Ford operations.

There is a lot of work left transforming the Ford structures, but with less than a year under Mulally’s belt, the progress achieved is stunning. Bill Ford led the company for five years and managed much, much less progress. Under him, managers deliberately and successfully derailed any efforts for change, sabotaging his well-intentioned plans. After the failed “Ford 2000” campaign, “One Ford” seems to be gaining the traction it needs to succeed.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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8 Comments

  1. Great that Ford is finally doing this, but is it too little, too late? They seem to be on a downward slide that can’t be reversed. They’re looking pretty beat up.

  2. Great article and very well-written. I only hope that Ford can move quickly enough to halt their losses and start actually increasing sales.

  3. I agree with the previous comment. The post is well-written, and you did a good job explaining what’s happening now at Ford, which, BTW is long overdue. But, I have to jump on the same bandwagon as the others, will any of this matter of Ford can’t turn around the sales of what they have right now? Ford sales are in free-fall. I know they’re raising more money by selling off their foreign brands, but will it be enough of a cushion to let them live to see another day?

  4. without trying to sound like a fan boy – Ford’s retail market share has been largely stable since summer 2006 – that is 11 months of stable retail share… Ford needs to increase it, but at the moment they are doing OK. A lot of their new product is doing very well – even the maligned Escape is racking up huge sales .. and the Taurus had a great first month of sales ..

    I still have a lot of hope left for Ford .. their sales are much better when you do not just skim the reports, but actually look at the details .. all the core products are doing very well, the decline is where it was expected.

    Regardless – the name of the game right now is not sales though – it is profitability .. and we do not have much info on the 07 yet on that front, plus Ford expects to be quite a bit in the red for another 2 years – and is financially ready for that.

    Oh and thanks for the comments on the piece … I am glad you all liked it.

    Igor Holas

  5. Outstanding article, Igor! I really enjoyed reading about Ford, which doesn’t happen every day. 🙂 Welcome to the Autosavant team!

  6. I hope Ford takes whatever platforms and pieces they want from Jaguar, Land Rover and Volvo before they leave. Ford could use some nice compoenets in their cars.

  7. I think we haven’t see yet the upcoming surprises then Mullaly reserve for us in the next coming years. I think Mullaly might give some nervous rear-view mirror check at Toyota, Honda and Carlos Ghosn.
    The only and main drawback will be his successor, if it’s Mark Fields or an other person, he should learn what Mullaly bring to Ford.

    Looks like Ford have a common thing with IBM: both had and have an outsider to fix the mess: Alan Mullaly at Ford and Louis V. Gerstner at IBM. I could add also Peugeot to the mix, but Christian Streiff formelly from Airbus, is only appointed-CEO at Peugeot-Citroen.

    And there some rumors then Wolfgang Bernhard is back as a CEO at Chrysler, things gonna be very interesting…

  8. Well written article Igor.

    I must say as a VW Enthusiast I’m scared (happily) Ford will succeed 😉 (means more had work for other manufacturers)

    Kudos to the “One Ford” theme its about time.

    Off topic I find it interesting how carmakers have off periods then suddenly come fighting back.

    Examples can easily be seen eg Mitsubishi & Fiat etc

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