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Ford's Bloated Structural Costs


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I find this amazing,.  No wonder Fields was fired.  From Automotive News:

"One of his most immediate priorities was to control fast-rising structural costs, including product development, engineering and vehicle launches. Hackett said those costs were increasing an average of $1.7 billion annually since 2013, a period covering the end of Alan Mulally's tenure as CEO and three years under Mark Fields before Hackett took over. Structural costs were flat in 2018, and Ford projects they'll stay that way in 2019.

"We arrested that, and that didn't take us long," Hackett said.

Even though Ford was spending more, its product-development process had become "constipated," he said, leaving the company without fresh offerings in the right segments. Hackett has directed Ford to spend more on the utility vehicles and pickups that generate virtually all of its profits today, while discontinuing low-margin or money-losing sedans in the U.S., among other changes.

"When I look in hindsight, I wouldn't have traded some of the product deferrals that happened that caused some of the delays that we now are righting," Hackett said. "So as I go forward, I have to look in the mirror and say I'm going to be faced with moments of truth. I'm not going to starve product."

https://www.autonews.com/automakers-suppliers/ford-ready-do-and-undo-whats-needed-fix-business?fbclid=IwAR1Lhnlhxo7BNZZ38nX5NfHyU4wFPvJn_ArAOJdOV-o9upMKIylkY1vMIuA

 
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2 hours ago, fordmantpw said:

Man, you sure have lots of pent of hatred for Hackett.  Geez!

Not sure it is pent up "hatred"-as I see it a lot of people-not just the financial community/press-just view the guy as a someone who talks in riddles.  Remember the post where someone said he actually had some young staff person who "translated" his statements to his staff.  Take it with a grain of salt.  The expression..." all hat and no cattle" comes to mind.

In any case, compare him to Mulally.    Was everyone within Ford and outside excited about following this guy? Impressed with his direction?     At least as a "civilian'" looking in I think so.  

So is Hackett a savvy manufacturing guy?  I don't think so-and you can't compare his office furniture stint to what say big Al did at Boeing.  Is he an excellent communicator?  For sure I don't think so.  Is he a guy you want to grab the hose and follow into a burning building? 

To each his own.  But I always felt the guy at the top had to have it all.  That is why they got there.

But as a loyal Ford guy and stockholder, hope I'm wrong.   Oh as an aside, Im was at a good sized dealership the other day looking at a new Ranger Lariat that was sitting on the floor-impressive by the way and it was sold.  I was talking to a guy who was not just one of the sales "grunts".  Had a lot of gray hair and people seemed to be coming to him frequently for direction.  In any case I made some comment about direction of company under Hackett.  His response..."Don't worry-he will be gone by end of summer."

Again everything with a grain of salt.

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I really don't care what anybody thinks of him, how good he communicates to investor analysts, or what his background is.  I care about results.  If he puts out great products and keeps the company profitable and brings quality up, then I'm all for the guy.  If he fails at that, then I'll bash him.  Until then, why doesn't anybody give him a chance?

Fields had the credentials and everything you ask for, and look how that turned out.

Edited by fordmantpw
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55 minutes ago, Bob Rosadini said:

 

In any case, compare him to Mulally.    Was everyone within Ford and outside excited about following this guy? Impressed with his direction?     At least as a "civilian'" looking in I think so.  

 

Hindsite being 20/20...the only thing Mulally did for Ford was lead them through a crisis they had-he really didn't set the company up that well for success after he left...

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1 minute ago, silvrsvt said:

Hindsite being 20/20...the only thing Mulally did for Ford was lead them through a crisis they had-he really didn't set the company up that well for success after he left...

I think he did, it's just that the new leadership let the company fall back into its old habits.

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21 minutes ago, fordmantpw said:

I really don't care what anybody thinks of him, how good he communicates to investor analysts, or what his background is.  I care about results.  If he puts out great products and keeps the company profitable and brings quality up, then I'm all for the guy.  If he fails at that, then I'll bash him.  Until then, why doesn't anybody give him a chance?

Fields had the credentials and everything you ask for, and look how that turned out.

Hackett has not mentioned quality at all.

3 minutes ago, silvrsvt said:

Hindsite being 20/20...the only thing Mulally did for Ford was lead them through a crisis they had-he really didn't set the company up that well for success after he left...

That was supposed to be Fields' job. He tried by prepping for a downturn that he was the only person who though was coming. 

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4 minutes ago, fordmantpw said:

I think he did, it's just that the new leadership let the company fall back into its old habits.

 

Then its obivious that he didn't do good enough of a job changing the culture and Fields was just an oppertuntic asshole that played the system. 

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13 minutes ago, coupe3w said:

So tell me guys / gals who would be a good CEO for Ford?

So far the only problem with the current CEO is that Wall Street doesn't seem to like him. We have really no idea what he is doing/did internally to fix the company as it stands now. 

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17 minutes ago, silvrsvt said:

Hindsite being 20/20...the only thing Mulally did for Ford was lead them through a crisis they had-he really didn't set the company up that well for success after he left...

Well that is a pretty big "Only is it not???  And from everything I have read, he did a lot to cut out all the disunity where everyone at higher levels was into covering their ass and protecting their turf.  Again- you Ford insiders-true?

Now if in fact Fields is/was the fall guy and the guy responsible for  Ford's current problems I guess Big Al has to share that blame as did he not pick Fields as the guy that could keep the direction going?

As to where we are today, the new Explorer IMO will be an absolute home run.  The new Ranger-likewise, regardless of MT's opinion.  Whose signature is on those two vehicles?  Fields or Hackett?   And the decision not to offer T-6 here right off the bat was probably made by a lot of people based on the theory that ATP associated with F-150 was far more important.

And Fordmantpw.....

Fields had the credentials and everything you ask for, and look how that turned out.

My thought on that was perhaps Fields did not have the support of the rest of the "team"-perhaps some of the players that thought THEY should have been in the drivers seat.  Mulally was clear on his "cut the crap" message-play as a team.  Maybe Bill Ford should have sensed what was going on-if in fact bruised egos stood by and were NOT team players under Fields.

Just a thought.

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Hackett is doing two important things:

Setting Ford up for the future:  Pushing electrification which includes hybrids and BEVs and Transportation as a Service with AVs

Getting rid of low margin vehicles and operations - pushing utilities and trucks ahead of sedans, focusing on more unique vehicles like Broncos, hybrid trucks and high performance vehicles that bring higher margins.

To accomplish that he’s had to do some internal cost cutting.   I suspect there simply isn’t enough budget to revamp quality so they’ll live with “good enough for now” and try to avoid the big costly recalls.

Just as important he says he’s committed to not letting good products rot on the vine.

That’s all I care about - what he says or doesn’t say to Wall St or how poorly he communicates is irrelevant as long as he greenlights the right projects and manages Ford internally.

It will be 2-3 more years before we really know if his bet will pay off but I think it will.

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49 minutes ago, Bob Rosadini said:

And Fordmantpw.....

Fields had the credentials and everything you ask for, and look how that turned out.

My thought on that was perhaps Fields did not have the support of the rest of the "team"-perhaps some of the players that thought THEY should have been in the drivers seat.  Mulally was clear on his "cut the crap" message-play as a team.  Maybe Bill Ford should have sensed what was going on-if in fact bruised egos stood by and were NOT team players under Fields.

Just a thought.

This is EXACTLY what I am talking about.  You are making excuses for Fields' failure, but not even giving Hackett a chance.  What's up with that?  It's like he's a relative and you're covering for him.  You're not the only one either.

Fields' failure = no support from the 'team'

Hackett's failure = he had no business being there because because because

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7 minutes ago, fordmantpw said:

This is EXACTLY what I am talking about.  You are making excuses for Fields' failure, but not even giving Hackett a chance.  What's up with that?  It's like he's a relative and you're covering for him.  You're not the only one either.

Fields' failure = no support from the 'team'

Hackett's failure = he had no business being there because because because

I don't think you’re talking about me but if you are, I will say this: I don't recall ever saying Hackett doesn't belong there, I just very strongly disagree with some of the moves he's made and his heavy use of hyperbole and meaningless corporate buzzwords when he speaks.

Edited by fuzzymoomoo
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It says 1.7 billion annually, that's almost 10 billion dollars over the years. I can see why a lot of people hate him, no one likes the guy that is cutting and trying to streamline things. You're eliminating departments and cutting the people someone manages, that means they could be in a position of not having a job. 

If the company wasn't on the brink of bankruptcy Mullaly would have been hated as well, they are trying to change a corporate culture at Ford which is unlike any place I have ever worked. 

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1 minute ago, jasonj80 said:

It says 1.7 billion annually, that's almost 10 billion dollars over the years. I can see why a lot of people hate him, no one likes the guy that is cutting and trying to streamline things. You're eliminating departments and cutting the people someone manages, that means they could be in a position of not having a job. 

If the company wasn't on the brink of bankruptcy Mullaly would have been hated as well, they are trying to change a corporate culture at Ford which is unlike any place I have ever worked. 

Oddly enough the streamlining of the corporate structure is one thing I do like, as do a lot of the white collar guys I know, even though a lot are nervous about staff reductions and that's not doing anything for morale. 

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2 minutes ago, jasonj80 said:

If the company wasn't on the brink of bankruptcy Mullaly would have been hated as well, they are trying to change a corporate culture at Ford which is unlike any place I have ever worked. 

Why is it so entrenched then? You'd figure that after 25-30 years you'd have turnover in mid-level leadership. I've worked around/in the DOD all my life and I know the corporate culture of its cilivian employees-I'll assume its similar to how Ford's is in some ways.

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6 minutes ago, silvrsvt said:

Why is it so entrenched then? You'd figure that after 25-30 years you'd have turnover in mid-level leadership. I've worked around/in the DOD all my life and I know the corporate culture of its cilivian employees-I'll assume its similar to how Ford's is in some ways.

Structural inertia. Ford has struggled with this for decades. It's their main weakness as a company. Organizational behavior at Ford is worse than the U.S. military, whether you're referring to civilian employees, enlisted personnel, or commissioned officers.

The "lost years" at Ford between Alan Mullally's retirement and Jim Hackett becoming CEO made structural inertia a lot worse.

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