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Ford's Bloated Structural Costs


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I remember Mullaly describing his first meeting with direct reports - everyone had a huge binder and a full time employee dedicated to keeping the binder updated.  They hid their financial results from each other.   Mullaly told them for the next meeting there would be no binders allowed and everything would be shared.   He forced them to work together for the good of the company.   I suspect while some folks got it, others just went along with it until he left then went back to their old behavior and Fields did nothing to stop it.

I think they should have brought in more outsiders in middle and upper management.

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8 minutes ago, akirby said:

I remember Mullaly describing his first meeting with direct reports - everyone had a huge binder and a full time employee dedicated to keeping the binder updated.  They hid their financial results from each other.   Mullaly told them for the next meeting there would be no binders allowed and everything would be shared.   He forced them to work together for the good of the company.   I suspect while some folks got it, others just went along with it until he left then went back to their old behavior and Fields did nothing to stop it.

I think they should have brought in more outsiders in middle and upper management.

They tried that with Hackett and it wouldn't surprise me if he's getting a lot of push back from the Ford lifers 

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2 minutes ago, fuzzymoomoo said:

They tried that with Hackett and it wouldn't surprise me if he's getting a lot of push back from the Ford lifers 

That's when the CEO tells the Ford lifers that it's his way or the highway.   Or it might be time to just show them the door anyway.  They're probably not going to change.

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5 minutes ago, akirby said:

That's when the CEO tells the Ford lifers that it's his way or the highway.   Or it might be time to just show them the door anyway.  They're probably not going to change.

If what you read is true, the big cuts are to be in Europe.  As for NA, they're supposedly eliminating middle management bureaucracy.   Of course we'll see what actually happens.

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44 minutes ago, fuzzymoomoo said:

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.

No, not talking about you.  You have some legitimate beefs with him, and I get that.

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6 hours ago, fordmantpw said:

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

It's not pent up hatred at all.

It's Jim Hacket again telling us  about this average $1.7 Billion/year blow out in product development cost while not really elaborating just what that cost of I estimate $5 billion was for...Since someone asked what it might have been, I responded with costs for alloy F150 , Super Duty and Explorer Aviator.

Rolling all of those products to aluminum almost one after another would have been a huge product development payment at that time and something not likely to be repeated again.....all I merely asked was whether  Hackett called that expense ended when it was like a big one time charge that Fields wore.

All we've heard for the last 20 months is give Jim Hackett a chance, well folks, Jim Hackett strolled into this job thinking it would be easy to get his 10% return, do this. that and the other thing and profits will flow...then 2018 happened and he started to realize that there were a lot more emerging problems occurring with Ford's business. While Fields had addressed what North America would need, he'd done nothing about the emerging changes in Europe and ROW markets....that's the huge nut for Hackett to crack, it's the biggest thing ripping a hole in all of Jim Hackett's plans.

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1 minute ago, jpd80 said:

YES, his time table for doing that was unrealistic and went out the window.....

Is that based on your inside info?  Because that was never announced publicly to my knowledge.

Even so it just means that he had to modify his original plans.  Things change all the time.  Being able to adapt is a sign of a good leader.

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2 minutes ago, akirby said:

Is that based on your inside info?  Because that was never announced publicly to my knowledge.

Even so it just means that he had to modify his original plans.  Things change all the time.  Being able to adapt is a sign of a good leader.

His original timetable for achieving 10% across the company was put on hold at the start of 2018 and has said publicly that the company may have to accept lower returns. I understand that good leaders must adapt but also must see near future headwinds when developing strategies......

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What I will give Hackett credit for is exploring the VW alliance where it benefits Ford - that more than anything will result in fundamental change to Ford's global business, cure Ford Europe and you cure ROW's problems. I'm not suggesting to embrace VW fully but there's a lot of opportunity to increase revenue the right way....

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3 hours 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.

x1000 It makes Government kingdoms look like a joke, I'm being serious when I say a 3 star general would run out of Fords upper management in 6 months saying he couldn't handle it. The amount of back stabbing and going around people is a masters game unlike I have even witnessed. I think some of it comes from the Family-ness of the company. There are people that have worked for Ford for 4 and 5 generations. Ford Family loves that but also it breeds the connection to the past as well as loyalties that spread departments. There are battles between family's and groups that go back decades that are still being fought. This guy went after my uncle's department under Nassar and now his kid works over here so I'm going to get him back. 

 

4 minutes ago, jpd80 said:

His original timetable for achieving 10% across the company was put on hold at the start of 2018 and has said publicly that the company may have to accept lower returns. I understand that good leaders must adapt but also must see near future headwinds when developing strategies......

I didn't think he knew when he took over just how bad things were at Ford again. From what's been said the walls were being built the last year Mullaly was there. People knew Mullaly was going and that Fields played by and was great at the old Ford playbook and departments needed to be ready. Mullaly just tore down the walls and signed some peace agreements, some were his management style but a lot was just people had to get along as even they knew if they didn't stop fighting they would all be out of jobs. So they tore down walls but made sure the foundations were getting strengthened so when they needed to build the wall and go to battle they were good and ready.

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1 hour ago, fordmantpw said:

You think he thought it would be easy?

I read this in Automotive News.  When Hackett was first approached about taking the CEO job, he turned it down and recommended somebody else.  It's only after doing some soul-searching did he decide to take the job.

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30 minutes ago, mackinaw said:

I read this in Automotive News.  When Hackett was first approached about taking the CEO job, he turned it down and recommended somebody else.  It's only after doing some soul-searching did he decide to take the job.

I remember that article from a year ago. It was a good read. https://www.autonews.com/article/20180116/OEM09/180119736/hackett-almost-didn-t-take-ford-ceo-job-suggested-someone-else-for-role

I'm not surprised that even a business genius like Jim Hackett hesitated to take the position of Ford CEO. Right now, analysts and investors are understandably frustrated that Hackett's "fitness" initiatives at Ford are taking a long time. But Ford was in such bad shape when Hackett became CEO that no quick fix is humanly possible. 

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11 minutes ago, rperez817 said:

 Right now, analysts and investors are understandably frustrated that Hackett's "fitness" initiatives at Ford are taking a long time. But Ford was in such bad shape when Hackett became CEO that no quick fix is humanly possible. 

Actually I like how Hackett has told the investment community to f**k off, we're doing this my way and at my pace.  It sure sounds like he, and the management team, have done a thorough top-to-bottom revaluation of the company and are addressing some structural issues that have been long neglected.  There's no excuse for pissing away an average of 1.7 billion dollars/year for five years.  No excuse at all.

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1 hour ago, jasonj80 said:

I didn't think he knew when he took over just how bad things were at Ford again. From what's been said the walls were being built the last year Mullaly was there. People knew Mullaly was going and that Fields played by and was great at the old Ford playbook and departments needed to be ready. Mullaly just tore down the walls and signed some peace agreements, some were his management style but a lot was just people had to get along as even they knew if they didn't stop fighting they would all be out of jobs. So they tore down walls but made sure the foundations were getting strengthened so when they needed to build the wall and go to battle they were good and ready.

Under Mulally, most of Ford's senior management stayed, the only high profile execs to get the shove was Ford's brother in law, Steve Hamp and Bill's fishing buddy Mark Shulz who was really ineffective as head of Ford China. Apart from that everyone kissed Mulally's ass and played nice. Before Mulally, Fields was the biggest back stabber there and proved it later on when he tried to fix Joe Hinrichs with the blame for Ford's quality issues.

So funny reading about Don LeClair (who wasn't a team player himself) calling out Fields and all the other senior VPs for being well over their pay grade, Mulally had to hold Fields back as he climbed over the desk at LeClair, that was 2006.

 

Jim Hackett is a CEO who relies heavily on his subordinates to guide his decisions , that's good to do provided those people are giving him an unfiltered view and not trying to steer him in directions they want to go. He's smart enough to see if people are genuine or playing possum...

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27 minutes ago, mackinaw said:

Actually I like how Hackett has told the investment community to f**k off, we're doing this my way and at my pace.  It sure sounds like he, and the management team, have done a thorough top-to-bottom revaluation of the company and are addressing some structural issues that have been long neglected.  There's no excuse for pissing away an average of 1.7 billion dollars/year for five years.  No excuse at all.

I have to agree with your here. Wall Street does not know what it takes for a such a business to be run or what it takes to steer it one way or another.

Its not like Ford instantly came back from the dead under Mulally. It took a few years for the fruit to bear. Hackett, at least, has the benefit of a profitable company and good economy. That does not give you a head start, but it gives you more to pay with. 

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The sharp decline in profit for Europe, ROW and China has  underscored the need for massive structural change outside of North America. If Hackett can remove that red ink from the ledger, then North America can do the rest - especially with some of the exciting products coming in the next few years.

Wall Street has no real power over Ford but rest assured that the Ford family also wants to see improvement in stock prices and returns but not at the cost of juicing Ford' Motor's operations.

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On 1/29/2019 at 11:47 AM, silvrsvt said:

Why is it so entrenched then? You'd figure that after 25-30 years you'd have turnover in mid-level leadership.

John Maxwell actually covered Henry Ford in his book The 21 Irrefutable Laws Of Leadership. If his description of Henry is accurate, this has been baked into the company from the get-go.

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On 1/29/2019 at 1:03 PM, akirby said:

I remember Mullaly describing his first meeting with direct reports - everyone had a huge binder and a full time employee dedicated to keeping the binder updated. 

My favorite story that I heard about Mullaly was when his direct reports showed up for a meeting and there was a bunch of different, long, skinny, pieces of metal laying on the conference Table.  "These a hood prop rods !  Why do we have so many different ones ?  It is JUST a prop rod !"

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9 minutes ago, theoldwizard said:

My favorite story that I heard about Mullaly was when his direct reports showed up for a meeting and there was a bunch of different, long, skinny, pieces of metal laying on the conference Table.  "These a hood prop rods !  Why do we have so many different ones ?  It is JUST a prop rod !"

I love those kinds of stories.   That was a CEO who understood the problems and what needed to get fixed.

Also the one where he took a couple of engineers to Consumer Reports to hear their complaints about the rear hatch on the 2007 Edge.   The engineers were basically arguing with CR and trying to defend their design.  Mulally told them to just listen and take notes.   He told them privately "We seek to be understood more than we seek to understand."

That's a powerful message that I try to apply to my job every day.

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