Ford shifts from recovery mode to all-out growth

Ford Motor’s shift in tone and action has happened so subtly and so carefully, you might have just missed it amid the news about the company’s $2.8-billion profit in the first quarter – the company’s largest first-quarter profit in 12 years (all figures in U.S. dollars).
Make no mistake, though, Ford’s corporate spin is spinning in a new direction and it suggests that Ford’s most senior managers no longer believe Ford is in turnaround and recovery mode. Ford is now in all-out growth mode.
We heard this from Alan Mulally, the CEO. During the first quarter results conference call, he didn’t spend much time at all talking about profit numbers and ratios related to debt versus cash on hand. No, he was all about the products; Ford’s financial position or the greater economic climate were of little interest.
Mulally, the big boss, is focused on talking about Ford’s current and future products and what profits they generate. Because of that, it seems fair to say the first stage of Mulally’s “One Ford” vision – building good vehicles on common platforms for the world, to be sold at good prices – is entrenched within the company.
Ford’s product goal is to develop “world-class competitive vehicles” for which the company can get an average of $1,100 extra. It means getting buyers to pay more even for former econocars like the Fiesta.
“The heated leather seat is the most popular option in a Fiesta,” Mulally said on the call. “This is a tremendous change. Our buyers are now making a lifestyle choice. This is something that we foresaw four years ago and are ready for.”
To make more money, Ford is pushing hard to accelerate the cadence of its product renewal. That was the message Ford was spinning at the recent New York auto show. The 2013 Taurus was, in fact, the metaphor for the overall product message.
“The Taurus is more than just a car for us,” said global product czar Derrick Kuzak. “It’s our flagship sedan.”
Exactly. In New York, many journos groused about Ford putting so much energy into showcasing a modestly reworked sedan – the Taurus – that won’t reach showrooms for another year. They missed the point. The Taurus unveiling wasn’t about one particular model. No, it was about where Ford is moving with its whole lineup, globally.
Kuzak, Ford’s group vice president of global product development, used the Taurus to illustrate the company’s goal of having a three- to three-and-a-half year product cycle for all its models; that will become Ford’s norm going forward, Kuzak said.
“One of the biggest determinants of market share is freshness of your product lineup. The fresher it is the more your customers agree to go to your showroom,” Kuzak said. “When we develop our product planthe most important metric we have is the average age of our showroom.”
The average age of the Ford portfolio in the United States is 2.8 years, Kuzak said. That’s young and Ford would like to make it even younger, still. That’s a major competitive edge, said Kuzak.
The 2013 Taurus also carried messages about the design and technology vision at Ford.
On the power train side, the 2013 Taurus will offer a re-engineered version of the 3.5-litre V-6 EcoBoost engine currently available in the Taurus SHO. But the more important engine will be the 2.0-litre four-cylinder engine used in the Ford Mondeo sedan in Europe. The 2013 Taurus with the 2.0-litre engine is expected to achieve 31 mpg (U.S.), or 7.59 litres per 100 km, on the highway.
“This signals our commitment to EcoBoost,” said Moray Callum, Ford’s executive director of design. “EcoBoost delivers two different things – it delivers performance, and it can also deliver fuel economy.”
If you want to know where Ford is headed in the next 12 months, look no further than the restyled Taurus. It will be the “face of Ford,” Kuzak said.
And it’s not just the design, but everything about the car – from the exterior styling to the Audi A7-inspired interior, to the engineering and the technology, including MyFord Touch touch-screen technology and active park assist, to the marketing and the speed of its remake. This current Taurus was introduced mid-year 2009, so we’re talking a very fast remake.
If Ford is successful in this next growth phase, the company will further pay down large chunks of its huge debt. If that happens, Ford will be re-established as an investment-grade security – the junk status will be history.

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