Ford: Misses the Mark
February 16, 2007

Ford is not meeting the goals of its Way Forward turnaround plan and employees are losing confidence, according to an internal report released to employees and obtained by the Detroit News. (It’s a subject I’ll discuss live on CNBC this morning at 11 a.m. EST)

Ford missed its retail sales goal in January and expects to miss goals again for February and March. The company did hit its material cost reduction target for January, but will miss targets for February and March by a wide margin, the Detroit News reported Friday.

Ford did not say if it can still meet its goal to be profitable in its North American Automotive Operations in 2009.

The internal document also showed employees are discouraged. Only 47% say they are confident in Ford’s long-term success. Less than 45% believe in the automaker’s Way Forward recovery plan.

Why wouldn’t employee morale be low? Workers remaining at Ford have watched those around them taking buyouts and being let go. The workload doesn’t decrease. In a crisis, in fact, it increases. Yet, there are fewer hands on deck to help.

Employee morale has been poor for a long time. Employees have shown little faith in management and the Way Forward plan. Morale was buoyed somewhat when Ford brought in Alan Mulally from Boeing as CEO. But the honeymoon is over. Employees have seen little of his stamp on the company, except the return of the Taurus name, which isn’t a particularly brilliant move and one that isn’t going to move the sales and profitability needle.

It doesn’t help when stories and photos, like those that appeared in yesterday’s Detroit newspapers, show Mulally on the golf course playing in PGA events on the eve of announcing Ford’s record $12.7 billion loss and shortly after it in the midst of job cuts and factory closings. Same goes for Ford’s President of the Americas Mark Fields who was flying the corporate jet home to Florida weekends at a cost estimated at $70,000 a week, more than some workers make. He now is flying commercial – first class.

Those kinds of things cause employees to be angry and disheartened when so much is being demanded of them.

Specifically, Ford missed its retail sales goal in January by 10,6000 vehicles, nearly 1 percentage point in market share, according to the internal documents. Ford had counted heavily on retail sales buoying total sales that were down overall because Ford is decreasing its fleet business, particularly unprofitable rental car sales. In addition, Ford ended sales of the old Taurus, which, though trending downward in its later years, still represented about 175,000 sales a year.

It’s not surprising. Ford recently briefed the press and hinted sales would be off this year, in part, because it is reducing its unprofitable sales to rental car fleets. But apparently retail sales were even softer than anticipated. The marketplace is extremely tough and competitive. Total industry sales are expected to be down a tad this year with players aggressively fighting over increasing their share of the pie.

Further, new product is what excites the market and gets people to buy. And Ford has little of it, only the Ford Edge and Lincoln MKX crossovers and the Lincoln MKZ luxury sedan.

Posted by Michelle Krebs at 7:09 AM under Ford | Comments (1) | digg this | Seed Newsvine