Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.bonus From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: bonus Thu, Apr 30 1992 Date: Thu, 30 Apr 92 05:41:14 EDT Message-ID: 04-30 0000 BONUS: Lean and mean, Ford returns USA TODAY Update April 30, 1992 Source: USA TODAY:Gannett National Information Network Ford - the letters stand for Fix Or Repair Daily, detractors say. Well, Ford Motor has done just about that to itself. The No. 2 automaker has tuned, tweaked and tinkered with its operations and products almost continuously since it nearly went broke in the early 1980s. It resisted the temptation to add factories and assembly lines last decade, while rivals were expanding into costly overcapacity. Instead of leaning on expensive sci-fi technology, Ford enlisted assembly-line workers to help decide how to run plants more efficiently. WAS FORD'S APPROACH EFFECTIVE? Ford lost $2.3 billion last year in the depths of the recession. But that wasn't as deadly as General Motors' $4.5 billion loss last year. And Ford limited red ink to 1991; GM bled $2 billion in '90. Ford, in its plodding fashion, has cut more than $3 billion from yearly costs and squeezed productivity at its factories, so it takes about 20 worker-hours to build a car. GM takes 40 hours, industry-leader Toyota about 16, analysts say. Overall, analysts say, Ford - the letters might stand for Found the Right Direction these days - is set to rebound strongly and more quickly than GM or Chrysler as the economy crawls back to life. WHERE'S THE EVIDENCE THAT FORD IS REBOUNDING? Ford's unexpectedly healthy first-quarter earnings of $338 million, in a tough worldwide auto market still beset by recessionary worries. That's nearly twice the net income announced by much bigger rival GM. Chrysler reports earnings Thursday. Significantly, Ford nearly broke even on U.S. car and truck sales - an enormous victory in its core business. The USA has been an automotive black hole. No matter how many cars and trucks automakers sold here, they couldn't make money doing it. They spent too much on incentives - needed to keep sales alive and factories open. SO THE APPROACH PAID OFF? Ford's careful approach - scorned in the record-setting mid- '80s, when demand seemed infinite - has spared it the multimillion-dollar costs of closing now-unneeded plants. "A lot of Ford's success is based on what it has done the past 10 years - leaner production, leaner staff, getting the break-even point way down," says consultant George Peterson of AutoPacific Group. That put Ford in position to profit from even a minuscule upturn in sales - and a recovery is on the horizon. Says Ford's cautious chairman and chief executive officer, Harold "Red" Poling: "We're getting a pickup in car sales and a pretty strong pickup in truck sales." WHAT'S A KEY TO FORD'S FIRST-QUARTER SUCCESS? Selling more cars and trucks to individual consumers and fewer heavily discounted vehicles to fleet buyers, such as car-rental companies. Ford says 29% of its sales are to fleets, vs. 37% a year ago. Poling says fleets are required to keep their Fords, Lincolns and Mercurys longer now - six months or 15,000 miles instead of three or four months. That way, ex-fleet vehicles are more like used cars and less likely to threaten new-car sales. BEYOND THAT, WHY IS FORD POISED TO BECOME EXPLOSIVELY SUCCESSFUL? Because of shrewd partnerships. Ford owns 24% of Japan's Mazda, which it taps for design and manufacturing help on small cars. Ford also linked with Japan's Nissan to split the cost of developing a minivan that will go on sale in July as the Mercury Villager and Nissan Quest. It imports Kia minicars from South Korea and sells them as Ford Festivas, sidestepping the big cost of developing a low-profit car. "Ford's partnerships are very opportunistic, which is how they ought to be," says Furman Selz auto analyst Maryann Keller. WHAT ELSE DOES FORD HAVE ON ITS SIDE? Strong products. The high-profit Explorer sport-utility truck has dominated the sport-utility niche almost since its debut two years ago. Better for Ford, buyers like the top-end, $25,000 Eddie Bauer model. They would spend even more if Ford could figure out what else to upholster in leather. "We're working on it," Poling grins. The Ford Taurus was the USA's best-selling car last month, wrenching that title from the Honda Accord, best seller for eight consecutive months. In fact, six of the 10 best sellers in the USA are Fords: F-series pickup truck, Taurus, Explorer, Ford Ranger small pickup, Escort small car, Tempo compact sedan. HOW IS FORD MARKETING ITS CARS? To fire up sluggish sales of the mildy restyled Escort, Ford is offering buyers a choice of well-equipped models for a single price: $9,999. It also is experimenting in some areas with offering well-equipped Thunderbirds for about $16,000 - less than the base model. "You lower the price instead of offering all the rebates. It comes out about the same," Peterson says. HOW IS FORD TARGETING HIGH-PROFIT NICHES? Ford's goal is to be top-seller in every truck segment, for instance. Trucks make lots of money for several reasons. They are simpler and therefore less costly to build than cars. They sell well without costly restyling every few years. They hold resale value, so consumers will tolerate higher sticker prices. There's another reason trucks are strong, says Peterson, himself a former Ford truck planner: "Trucks aren't as glamorous as cars, so they get less attention from upper management. That means workers are left alone to do their jobs and develop the right products." And the Lincoln Mark VIII luxury coupe, due this winter, has the paper credentials to polish Ford's image. WHAT WAS FORD LACKING? Ford certainly has done plenty of staggering in the past few years. Analysts say it has been too conservative in its styling. And they say it has waited too long between styling changes on key models such as the Tempo and Mercury Topaz, bread-and-butter compact sedans. It has launched new models - such as the Lincoln Town Car and Ford Crown Victoria - before the right engines and transmissions were ready. Old powertrains have to be carried over a year until the new hardware is ready. And it has lagged rivals in developing modern engines - high-powered but fuel-efficient V-6 and V-8 engines. HOW HAS FORD TURNED ITS ATTENTION TO DEFICIENT AREAS? Top managers took the rare step of ordering designers to get more radical on the '93 Mark VIII to make sure it's adventuresome enough, Poling says. And billions of dollars are being poured into engine and transmission development. "It's powertrain heaven," declares Robert Transou, manager of Ford's engine and transmission operations. "They've made lots of little mistakes," says Keller. "But those are criticisms of the past. It looks like they've got their act together now." Bonus Editor: Michele Coleman. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM