No. 951
June 20, 2018
 

About The UjianNasional

Peter M. DeLorenzo has been immersed in all things automotive since childhood. Privileged to be an up-close-and-personal witness to the glory days of the U.S. auto industry, DeLorenzo combines that historical legacy with his own 22-year career in automotive marketing and advertising to bring unmatched industry perspectives to the Internet with Ujian-nasional.info, which was founded on June 1, 1999. DeLorenzo is known for his incendiary commentaries and laser-accurate analysis of the automobile business, as well as racing and the business of motorsports. Author. Commentator. Influencer. The Consigliere. Minister of the High-Octane Truth. DeLorenzo is considered to be one of the most influential voices commenting on the business today.

DeLorenzo's latest book is Witch Hunt (Octane Press  ). It is available on Amazon in both hardcover and Kindle formats, as well as on iBookstore. DeLorenzo is also the author of The United States of Toyota.

Follow UjianNasional

Saturday
May052018

FORD IN FREE FALL.

By Peter M. DeLorenzo 

Detroit. Depending on one’s point of view, last week’s column either praised the Ford executive team for making a market-driven decision to reduce the number of its car nameplates, or slammed Ford for abandoning the car market. Though I took pains to present the rationale behind both sides of the decision, the more I’ve thought about it, the more it became very clear to me that Ford – at least certain Ford executives – have lost their frickin’ minds for walking away from the car market, especially with its very competitive Fusion.

I should point out that there is much more to this story (there always is), and it should also serve as a reminder of why you come here in the first place, which is to get the nitty-gritty insider stories of this business that you can’t find anywhere else. 

But before I get into that, Ford in Free Fall? Come on! How can that be? Isn’t this the home of the vaunted F-150, the most dominant vehicle in this business for more than four decades and a cash machine of Brobdingnagian proportions? Yes, it is. The F-150 is The Franchise, and its success powers the company machine, keeping the whole enterprise going.

This success doesn’t come easily or automatically, however. Ford happens to have the best sales team at its disposal, led by one of the savviest executives in the business – Mark LaNeve – and it’s because of him and his team, the consistent excellence of the F-150 and the fact that Ford has some of the finest dealers in the industry that the Ford cash machine keeps going, month after month and year after year. But take away the F-150, and Ford would be just another car company struggling to keep the enterprise afloat.

It may also help to remember that Ford is an extremely unique enterprise in that the Ford family controls 40 percent of the company through special stock. And for most around these parts that is a very good thing. Often referred to as “Ford’s” - as in, “I work at Ford’s” – Ford dominates so much of the local landscape (The Detroit Lions, The Henry Ford museum, etc., etc.) that through its many involvements with social and charitable initiatives over the decades, it has become an integral part of the fabric of this community, and there is a distinct sense of pride associated with the company because of that. But that doesn’t mean everything is rosy in Dearborn. Far from it in fact, because the internal hand-wringing over this “let’s get out of the car business” decision has exposed the ugly underbelly of what the Ford Motor Company has become, and it now finds itself at the most precarious moment in its history – yet again – because of it.

Yes, the resolute and intransigent bureaucratic fiefdoms that have always defined Ford have reared their ugly heads again, but then again that was to be expected. After Alan Mulally left, they just dusted off their pitchforks and resumed their narrow-minded shit disturbing, company goals be damned. But that’s almost a given at Ford, it’s as much a part of the company’s corporate culture as the Mustang. But that’s not the reason the company is in trouble again.

Chairman Bill Ford Jr., who made the brilliant and gutty move to bring Mulally in when the company was in danger of imploding more than a decade ago, was faced with a similar decision when Mark Fields was exited from the company a little more than a year ago. If Bill had his druthers, Alan would be just now getting ready to retire, he wanted him to remain as CEO that badly. And although this was a view that was shared by many, alas it wasn’t to be the case. So, having gotten to know Jim Hackett over the years, Bill alighted on the notion that Hackett could be The Guy.

And in some respects, Jim showed flashes that he could be The Guy, but only intermittently. Hackett’s esoteric pronouncements and his vision of the future – defined by connected cities et al. – and the Ford Motor Company’s role in it were all deemed well and good, but meanwhile the machine that defines Ford wasn’t being served. The High-Octane Truth is that Hackett, a decent, smart and well-meaning guy, just doesn’t have the depth and breadth of experience to make a real difference at Ford. And right now, the one thing Ford desperately needs more than anything else is a chief executive who understands this business inside and out, and can guide Ford through perilous waters.

I mentioned the notion of "cutting to prosperity" last week, which never, ever works in this industry. But unfortunately the internal climate at Ford right now is exactly that: cutting, cutting and more cutting, which is a giant bowl of Not Good. You would have to assume that what to do with Hackett would be Bill Ford’s most pressing problem and it certainly is, because many now view the selection of Hackett as being an interim choice. And whether Bill Ford is willing to admit that to himself or not, the difficult decision about who will lead Ford into the future is now front and center, as well it should be. 

But another situation is roiling Bill Ford’s decision making at this very moment, and it involves the rise of another executive, one who is unfettered by rational thought and untethered by accountability, and who has gone completely off the rails. Jim Farley, the former Toyota wunderkind who was responsible for the launch of the Scion brand, was brought in by Alan Mulally to be Chief Marketing Officer way back when. And not unexpectedly, his debut at Ford didn’t exactly get off to an auspicious start. Farley didn’t waste any time transforming himself into an enfant terrible right out of the gate. Displaying a prodigiously short attention span and burdened by an excruciatingly painful interpersonal awkwardness, Farley’s belligerent, condescending style of dealing with underlings, along with his classic “parachute in, helicopter out” M.O. that has defined bad actor executives for decades in this business, became his calling card. Internally, Farley became known as "The Two Jims," and interactions with him became a crap shoot, hinging upon whether people encountered the "good" Jim or the "bad" Jim on that particular day. Needless to say when the "bad" Jim was unleashed, Farley left a trail of bad feelings and highly questionable decisions in his wake. 

Farley has long considered himself to be “the smartest guy in the room” at Ford, much to everyone’s endless chagrin, because the reality is that he isn’t. It’s a carefully crafted façade that is hollow to its core. Farley’s bad executive behavior starts with his inability to listen, considering his own counsel to be by far the best source when it comes to decision making. (Ironically this is the absolute opposite of Alan Mulally, who regularly canvassed multiple constituencies on major decisions.) And because of that, as well as a host of other annoyances, Farley left such a bitter taste in people’s mouths that when he was shipped off to run Ford of Europe several years ago the overwhelming sense of relief internally at Ford was palpable.

Blissfully unaware that he was universally loathed back in Dearborn, Farley seized upon his assignment in Europe, seeing it as a stepping stone to the executive suite at Ford. And the planets were aligned for him to come off as a hero there, too, because the European market had been in the doldrums for so long that the only way it could go was up. Steve Odell, who had been running Ford of Europe and had done all of the heavy lifting by closing plants and laying off people, set the table for Farley to succeed. And the inevitable happened, as Ford’s fortunes recovered in Europe along with the overall market. Farley took advantage of the opportunity and made sure all of the execs back in Dearborn could see what a genius he was, and unfortunately, too many fell for it.

The problem with all of this was that once Mark Fields was jettisoned from the company, not only did Bill Ford bring in Hackett, he brought Farley back from Europe, and made Joe Hinrichs and Farley co-No. 2 executives reporting to Hackett. And it proved to be a fateful decision, because at that very moment Farley decided that he was very much going to be The Guy.

As I said previously, an emboldened Farley, unfettered and untethered, turned out – predictably – to be disastrous. With his eyes set firmly on Hackett’s job, the very worst of Farley returned to Ford headquarters, only now his most repugnant qualities were magnified and amplified, with no one seemingly able to rein him in.

Besides his now-signature belligerence and rudeness in full view, Farley started to get out ahead of his skis, making decisions that were puzzling at best and potentially harmful to the long-term health of the company. Having been gunning for Ford’s advertising agency – the WPP-owned GTB – for years for slights both real and imagined, Farley almost immediately put the massive Ford account up for review. This, after WPP/GTB had been involved with Ford for 73 years. Could the advertising be improved? Certainly. And there's a way to do that. But destroying a long, fruitful relationship to assuage Farley’s gargantuan ego was flat-out irresponsible and uncalled for.

Farley also commandeered company appearances in front of financial analysts, something completely beyond his ken, thinking that if he demonstrated his acumen there that he would gain favor with Bill Ford and the board. And true to form, this proved to be a total disaster as well. Industry analysts are still talking about Farley’s cringeworthy performance at the Deutsche Bank Global Auto Industry Conference here in Detroit back in January, where he came off as being someone who was flippant, woefully ill-prepared and not ready for prime time, and consequently Ford came off poorly too. Do you wonder why Ford can’t gain any traction on Wall Street? Farley’s dismal performance that night didn't do the company any favors.

And then there was the “we’re going to get out of the car business” decision that turned out to be an unmitigated PR disaster, because it was handled poorly and came off as a knee-jerk pronouncement that hadn’t been thought through. It turns out that the idea was Farley’s (no big surprise), wittingly or unwittingly aided and abetted by CFO Bob Shanks. And internally it bore the signature of a classic Machiavellian move by Farley as well, because Joe Hinrichs wasn’t even aware that it was going down until after the fact, which is almost beyond comprehension. (Editor-in-Chief's Note: I spoke with Mark Truby, Ford's PR Chief, and he said that Joe Hinrichs was aware of the car decision. I stand corrected. -PMD)

Am I picking on Farley? Hardly. I have only scratched the surface in describing this egomaniacal character and his blatant power grab, and the sad thing is that there are several other areas he is seeing fit to mess with inside of Ford that could wreak havoc on the company’s future for years. And this simply shouldn’t be, of course. One bad actor shouldn’t be causing this much consternation and hand-wringing throughout the enterprise, threatening to jeopardize everything the Ford Motor Company stands for. When everything is factored in, Jim Farley is simply the wrong person, in the wrong place, at the wrong time.

Bill Ford has a very difficult task facing him. He has to admit publicly (after first admitting it to himself) that Jim Hackett isn’t The Guy. Then he has to make sure that Jim Farley is kept as far away from being The Guy as is humanly possible, because left unimpeded Farley will be detrimental to the future of his family's company. 

I closed last week’s column with the following words, which still resonate loud and clear today: 

In the meantime, since its future product announcement didn’t exactly set the world afire, the Ford executive team needs to press the reset button and focus on the task at hand. That means focusing on designing, engineering and building the best products they can muster for every segment the company competes in, despite the Wall Street cloud of negativity hanging over them.

Because in the end, there is one fundamental aspect of this business that will never change, and that is that it’s about the product, it has always been about the product, and it always will be about the product.”

And that’s the High-Octane Truth for this week.

« LOOKING THROUGH THE INDUSTRY KALEIDOSCOPE. | Main | MUCH ADO ABOUT SOMETHING. »