Jan. 18 (Bloomberg) -- Ford Motor Co. is discovering just how far it has fallen from the pinnacle of automaking and the self-reliance and inventiveness that once made it great.

We know this because Ford executives otherwise wouldn't be talking so urgently, suddenly or in such patriotic terms about the need to ``innovate.''

Promising that ``innovation is the compass by which Ford will set its future direction,'' Bill Ford Jr., chief executive officer, has been rallying employees to get behind new products and find ways to do things better or -- a bit darkly -- go elsewhere. The message appears in company speeches and as part of a $90 million advertising campaign.

Mark Fields, Ford's newly promoted executive vice president, said in a talk earlier this month that ``Americans really do want to buy American brands.'' Afterward, Field insisted, somewhat defensively, that ``we aren't wrapping ourselves in the flag.''

Fields wouldn't be the first U.S. auto executive to deny that his company wants Americans to buy cars from his company just because it's incorporated in the U.S. That honor belongs to Lee Iacocca, a onetime Ford president who later perfected the jingoistic pitch as chairman of Chrysler Corp.

Battered Esteem

Ford's self-esteem lately has been as flat as its credit rating. The automaker, after all, once was an exemplar of corporate America, its name synonymous with fresh thinking. Many still can recall a day when ``Ford has a better idea'' was a credible slogan.

The late Henry Ford, great-grandfather of Bill Ford, introduced the moving assembly line to factories, created a car that the average person could afford with the Model-T, and paid a $5 daily wage that was revolutionary for its day.

Now Bill Ford's nightmare is a bankruptcy that could strip his family's control of the company's factories, offices and laboratories. With recent pronouncements about American innovation, he's trying to jolt employees from paralysis or the doldrums, an understandable reaction to impending job cuts and pay reductions.

``I hope what Bill says pans out,'' said David Lewis, 78, a professor of business history at the University of Michigan who has studied the automaker for a half century. ``So often companies make proclamations and move on. I'm hoping, even praying, that it comes to fruition.''

U.S. Sales Plunge

Ford's U.S. vehicle sales, which account for about half its worldwide total, have plunged by more than 1 million since 2000, to 3.15 million last year. That's more than twice the decline, in absolute terms, of much larger and similarly troubled General Motors Corp.

The sales decline has trimmed Ford's share of the U.S. vehicle market to 18.6 percent, down a point from 2004 and well below the 25 percent level of the mid-1990s.

Mainstay models such as the Ford Explorer sport-utility vehicle and the Freestar minivan are floundering, while the Ford Five Hundred family sedan, introduced more than a year ago, hasn't elicited more than a tepid response from consumers.

Ford is now counting on the recently introduced Ford Fusion, Mercury Milan and Lincoln Zephyr sedans -- adapted from Mazda Motor Corp.'s Mazda6 architecture -- and they seem to show promise. Ford said it intends to increase by 10-fold the number of gas-electric hybrids it builds within five years.

Does the word ``innovation'' accurately describe a series of cars that differs from the Mazda6 in mostly cosmetic terms? In a sense, yes, for it speaks to Ford's business acumen and its ability to manage an international alliance.

Mazda's Help

But much smaller Mazda, a third owned by Ford, possesses much engineering talent the Dearborn, Michigan-company lacks. And that discrepancy ultimately spells trouble.

Too many years of mediocre performance may stand in the way of Ford's plan to permit employees to embrace new ideas. The automaker is in dire financial condition. Although it posted profit of $1.87 billion through the first three quarters of 2005, that's because its finance unit is subsidizing deep automotive losses.

Moody's Investors Service lowered its rating on Ford's car- loan division to junk status on Jan. 11, saying ``Ford continues to face formidable challenges, the most significant of which will be stabilizing its U.S. share position at 18 percent or higher.'' The car-loan division was the last Ford unit with an investment-grade rating. Ford has about $130 billion of debt outstanding.

Black Monday

On Jan. 23, next Monday, the automaker will announce a program it calls ``Way Forward'' that includes the shutdown of several North American factories and the firing of thousands, and probably tens of thousands, of workers.

``This is for keeps. We have to get better,'' said Jon Pepper, a Ford spokesman. ``That's why Mark Fields is saying things like `change or die.'''

Ford has undertaken big cutbacks before, usually in response to economic downturns that affected the entire industry. This time, though, Ford and GM alone are the victims, while other automakers flourish.

Unfortunately for Ford, some American consumers have defected for good and now drive Hondas, Toyotas and other non- Detroit vehicles. And while some may respond to Ford's latest talk, the company better be sincere about what it's saying, or time truly has run out.

To contact the writer of this column: Doron Levin in Southfield, Michigan dlevin5@bloomberg.net

Last Updated: January 18, 2006 00:04 EST