Mark Fields, executive vice-president and president for the Americas at Ford Motor (F), arrived at the company's worldwide headquarters last fall from a stint running Ford of Europe. The move came after stopovers of varying success running the Premium Automotive Group (Jaguar, Land Rover, Aston Martin, and Volvo) and Mazda (MAZDAF), in which Ford owns a one-third stake and controls management.
He burnished his reputation with his success at Mazda, which today is a solid contributor of profits to Ford and a healthy niche auto company. Today, he is the lead architect of Ford's so-far wobbly attempt to put the company back on solid financial footing.
Fields, 45, spoke with reporters at the annual Center for Automotive Research seminars in Traverse City, Mich. Senior correspondent David Kiley was on hand to ask Fields about the state of Ford's turnaround plans and morale at the Dearborn (Mich.) auto maker.
The company announced that it hired Kenneth Leet, an investment banker, to explore alliances for Ford, as well as asset sales. Speculation about sell-offs centers on Jaguar and Land Rover. Is it time for Ford to get focused on the core Ford Lincoln business and invest more in your Volvo unit and forget the rest of it?
North America is the engine of the company. That's not a dig at the rest of the company. But it's extremely important that we stay relevant and vibrant in our market. That said, we have to have the right spectrum of brands to compete globally. Bill Ford has given Ken Leet wide latitude to explore the best options for the company. All options are being looked at.
We will come out before the end of September with some announcements. But it won't be a new plan. It will be an acceleration of the plan we have.
Would asset sales be done specifically to raise cash?
We have a very strong cash position. But you need a lot of cash in the auto business to handle contingencies and cover your monthly expenses, etc. But hypothetically, if we were to sell off some brands, it's not an automatic that the money would go into more new products. Every product plan has to pay its way.
What are your thoughts about an alliance with another auto maker?
We have to look at it. Probably when we look at what's going on across town [General Motors (GM) in alliance talks with Renault-Nissan], we have to look at all options to stay competitive. But alliances are tricky. I know from managing Jaguar, Land Rover, and Volvo, and trying to get British and Swedes to cooperate and share and get on the same page. I am an American, so that's three cultures to deal with. But we already have successful alliances with our part ownership of Mazda and our deal with PSA in France on diesel engines.
Is morale very difficult at the company?
Is it tense? Yes. But we have gone to great lengths to communicate what is going on. Every salaried employee has been taken off site and taken through all our metrics, our market-share trend, our share price, our earnings trend. We want everybody to know as much as they can. I have been saying it's time for us to "change or die." Information is very important so they know we mean it. If you leave people in the dark, they start to create their own reality.
Why is it so hard for you to get traction on this plan?
It wasn't the disappointing second-quarter results that caused us to accelerate. It's been the change in sales trends for key segments. Full-size pickups were 14.5% of the new-car market last year. In the second quarter, it was down to 12.7%. That's a dramatic drop, especially for us, because we are the truck leader. In the second quarter, it was down to 12.7%. That's a dramatic drop, with just about all of that coming from people who previously bought pickup trucks for personal use rather than business or construction or towing. And that business, where someone wants a truck even if they don't need it, isn't coming back. On top of that, steel prices are up 40% and some precious metals we depend on are up over 100%. It's striking.
Sounds like you don't have the time you need to carry out the plan you laid out in January, that the business and the market are falling away faster than you can bring new and profitable products to the showroom.
I never said this was going to be linear. It's going to be rough. I've seen this movie before. It took a while at Mazda to get focused on cars for customers and the brand.
I'm not a magician. I'm a practitioner. We're trying to give people a good dose of optimism about why everybody should go on the journey with us.
Merrill Lynch (MER) recently said that your product cycle over the next five years will lag behind the industry average as well as your closest competitors.
We don't think that's accurate. We are looking at whether we should be more forthcoming and clearer about our future products and when they are arriving so there is greater clarity about where we are. But we have to do that without compromising our competitive position.
Ford has an unfortunate record of setting public goals and then not meeting them or backing away from them. I mean the goal of selling 250,000 hybrids by the end of the decade and earning $6 billion to $7 billion by this year—that was a goal set back when Bill Ford took over in 2001.
I wasn't here when those goals were set. But what I do know is that we need to be flexible and how we do business. The hybrid goal doesn't make sense given the fact that other technologies are emerging that customers may like better. That's E85, diesel, and other technologies. One of the things we are doing now is focusing on what the customer wants. What are their unmet needs? We used to set public goals like that for reasons that were not customer focused. We used to approve products based on what plant we needed to fill. That's over.
Some say that you, Ford North American Design Chief Peter Horbury, Product Development Chief Derrick Kuzack, and Chief Executive Anne Stevens are the first group under Chief Executive Bill Ford that really gets along and is on the same page. Do you agree?
I don't want to speak about people who were here before. What I will say is that, first and foremost, we are a group that trusts each other. When we are together, sorting out these enormous challenges, we trust each other enough not to be shy about tossing out an idea. We don't fear politics in the room, or will so-and-so eat me alive if the idea isn't right? That we like each other is a nice side benefit. But the respect we have for one another, from having worked together in other parts of the world on similar problems that we face now, is a help.