By the time Jacques Nasser celebrates his first anniversary as CEO of Ford Motor Co. in January, there will be little doubt that a new regime is firmly entrenched in Dearborn. BUSINESS WEEK has learned that Nasser plans to announce in November a realignment of the sprawling $143 billion auto maker that, while not actually repudiating Ford 2000, the strategic vision of predecessor Alex Trotman, will put the company on a different path. Ford 2000 centralized worldwide responsibility for functions such as product development, purchasing, design, and manufacturing--and shifted other decision-making power to the home office.
Nasser wants to keep the efficiencies generated from central thinking about design and production. But he wants to reintroduce the market focus in regions across the globe that will give Ford stronger brands and more appealing products. "Ford 2000 was a good idea carried too far," says a source familiar with the new plan. And no, Nasser is not doing a reorganization. "General Motors has given reorganizations a bad name," sniffs one Ford exec.
Nasser is "trying to create the Ford 2000 that should have been created in the first place," as one exec put it. That translates into a new organizational chart that formally recognizes Nasser's heightened emphasis on the company's brands and gives the various regional and brand units more autonomy. The reason: Nasser wants his top managers to be more entrepreneurial, more accountable for the profits and losses they generate. He also wants each brand to crystallize its own identity with customers. The plan, which still could change, will be unveiled in November and implemented beginning next year.
In one respect, Nasser's move reflects the demands of a global auto business. DaimlerChrysler Chairman Jurgen Schrempp acknowledges that he, too, is streamlining his management.
One of the clearest examples of Nasser's new vision is the plan to split up its North American auto brands, with sales totaling $87 billion, into "strategic business units," including Ford Car, Ford Truck, and Mercury, say sources close to the company. "If it's different in the mind of the customer, it will have its own [brand] group," explains another source.
AILING DIVISION. Nasser's goal is to make Ford more nimble and more closely attuned to customers. "You've got to break down the business into the smallest possible units to give the employees in them authority and accountability," says one source knowledgeable about the plan. That applies to Ford of Europe and the company's ailing South American unit, which lost $226 million last year. Nasser aims to restore to regional Ford managers such as Ford of Europe President Nick Scheele the power that was stripped away by Ford 2000. It's not major surgery, stresses Robert L. Rewey, Ford's group vice-president for sales, service, and marketing. "We're evolving, we're not reorganizing."
Since late 1996, when he took over Ford's global auto group, Nasser has been quietly asserting the new vision and replacing key executive positions eliminated in Trotman's overhaul. He has also been showing the door to underperformers and recruiting all-star managers from outside--most notably former BMW exec Wolfgang Reitzle, who oversees all Ford luxury brands: Lincoln, Jaguar, Aston Martin, and Volvo. This Premier Auto Group "was the first step" in Nasser's plan, says one insider. Even earlier, Lincoln-Mercury's relocation to Southern California was a signal of Nasser's intentions. The division's marketers, designers, and engineers have been relocated to the West Coast, far from Detroit's stodgy mind-set.
Now, sources say, Nasser is even considering putting Ford's North American mass-market brand units Ford Car, Ford Truck, and Mercury under a single North American boss. One name being bandied about is James C. Schroer, Ford's global marketing vice-president.
Nasser's charge-ahead style may allow him to redraw Ford quickly, but it also may be upsetting the United Auto Workers, as the two sides negotiate a new national contract. Nasser's plan to slim down Ford by spinning off $18 billion Visteon Automotive Systems has rubbed workers at that parts unit the wrong way. Nasser and Ronald Gettelfinger, the buttoned-down UAW vice-president who heads the union's Ford team, are both newcomers to this pressure-cooker environment. This could complicate negotiations over Visteon.
Overseas, Nasser has already installed regional leaders for Europe, South America, and Asia Pacific. His new plan simply gives them a greater say in running their operations, and more responsibility if their efforts fail. Scheele says Nasser is giving him a free hand in Europe. He's cutting capacity by 25% and sharing back-office costs with Volvo and Jaguar. Nasser has also told him that the Ford brand must stand on its own in Europe. Scheele wants to burnish the brand by reminding consumers it is German-made, since most Fords are made near Cologne. To reinforce that prestige, Scheele has relocated headquarters and R&D there, as well.
Wherever Ford operates, the central idea is to create bite-size, highly accountable regional brand units that can get close to their target customers' tastes and needs. The goal, especially for Ford's money-losing passenger-car brands, is to bring out cars with brand personalities tailored to suit the younger, hipper buyers who have flocked to European and Japanese cars. Says one source knowledgeable about the plan: "It's going to help them get the brand differentiation they want."
Creating such virtual corporations inside Ford also provides another benefit: training grounds for future leaders. Nasser himself cut his teeth on a series of jobs running regional operations in Argentina, Brazil, Australia, and Europe. "Ford 2000 eliminated the training ground for all of Ford Motor," laments one former Ford exec. Nasser's new "strategic business units" would give a new generation of Ford managers the chance to test their leadership skills with hands-on operating experience.
Striking the right balance between global integration and regional influence is extremely difficult, management gurus say. And auto analysts and industry watchers mostly applaud Nasser's willingness to adapt Ford's game plan on the fly. "He seems to have a reasonably agile philosophy, not getting locked into one strategy forever," says David E. Cole, director of the University of Michigan's Office for the Study of Automotive Transportation. Ford is likely to remain "a company that's continuously restructuring, so that tear-ups don't have to be traumatic," adds Merrill Lynch & Co. analyst John Casesa.
Such continuing change seems likely as Nasser puts his stamp on Ford. So count on more shakeups and new business plans from the nimble Jac.