Ford Starts To Get The Lead Out
Ford Motor Co.'s automotive president, Jacques A. Nasser, delivered a dramatic performance on Mar. 17--part of the biggest audition of his career. In a St. Patrick's Day massacre, he snuffed out four slow-selling car models. In addition, he announced plans to lay off 2,500 workers--the most severe cuts in 15 years. That was just what Ford's board was looking for. "We are moving quickly," says Nasser. "The question is: Are we moving quickly enough?"
Ford's board is giving Nasser extra time to answer the question. On Mar. 13, it tacked 18 months on to the tenure of Chairman and CEO Alexander J. Trotman, 63, who will stay until Jan. 1, 2000. Prior to the meeting, as reported earlier (BW--Mar. 24), some board members were not inclined to extend Trotman's time at the top until they saw some improvement in Ford's auto earnings, which are the lowest of the Big Three.
But at the Mar. 13 meeting, the board decided that Trotman needed more time to allow his sweeping global reorganization to pay the big dividends that he has promised. Just as important, the directors wanted more time to size up Nasser, say sources close to the board. At 49, Nasser has the potential to be the longest-serving top executive since Henry Ford II, who ran the company from 1945 to 1980. Directors feel that they don't yet know Nasser well enough, and they believed he would not have had enough time to prove himself if Trotman retired as planned on his 65th birthday--in July, 1998--the sources say.
The directors are cheered that Nasser is demonstrating the cost-cutting acumen that has earned him the nickname "Jac the Knife." He showed his stuff with his decision to shut down the car line of an Ohio factory and to drop the slow-selling Thunderbird, Probe, Aerostar, and Mercury Cougar. But that is not enough. "Now, he has to show he can create profitable products," says a source familiar with the board's deliberations.
DARK HORSE. Indeed, sources say that the board is not easing up on Trotman and Nasser: Its members are alarmed about Ford automotive profit margins, which sank to 1.4% last year, down from 1.9% in 1995. But directors believed they needed to endorse Trotman so he could bring about a turnaround, the sources say.
Nasser is not the only one under board review. Chief Financial Officer John M. Devine is a dark-horse candidate for the CEO job, but he lacks automotive experience. Directors also are trying to determine whether William Clay Ford Jr., 39, great-grandson of Henry Ford, should become nonexecutive chairman. Some large investors have raised concerns that power-sharing between Ford and Nasser could lead to conflicts. "If Nasser works his magic, he could say: `I want to be chairman and CEO,"' says one investor.
It's a prize that Nasser has been eyeing for most of his 29-year career at Ford. "Nasser has primed himself in the same way Bill Clinton had wanted to be President since he was 16," says University of Michigan business professor David L. Lewis. Now, Nasser has a three-year campaign ahead of him to win over Ford's board.