Ford's Fields Outlook on Company
FIELDS: WE WILL COMPETE TO BE AMERICA’S CAR COMPANY
The following is a transcript of remarks
delivered by Mark Fields, Ford Motor Company Executive Vice President
and President of the Americas, to the Motor Press Guild during the opening
of the Greater Los Angeles Auto Show on Wednesday, Jan. 4. Thank
you and good morning, everyone. I especially want to thank the Motor Press
Guild for inviting me to speak today. It’s good to be back in
California , having lived here for a few years in the early 1990s. I’d like to take a moment, on behalf of everyone at Ford, to
extend our concern for the people of California , who have been victims of
the heavy rains and flooding. Our prayers are with you for a return of the
sunshine and an end to the devastation.
I’m pleased to be with a group of people this morning who not
only follow the auto industry as a business, but who have a real passion
for cars.
And that’s why I’m here: to discuss this passion for
automobiles and how re-connecting with that passion through innovation and
bold design will increasingly separate the successful auto companies from
those squeezed out in the American market.
Everyone has a scorecard for who’s likely to be in and out of the
game. And I’m sure some of you have concluded that at least one or
possibly both of the American automakers might end up “out.”
But to those people who have written us off, I would simply ask you to
keep an open mind this morning. That’s because my message to the
open-minded and the skeptics alike is one of both optimism and realism.
Optimism because I believe in the future of Ford Motor Company and the
American automakers. Realism because I understand that it will take
fundamental changes in the way we do business to secure our future.
The auto industry here in the U.S. always has had its ups and downs.
It’s a cyclical business. You all know that. What is different today
from previous downturns is the confluence of powerful economic and global
competitive forces, and the cumulative impact of business decisions made
– or not made – in Detroit over the past several years, or in
some cases, decades. Just think about what we encountered last
year alone. Steadily rising interest rates after a period of historically
low rates. A significant increase in oil and gasoline prices. High material
costs, especially steel. Bankruptcies among major suppliers.
The American auto industry? What ails us? It goes beyond economics. In
short, we lost our way. We lost touch with our customers –
particularly our car customers.
I’m amused, in fact, about the debate in Detroit as to
who’s in or out of the Big Three. It makes for great headlines and PR
stunts, but it’s the wrong debate. It’s old thinking, and
it’s irrelevant.
The real focus should be the up-for-grabs Big Six – the battle
among six huge North American, European and Asian companies for growth and
profits in the North American market.
I can assure you that’s our focus at Ford. It starts with the
commitment we’ve made at Ford to driving American innovation –
in design, in safety and in environmental technology.
At Ford, innovation is our heritage. But, more importantly, it’s
our future. And it can be the future of the entire American industry.
As Bill Ford said last fall, we will continue to cut our costs and
improve efficiency. But we cannot win the hearts and minds of the American
consumer with efficiency alone. It’s an important message to
remember, and it’s driving every part of the plan we’re
developing at Ford.
We call it our “Way Forward” business plan, and it’s
the roadmap for transforming our business in North America . It includes a
huge investment in clarifying and leveraging the brand identities of Ford,
Lincoln and Mercury – and better connecting with more customers than
we do today.
Equally important, it includes an investment in innovation – and
in bold American design – to provide that emotional connection with
more customers. I’m not here today to reveal all the details of our
Way Forward plan. That comes later this month – on Jan. 23 to be
precise.
But what I do want to talk about is one of the most important elements
of our plan – and that is how we will stabilize in the near term and
ultimately grow our market share by making customer values and attitudes
central to our business model.
It’s a lesson not just for Ford. It’s important to the
entire industry.
First, let’s look at the economic environment in which our
customers will make their car-buying decisions this year. The economy is
projected to grow at a good pace of 3 percent or better. Gas prices have
come down from the highs following the hurricanes last fall. But oil
futures suggest a price between $60 and $65 a barrel this year, which means
there won’t be much relief at the gas pump. So, fuel economy will
continue to be a factor for buyers.
We will have to wait until we get a complete look at 2005 sales this
week. But, right now, somewhat slower growth, higher interest rates and
volatile gas prices all add up to auto sales that probably won’t
outshine last year’s selling rate in this new year.
But one thing I can tell you with a high degree of confidence is that
2006 will not be the “year of the truck,” as I saw in one of my
competitor’s press releases recently. That “build it and they
will come” attitude is not only business as usual, it’s the old
thinking that we need to shed as American automakers.
Instead, the consumer will be in the driver’s seat more than ever
before, and that will cause the shift in buying patterns to accelerate
dramatically.
And it will mean one of two things. Either the American automakers,
including Ford, will begin to change, play far better offense and truly
connect with customers. Or it will be the beginning of the end for some
companies.
Those of you who reported on Mazda during my years there know that I
was even blunter a few years ago. I told the Mazda team very directly,
Change or die. This applies to the American automakers today just as
powerfully as it did to Mazda five years ago. And I’ve
given the Ford team the same challenge. It’s time to play offense.
It’s time to reestablish our American auto industry as our symbol of
pride in this country. It’s time to take back our future. And the
clock is ticking.
That sense of urgency will be very evident when we announce our
“Way Forward” plan on Jan. 23. You will, of course, hear how we
at Ford plan to make a fundamental shift toward greater quality and
productivity.
But, more importantly, you’ll hear how our product investments
will clearly establish what we stand for as a company and how that will
help us connect with more customers in the future.
I want to begin with the Ford brand, because it is inextricably linked
to the image and success of Ford Motor Company. Then, next week, at the
Detroit auto show, we’ll share more on Lincoln and Mercury.
And, while these examples will be specific to Ford, the insights about
the brand and the customer are applicable to this entire industry.
That’s because, to me, it’s imperative for any successful
business to have a laser-like focus on its brand and how every part of the
business is centered on the customer. That customer focus sets up
everything: the products, the volumes, the revenue and the cost structure.
Growing companies, the ones that are increasing their market shares
today, think like their customers, and they see the world through their
customers’ eyes. Too often, we in the auto industry dismiss this.
Many people, including many of you in the media if we’re being
honest, view brand-speak as irrelevant.
I’d like to challenge that thinking today, and I’d ask you
to think again. Because brand-speak is only irrelevant when it’s just
a slogan or an advertising tag line.
I’d point you to the latest Interbrand ranking of the companies
that are building their brand images, and their fortunes: E-Bay, Apple,
Motorola. Guess what? Apple and Motorola had been written off less than a
decade ago, just like the American auto industry. The headlines were grim.
But Apple and Motorola went on the offensive. They redefined
themselves, they refocused on their brands, and they connected like never
before with more customers. They did it with products like the iPod and the
Razr phone – products that have excited customers with bold design
and innovation.
Bold design and innovation. I’ll come back to that.
The Boston Consulting Group recently polled senior executives in 68
countries and developed a top 20 list of the most innovative and, as a
result, most successful companies. Guess who’s on the list?
It’s the same companies that focused on their brands and their
customers. And, no surprise, Apple is at the top of the list.
Now, I give you this context because it is the same thinking that
we’re adopting at Ford. When we started out on our “Way
Forward” plan, our first step was a reassessment of what people think
of us today. What are our weaknesses? What are our strengths?
Our research confirmed for us what we knew in our hearts. Ford’s
strength and identity are defined by three words: bold, American and
innovative. Yes, we are a global company. And we proudly sell premium
brands like Volvo and Jaguar.
But Ford is best in this market when our cars and trucks embody the
American spirit – and that means bold and innovative. Interestingly,
the same is true for Apple and Motorola – two other American
companies that have rebounded with great success.
At Ford, we’ve come up with a phrase that we’re using
internally to define that spirit. We call it “Red White &
Bold.” This phrase is not about wrapping ourselves in the American
flag. And it’s not an advertising tagline. It’s an internal
rallying cry that reminds us what will drive us to success.
Visually, in our products, it means bold American design. But “Red
White & Bold” is not only about design. It’s about the way we
think, the way we make decisions, the way we invest in our future.
And that’s what powerful brands are all about – aligning
all aspects of your business to meeting the expectations of your target
customer. Let me give you some examples.
Today’s fastest-growing vehicle segment in the United States is
crossover utility vehicles, or CUVs. CUV growth is now outpacing the
remarkable growth SUVs achieved in the 1990s.
CUVs surpassed 2 million U.S. sales last year, and they are on pace
this year to exceed traditional SUV sales for the first time ever. Two
distinct market trends have helped fuel this explosive growth. Car buyers
are seeking more spacious and flexible interiors, along with the security
of all-wheel drive.
And many traditional SUV buyers are seeking more maneuverable and fuel
efficient vehicles that still make it possible to have an active lifestyle.
But this growth hasn’t fostered much in the way of bold design
– not yet anyway.
So far, just about all of the CUVs on the market have been variations
on familiar themes: CUVs disguised as station wagons or SUVs. We’ve
even seen minivans disguised as CUVs.
Ford’s next crossover, by contrast, is going to chart its own
course. When we unveil the new Ford Edge on Sunday in Detroit , you will
see the continuing influence of the bold and unmistakably American Ford 427
concept in its design – and it will make the Edge both distinctive
and unmistakably a Ford. Another key battleground is small cars
– often called B-cars. Mark my words: Small is big in America –
particularly among the “under 30 set.” And, like crossovers,
small cars are ripe for bold design and innovation. As some Asian
and European brands have shown, buyers are looking for more than just the
small, fuel-efficient vehicles patterned after the ubiquitous econo-boxes
of the 1970s and ‘80s. But no company today is putting an American
stamp on the small car segment. That means there’s a huge growth
opportunity if only someone is willing to seize it.
Ford plans to seize it. Work on some bold American small cars is
already under way at our California Advanced Product studio, just down the
road in Irvine .
You’ll also see a new concept at the Detroit auto show next week
that proves small cars can be bold, American and innovative. And this
concept will underscore just how serious Ford is about being a major player
in this segment going forward.
We’re also reaching out to new sources of inspiration. This fall,
we commissioned a long-term exploratory project at The Art Center College
of Design in Pasadena , challenging students to create an all-new
entry-level car for Ford customers. I encourage you to visit the Art Center
’s display in the convention hall today to see what the first group
of students came up with – including several small-car proposals.
I have to be honest with you. Without American Innovation and
“Red White & Bold” to guide us, the small-car opportunity is
one we probably would have missed. Before we had a clear vision of what the
Ford brand should be, there was a very real risk that our product planners
would simply try to “out-Korean” the Koreans. In my mind, that
would be a recipe for customer confusion and failure. But with a bold,
American small car, we will have more than a just fighting chance to win.
You don’t have to wait for future Ford small cars for proof that
bold American design is a winner. Just look at the success of the Ford
Fusion. I’m not telling you anything you don’t already know
when I say we took our eye off the ball for years when it came to sedans.
They just weren’t attractive enough when we were feasting on the
addictive profitability of trucks and SUVs.
But, when we made the decision to play offense, to fight back, to
reenter the mid-size car market with a bold American design, people took
notice. In developing Fusion, we recognized we had a real
challenge to re-establish Ford brand relevance in the mid-size car segment,
so we made an extra-ordinary effort to assure customer and brand alignment.
And it’s paying off.
It’s still early days, but the Fusion is proving itself a winner.
Sales are growing, and we’re leasing more than one in four Fusions
because the residual values are so strong. Fusion customers say “bold
design” is the number one reason they embrace the car.
With this early success and with an all-wheel drive version coming this
year, we’re so bullish on Fusion – and the Mercury Milan and
Lincoln Zephyr, too – that we’re announcing today that
we’re going forward with our plans to add a third production shift
starting next month.
Fusion sales were up substantially in December from November, and we
only just recently started our marketing efforts. The third shift and added
capacity will allow us to continue this momentum going forward.
Some of you are probably wondering how we can be so sure that the Ford
brand is back on the right track. I would ask you to think back to
September, when Bill Ford declared that American innovation is the compass
by which Ford will set its future direction. The compass, you see, was not
set by Bill Ford, or by me, or by our Way Forward plan. It was set by
customers themselves.
Customer input has always been important to the decisions we’ve
made on products, designs and features. But, this time, as we developed our
Way Forward plan, we wanted to know more – to take the same type of
approach we did with Fusion for all our products.
In fact, we’ve started applying the same kind of intelligence to
car buying that campaign strategists have been applying to voters.
Who’s most likely to buy our products, who’s least likely to
buy them and who’s up for grabs. This has given us a much deeper
insight than we’ve ever had before using traditional demographic or
vehicle segment-based models.
One of the most important findings from this research is that there
remains a huge market for American cars in this country. And the potential
is significantly larger than the roughly 55 percent market share that GM,
Ford and Chrysler together command today.
Americans really do want to buy American brands, as long as they are
competitive with the imports. We know this, because it’s already
working in some segments today. Again, look at the success of the Ford
Fusion.
Or the Ford Mustang. Mustang remains hottest car in the industry, and
it has the magic combination of high conquest sales – with more than
50 percent of customers coming from non-Ford brands – and high
loyalty.
Or the F-Series pickup. Despite the much talked about new competition,
we just sold 900,000 F-Series trucks for the second year in a row. 2005
was, in fact, the third best sales year in our history.
And, even here in the import-dominated Californian market, we set an
all-time record for the F-Series, which remains the best-selling vehicle in
the state.
We also shouldn’t overlook the Ford GT when we think about the
potential that exists today for American automobiles. We have been
gratified by the large number of Ferrari owners who have purchased the Ford
GT in recent months, many of them citing its uniquely American character as
a motivating factor.
And what do these vehicles have in common? Quite frankly, they’re
bold, they’re American and they’re innovative. And they are all
in market segments where Ford knows its customers best.
Many brands want to be American. However, there is no uniquely and
consistently American brand in the auto industry. Not yet.
It’s interesting that Toyota is desperately trying to cast itself
as an American brand. Toyota is trying to be American because they realize
the market potential is huge. And Toyota has scored points by
investing in the U.S. But that doesn’t make it an American brand. In
fact, our research shows, the qualities that draw customers to Toyota
vehicles are Japanese qualities.
Again, I go back to the research that has validated our thinking at
Ford. There remains a huge – and not yet fully realized –
market for American cars in this country. It is waiting to be seized,
consistently.
Of all the leading automakers, I believe Ford has the strongest legacy
claim to be “ America ’s Car Company.” In part,
it’s because of where we’ve been. In terms of economic and
social influence, there is no other company that’s had a greater
impact on the lives of people in this country and in the 20th century than
Ford.
Customers identify with Ford and its uniquely American story –
even if they’re not buying cars from us today. The innovations and
life of Henry Ford are taught in our grade schools. Ford vehicles from the
Model T to the Mustang are part of the national consciousness.
They’re in our museums and in our art galleries.
The challenge going forward is to give more customers in this country a
reason to believe in us again. And that is going to be our focus at Ford.
In short, we are changing the way we do business.
We will compete vigorously to be America’s Car Company, winning
the hearts and minds of even more customers, from the young buyer looking
for his first car, right on through to the family driving their kids to
school and the farmer hauling wheat.
We will maintain our commitment to our loyal American truck customers,
while delivering innovative and boldly styled cars that will appeal to
those people who are still inspired by the American dream – people
who live in every town and suburb of America , and at every age and stage
of life.
Our way forward is not a retreat into smaller markets, but a retaking
of the American marketplace. And it starts today. It’s time
to play offense. It’s time to take back our future.
We, at Ford, know what we have to do. Hopefully, you’re seeing a
sense of candor and commitment that you’ve haven’t seen in a
while from Ford people.
And we’re going to do it by being bold, American and innovative.
It’s a big challenge, but I speak for the entire Ford team when I say
we’re eager to take it on, in fact, it’s the opportunity of a
lifetime.
Thank you, and enjoy the auto show.