"Customers Will Really Decide What Tires They Want in the Longer Term," Ford Motor Company President and CEO Jaques Nasser Tells CNBC's Today's Business
7 December 2000
"Customers Will Really Decide What Tires They Want in the Longer Term," Ford Motor Company President and CEO Jaques Nasser Tells CNBC's Today's Business
FORT LEE, N.J.--Dec. 7, 2000--Ford President and CEO Jaques Nasser went live in an interview on CNBC's "Today's Business" at 6:22 a.m. ET today to discuss the Firestone tire recall and Ford's continued commitment to customers. Below is a rough transcript:CNBC Transcript Show: Today's Business Anchor: Liz Claman
Bob Sellers: Yesterday, 29 more deaths were reported in the government's probe into the safety of Firestone's tires, bringing the total number of deaths to 148. Many of these tires were mounted on the Ford Explorer SUV and the incident has effected the automaker. With us from New York is Liz Claman who is joined by Ford CEO Jacques Nasser.
Liz Claman: Thank you very much Bob, we are at the Pierre hotel in New York City. I want to reach back to August 9, after mounting pressure, Firestone tire announced they would recall 6.5 million tires, many were mounted on Ford Explorer. How Ford's CEO would handle this crisis situation would make the difference between success and failure of the company's reputation and the future. We are joined now by CEO of Ford Motor Company Jacques Nasser. Thank you for being here with us on "Today's Business".
Jaques Nasser: Thank you.
Liz Claman: Yesterday more was added to the situation with the safety administration announcing that there were 29 more deaths added to the more than 140. How does the situation stack up right now for Ford? What are the status of the investigation and the status of the recall?
Jaques Nasser: Liz for us right from the very start our focus was right on the customer. We wanted to make sure that we could alleviate the concerns all of our customers had. And we wanted to ensure that we accelerated taking the bad tires off the road. We are about 90% complete at this point.
Liz Claman: With the tire recall?
Jaques Nasser: With the tire recall. And our focus is still on communicating with our customers, making sure that we have an open policy in terms of explaining where we are and what the problems are, and to ensure that in the longer term, that this never, never ever happen again.
Liz Claman: When the story came to light, I want it say around August/September, a lot of local newscasts across the nation starting showing video of this tread separation the Firestone tires were undergoing. Probably a nightmare to Ford as well, seeing the tread separations occurring on Ford Explorers which in turn overturned causing many, many deaths. When was the first time you personally heard and understood there was a dire problem with tires mounted on Ford Explorers?
Jaques Nasser: Certainly it was a concern for us, but our major concern was the level of anxiety for our customers. It started early on this year when we started to get information that was very informal, actually, from several television stations and other media and through the federal safety officers. Once we started to piece that together, we acted within days to make sure that everyone understood what the situation was and that we mounted what is probably the fastest recall in the history of the American automotive industry.
Liz Claman: You are not the ones that make the tires though, Firestone makes the tires. Did you talk to Firestone, were you unhappy with the speed with which they dealt with the recall?
Jaques Nasser: Of course we communicated Firestone, but we feel that our customers are our customers. I know there was a lot of emotion and perhaps blame being laid early on in the piece because everybody was intensely interested in looking at our customers.
Liz Claman: Immediately the government of the United States got interested and the Congress requested that you appear before them. You initially, Mr. Nasser did not want to testify in front of them. You had other issues on your agenda, namely the recall. You ended up eventually going before Congress. Why did you initially say no, you didn't want to be a part of that?
Jaques Nasser: We wanted to make sure that the Ford Motor Company had a position where we could talk to Congress independently. We did not want to be part of an overall panel and for about 48 hours there was confusion as to whether we could do that or not. We wanted to make sure that our message went through to our customers in an unfiltered fashion. Once that was resolved with them, as you know, I appeared not only at the Congressional hearings, but the Senate hearings and I got to say it wasn't the most entertaining period for me, but it was necessary in terms of communicating where we are and allowing our customer base to feel at least informed as to what was going on.
Liz Claman: Now the National Highway Traffic Safety Administration is involved in the investigation. You are supposed to meet with them next week. There is word that Ford and Firestone are coming together on deciding just exactly what was the cause the of tread separation. Can you shed any light on that right now?
Jaques Nasser: Not at this point, but I think the best way to really understand the situation is that it is a highly technical issue that we are dealing with and if the Federal Safety Organization and Firestone and Ford can put their best technical resources together and arrive at a causal effect, a root causal effect that everyone believes in and supports, then I think that will be the best way to go forward.
Liz Claman: I want to go back to the moments after the recall was announced. Ford launched this so-called war room on the 11th floor of the Dearborn, Michigan headquarters. Tell me about the war room, is it still in operation, how many calls are you taking a day compared to the initial recall days?
Jaques Nasser: The war room, as you call it, is meant to focus on all of our technical and logistical resources on getting as many bad tires off the road and replacing them to good tires.
Liz Claman: Did you work in this war room?
Jaques Nasser: I did and we had constant communication with the team, the team did an outstanding job and the reason they did is every single decision and every single waking moment for everybody on this team was focused on the customer and what is good for our customers. We had thousands of customer calls during the early period; we are now down to a handful of calls every day. We are pleased with that because it means that most of the bad tires are off the road.
Liz Claman: No CEO ever wants to deal with anything as tragic and devastating as this. You immediately took to the airwaves and had commercials on that said if you have tires that need to be replaced, we'll get them replaced. You took to the airwaves promising to deal with situation as a leader. What leads you along the path that you took to putting yourself on the forefront, that is a difficult thing for a CEO?
Jaques Nasser: It can be and you get criticized no matter what you do by certain elements.
Liz Claman: People criticized you about your Australian accent.
Jaques Nasser: I don't think I have an accent.
Liz Claman: I have the accent.
Jaques Nasser: People said I was a mixture of Al Gore and Crocodile Dundee, that cuts right into you, but the whole idea is to be up front and focus on the customer, have open communication, share all the information as quickly as possible. In addition to that, we wanted to make sure our customers really understood everything that was going on and we wanted to also make sure that our own employees, our dealers, our suppliers, had the ability to be able to communicate to their stake holders exactly what the situation is.
Liz Claman: As you are dealing with this you are still hearing at that time about people who were killed in Ford cars that had Firestone tires. What was that like for you as a company leader to know that your product not necessarily caused the deaths of these people but had something to do with it?
Jaques Nasser: Some of the saddest moments I think of our professional lives as we went through this because we could see the concern and the anguish that was going on in the marketplace and the only thing we could do was to act as quickly as possible and keep our customers at the center of everything that we were doing.
Liz Claman: One decision you made was to take this unprecedented step of shutting down assembly plants to free up thousands of tires for the recall, to have tires switched on Ford Explorers, that was at the risk of hurting your third quarter profit which indeed did take quite a hit, down 7% from a year ago that quarter and operating earnings down 16%. Did do you still stand by that decision which hurt shareholders on top of everything else?
Jaques Nasser: It was a hit to our consecutive record financial performance but you've got to look at it in the long-term. And in the long-term customers is the focus of everything that we do. And if you can look after your customers then you will look after your shareholders in the longer term.
Liz Claman: This all comes at a time when we are seeing a pronounced slow down in the auto industry. What are you feeling about this slow down and of course it almost seems like everything is coming down on Ford at the worst possible time?
Jaques Nasser: I think we are doing very well in the marketplace relative to our other competitors. And when I look at it, what is a good strong great automotive company all about? It is about great products, it is about great brands, about great people, and about making sure that you can execute and implement really well and that you have the intents and deep focus on customers. That is what we are doing.
Liz Claman: How much does it matter to be number-one right now to you?
Jaques Nasser: Number one in terms of sales and market share isn't a great concern because that is an outcome. What we want to do is to make sure that we have the plans in place to be number one in customer satisfaction, number one in the way people look at our company and say Ford Motor Company, that is a great company. That is more important for us.
Liz Claman: Okay in the next half-hour I want to you stay right here and continue our conversation with Jacques Nasser. We will talk more about the perceived auto slow down more about Ford's relationship with Firestone tires the new Explorers coming out. Will Firestone tires be on those Explorers? More from the CEO of Ford Motor Company Jacques Nasser in the next half-hour.
Liz: Welcome back to New York City. We are having an exclusive one-on-one discussion live with CEO of Ford Motor Company Jacques Nasser, welcome back and thank you for continuing to speak with us. Let's begin once again with the Firestone tire recall that greatly effected Ford considering many were mounted on Ford vehicles. What is your relationship now with Firestone?
Jaques Nasser: It is a business relationship. I think we went through some very difficult times with them. We wanted to make sure that our customers came first and I think Firestone understands that now. We would like to go forward with them, but as we said before, our customers will really decide what tires they want in the longer term.
Liz Claman: I have to tell you maybe I don't know enough about the auto industry but I would be so remiss and so worried about putting Firestone tires on any vehicle I were to make specially in light of what happened you don't want to paint an entire company's products with the same paint brush but the ATX tire may be responsible for 148 deaths some people say why would Ford ever put the tires again on in vehicles?
Jaques Nasser: I understand the concern and I feel for the way customers would feel as well but Firestone has been around a long, long time, 100 years and they've made hundreds and millions of really great tires. And I think you could over exaggerate exactly where the present situation is but in the end it will be customers who decide exactly what tires they get.
Liz Claman: In the wake of the recall, there was a lot of he-said she-said going on, where Ford was unhappy with the speed with which Firestone dealt with the recall and frankly, felt Firestone was not forthcoming with enough data quickly enough and you began doing your own numbers crunching. Firestone intimated that Ford truck has a design flaw. Is there a design flaw with the Explorer?
Jaques Nasser: Absolutely not. The Explorer is one of the safest vehicles on the road and that isn't us talking about it. You would expect that from us because we are so proud of the top-selling sports utility vehicles in the world. You don't become the top-selling sports utility vehicle in the world unless you are the best. In addition to that, when you look at safety record of explorer over a ten-year period it has one of the top safety records in the world. It is a fantastic family vehicle and we stand by that because independent data confirms that. I would say during the heat of the initial investigation of the issue there were clearly emotions running high.
Liz Claman: Absolutely.
Jaques Nasser: For us, we get passionate about our customers and if anyone gets on the road, we don't like it. We get upset about that because we feel for our customers.
Liz Claman: You also get passionate about protecting the Ford reputation. You took to the airwaves, started this war room taking thousands of customer calls. Inevitably people refer to how Johnson & Johnson dealt with the Tylenol scare a decade-and-a-half ago, people use that model for the crisis situation. Whose rule-book did you follow, or did you make up the rules on your own?
Jaques Nasser: Our rule-book is simple, put the customer at the center of everything we were doing make sure we were open on all the information that we had and that we worked quickly in a nimble fashion to get as many bad tires off the road and get as many good tires to our customers. So that was our mission, and we really didn't have a rule-book and I think the Johnson & Johnson case may have been appropriate in the decade that it was launched at that period, but times have changed.
Liz Claman: Do you have any anecdotes, do you hear from some people that are absolutely furious with you? I know there will be a lot of personal injury lawsuits against Ford and Firestone. There is word that Firestone could possibly be bankrupt because of this. The Ford situation is not that dire, but you talk to the people directly. Are they screaming at you?
Jaques Nasser: I've taken many customer phone calls and I would say they range from very supportive to very disappointed and I can understand all of the emotions in that range.
Liz Claman: Okay. I want to segue now to Ford and the future of your SUV's. You've got the 2002 Ford coming out. First of all are you going to put Firestone's on the Ford Explorers?
Jaques Nasser: The new model Explorer, which by the way is a groundbreaking vehicle, is really again going to be trend-setting in every way, we will have our customers make a choice on tires.
Liz Claman: Is that new?
Jaques Nasser: It is new for us, and I think new for the industry. We feel we are now getting to a point where tires aren't generic any more. People really care about their tires and care about the brand of tires that they have and if our customers care, then we will give them the choice.
Liz Claman: You will let them say I will have Goodyear, or I will take the Firestone's?
Jaques Nasser: Right, yes.
Liz Claman: Let's move to the auto industry. With the roll out of the new SUV, you are faced with serious competition from foreign upstarts starting their own SUV lines and doing pretty well and cutting into U.S. auto makers and DaimlerChrysler as well. How do you compete with that landscape, being so difficult as it is?
Jaques Nasser: Liz, we love it. When we create a segment, such as the sports utility segment and ten-years later our competitors wake up and say gee this isn't a bad segment to be in because by the time they get their resources and their assets aimed at that segment we will be off creating new segments, and when you look at our sports utility model range now with Escape and Explorer and Expedition and Excursion in the Ford brand -- recent acquisition of Land Rover -- we are the top producer of utility vehicles in the world today by a large, large margin. We welcome the competition, we think we are well prepared for intense competitive activity and we will let customers decide who the winner is.
Liz Claman: But Mr. Nasser, you see the number of fewer people buying SUV's, whether that is because of saturation in the markets or because interest rates are too high. Is there an official auto slow down right now?
Jaques Nasser: If you look at SUV's as a segment, actually more people are buying SUV's than ever before and the reason being, they have so many more new models and choices. There is a slowdown in the automotive sector at the moment from astonshingly high levels in the first half of the year to what I would say were more normal levels at this stage. I think what has been disturbing for all of us is how sudden that change has happened. And many of our competitors have been left with very high levels of inventory, unsold inventory. And therefore they've had to respond with marketing programs. We stand back and we say what is going to drive this industry and who are the winners going to be. The winners will be those companies that have strong products, strong brands, and strong leadership, and a connection with customers. And we feel confident about our future.
Liz Claman: The stock has taken a bit of a hit lately due in part to the Firestone recall, but also in part to the auto slow down. What do you see to enhance shareholder value? You spent nine billion acquiring up-scale brands like Volvo and Range Rover. Where do you see all the brands including Aster Martin and Lincoln and Jaguar?
Jaques Nasser: When you look at our luxury brand in particular, they are having a great year. Jaguar is having a record year; Volvo is having a record year. We recently acquired Land Rover, and Lincoln is having a sensational year. By the way, Explorer this year will probably have its best year ever in a ten-year period.
Liz: You passed on Daewoo?
Jaques Nasser: We passed on Daewoo.
Liz Claman: Why?
Jaques Nasser: Once we got to understand it intimately we decided it really didn't fit in our strategic plan. And we had to go through and do the due diligence, it is not a bad company they've got some very good attributes, but they didn't fit with the direction we were headed.
Liz Claman: I know it is a particular busy time for Ford but do you see future acquisitions on the horizon?
Jaques Nasser: We don't need any, but we never say never. We are always looking for acquisitions that would fit within our strategic intent but I would say, at this point, looking forward we are going to be more focused on flawless execution of what we think is a very, very strong strategic plan for the future.
Liz Claman: You took over as CEO in late 1998, you've been with Ford for more than 30-years, you've been through thick and thin with this company but there is no denying that this could very well be the thinnest of times for Ford. How do you see your legacy? I know you are probably in it for the long haul. I would imagine you are willing to stay with the company no matter what. You are already making it through fire and brimstone but how do you see the legacy playing out -- this will always stick with Ford. What happened with Firestone?
Jaques Nasser: It probably will, but I look at it in terms of what is our vision, it is the world's leading automotive company for the way that consumers look at it, for leading products and services, that is the way we look at it, and long-term. If the customer looks at the Ford Motor Company and says that is a great company, if the people that do business with us look at the Ford Motor Company and say gee that is a great company, if our employees say this is the company that I want to be associated with, to me that is the legacy that any great enterprise would like to leave behind. We've been around for almost 100 years and we are very fortunate because we've had generations passed to us, to build Ford and myself a wonderful company and our intention is to hand it to the next generation as even a better and greater company.
Liz Claman: Mr. Nasser, we wish you the best of luck.
Jaques Nasser: Thank you.