Soon after news broke late on May 22 that Ford Motor Co. was replacing its president and CEO, the calls, emails and texts started to roll in. Rank-and-file Ford engineers, some relative newbies and others whom I’ve known for 20 years or more, needed a little catharsis.
“It’s been like the ‘Nasser era’ around here—distracted! Eyes off the real business,” one chassis veteran told me. He was equating the strategic direction of the deposed CEO Mark Fields to the 1999-2001 tenure of former CEO Jac Nasser who aimed to transform “a boring old car maker” (his words) into a consumer-products and services company. Nasser set out to diversify the Blue Oval with auto repair shops, e-commerce and even scrapyards while he simultaneously acquired Jaguar, Land Rover and Volvo. Disruption of the wrong kind followed.
Texted a powertrain test engineer on May 23: “Credit not given to 1000s in trenches delivering our profitable products.” A body-and-structures guy opined, “Those of us whose work isn’t related to the next ‘app’ have become invisible to our PD [product-development] leadership.”
And my favorite, from an electronics whiz at the Michigan Proving Grounds in Romeo: “At the end of the day we make durable goods that have to last 15 years—a concept that’s alien to Silicon Valley.”
In the press conference that followed the CEO shakeup, Bill Ford asserted that he and new CEO Jim Hackett will not permit their “One Ford” global vision to degenerate into “Core Ford” and “New Ford” factions. The former is the traditional engineering-manufacturing dynamo that last year generated 90% of the company’s $10.4 billion in pretax profit. Amazingly, investors don’t assign value to such a business.
The so-called “New Ford” by comparison encompasses the advanced programs—vehicle electrification, autonomy and “mobility”-related ventures such as ride sharing. They only burn cash at present and may continue to do so for another two decades.
In the meantime, X dollars from the sale of each “Core Ford” F-150 and Focus must go into funding R&D for the self-driving podicles now in development. The same reality faces Toyota, Mercedes, Honda, GM and other incumbents: “Core” products engineered for human drivers and likely carrying a combustion engine—Jac Nasser’s “boring old cars”—will be subsidizing the new self-driving ones for years after they enter production. I’ll wager that the transition takes longer than the always-accurate forecasters (“10 million self-driving cars by 2020!”) breathlessly predict.
Engineers don’t get credit for simply delivering safe, durable and in many ways fun vehicles that delight customers. And they’re doing it under tremendous cost and time pressure. I think this is the root of the frustration that’s been growing within Dearborn’s “Core Ford” engineering groups.
Those engineers who feel marginalized by future hype can aim some of their frustration at Wall St. It was the investment community who hijacked the term “Technology” about 15 years ago, to make it easier to organize the mobile-device and telecom industries into one tidy bin. Their “tech media” accomplices then declared new reporting boundaries. So, if you’re developing nano-composites, or lean-combustion strategies, or active noise cancellation, or new seat structures…sorry. You don't warrant their attention.
Ford Motor Co. itself fell into this sad communications hole. During the previous CEO’s tenure, product launches veered toward social media “selfie” fests. The sole PR staffer who was dedicated to digging out novel engineering and product-development stories quit the company but was not replaced. “No longer a priority” was the reason given to me later. Apps R us!
I hope Ford’s new leadership sees it differently. Mobility companies are Engineering companies, first and foremost. Bill Ford got it right: Ford’s technology valuation, as perceived by investors, media and customers, will rise or fall on one equation. Core + New = One.Continue reading »