Two companies in trouble, two separate paths

Ford also just announced a new CEO, Alan Mulally.

The naming of Alan Mulally to Ford CEO is huge, both for Ford and Boeing.

Mulally has been an integral part of the resurgence of Boeing, specifically their comercial group. There was a point about 8 years where Airbus and Boeing both made their stance on the future of air travel. Airbus announced their plans to create a new massive jumbo jet (A380) while Boeing derived the 787.

The divergence of these strategies will shape the air travel industry for years. The A380 was positioned as a hub to hub aircraft able to carry more passengers than any other commuter plane. In contrast, the 787 was designed to be airport to airport…taking people from their origin to their destination, no major hubs or connecting flights or special runways required. Well, I think we all know where this is heading and who picked the better long term strategy. Mulally was KEY to this.

He has long been overlooked for major CEO posts due to Boeings own lackluster performance. While previous CEOs arranged illegal contracts and had affairs with assitants…Mulally focused on building Boeing Commercial Airplane Group and seeing that the Dreamliner became more than just a dream. A reality.

Had this appointment happened a few years ago while other CEOs were in office for Boeing I would say Boeing would be in deep trouble. However, they tapped Jim McNerny and he will do amazing things for Boeing as well. Boeing is in good hands for sure, despite losing Mulally.

Now Ford has Mulally and Mulally has a rough road ahead (no pun intended). He’s faced with restablshing a brand and figuring out which children to keep and which to let go. Im very confident in the skills he brings with him and no doubt think Ford will recover with him at the helm.

For the naysayers who think fixing Ford is an insurmountable task, I ask you to consider this: many people thought the same thing about Boeing post 9/11…and thanks to Mulally’s leadershipe and the development of the 787 Boeing is stronger now than it has ever been in it’s history. Fixing Ford doesn’t seem so hard now…

Good luck Mr. Mulally.

Uh…

Ford – Operating Income – Last 4 Quarters: -$4 billion
HPQ – Operating Income – Last 4 Quarters: +$4.9 billion

I don’t care if Ford blogs or doesn’t blog, they need to stop losing money. Perhaps its nice to be discussed in Silicon Valley salons, but if I were a shareholder I’d rather have that $4 billion back.

As for comparing them with Boeing, I’d say Toyota is much more nimble competition than Airbus. Completely different industry. We’ll see about Ford, blog or no blog.

Scooby: well, that’s what happens when you bet your business on big trucks and SUVs and gas prices go up and consumers change their behavior.

Unfortunately too many companies wait until small trends are freaking huge before they act. If I were at Ford I would have invested a lot more in small cars years ago and built a strong brand around that.

Let’s not forget the costs and problems that Ford is suffering from due do the unions.

“If I were at Ford I would have invested a lot more in small cars years ago and built a strong brand around that.”

With all due respect Robert, the consumers are not buying those vehicles. They like big, safe SUV’s, trucks and Minivans.

Dave: that’s not true. Ask Toyota who sells TONS of small cars. Yeah, some big, but most small. And Toyota hit a home run with its hybrids.

The thing is you were right, if we were talking about a year ago. Today with higher gas prices people are changing their buying behavior to smaller, more fuel efficient, cars.

The other part of the market that’s doing well is the luxury market. You should come to Silicon Valley and see all the new BMW’s and Mercedes that are being driven around.

Ford isn’t positioned in that market at all. The new Mustang, for instance, sucks. (I rented one and it was horrid compared to Maryam’s new BMW).

If they can’t get cars on the market that compete well with BMW’s and other luxury brands, they will have a tough time competing.

So, to recap. They need to work on two fronts: fuel-efficient cars and luxury cars. They have trucks and SUVs fairly well nailed (although even the Escape doesn’t turn me on when compared with a Toyota RAV 4).

Well the market is turning away from SUVs, which are not safer by the way. But a big part of the trouble Ford and GM are in is due to pensions. There are more former workers on pensions than current employees and their healthcare costs are draining the automakers. But of course there’s nothing wrong with how the U.S. healthcare system is structured, nope, not at all…

Andy: true. SUVs are definitely not safer. Bigger does not equal safer. Just ask the Tongan Royalty who were killed in an SUV here in Silicon Valley. Story here: http://abcnews.go.com/US/wireStory?id=2162273

Get away from the Silicon valley and you will find that SUV’s, trucks and Minivans are the norm. Can a soccer mom haul 2.2 kiddies and a bunch of stuff in a car? No freaking way.

As for the naysayers on SUV safety – they are dead wrong. Look at how many have 5-star government crash ratings as compared to cars.

The real problems with Ford is that the deals made with the unions years ago are now coming home to roost.

Robert,

Sorry but a car would have to last a lot more than 30,000 miles without a glitch to convince me to buy one. Also I determine how I buy the car by how the service department treats me as well. For instance we have this car dealership here in Florida called Gettel Toyota. Since they have a really poor service department I am now switching to Honda. It is not treating your customers great one time but all the time and the service department can make or break a dealership in my view.

This also applies to any service whether it is on the web or otherwise. Sell me each time. It is just too easy for customers to switch to a competitor today. Those that keep up the customer service keeps me as a customer. Just my two cents.

30,000 miles is hardly the mark of a durable car. Sure, *failure* before that point is the mark of a *non* durable car, but you shouldn’t be impressed by 30,000 miles without a problem. Short of actual manufacturing defects, it takes at least 60K-100K miles before the truly durable cars seperate themselves from the pack.

I’ve had 2 cars that cleared 200,000 miles before I sold them off and one of them is still running at about 560,000 miles and is still in the family.

Of course that was a small VW diesel from 1984 that got 68mpg on the highway 20 years before the Prius, so I’m probably harder to impress with automotive results than some.

This a great blog. Where else could you find an exchange of ideas on this subject? Kudos, Scoble!!!

Dave: oh, I’m not saying that SUVs haven’t sold like crazy in the past few years. Silicon Valley is full of them. But that the trend is away from big cars and trucks and toward smaller ones.

Remember, that trend only has to be very small before it causes HUGE profit changes. 1% changes in the auto industry is a HUGE amount of dollars.

J Wynia: I have a 100,000 mile warranty on this Ford so I totally expect it to get there without any troubles.

I’ve found that after 100,000 it’s a crap shoot. My Acura (1984) went to 200,000, but I know other people who had major troubles with theirs at 130,000.

I also know people who’ve had VW Passats (a very expensive car when compared to my Ford) and had problems before 30,000 miles.

But I’ll keep reporting my Ford’s health every 10,000 miles or so.

But let’s remember that the profit margins on trucks, SUV’s and Minivans dwarf those of small cars and that impacts profits big time.

Let’s look towards cleaner diesel engines for these vehicles to hopefully turn the tide.

As for gasoline prices – there are more taxes in the price per gallon as there are net profit for the so-called “big oil” companies. Let’s call our elected officials and ask them to back off on these taxes!

I agree with your assessment of Ford’s Bold Moves. Definitely IR for the YouTube generation.

Ford has a lot of good communications people and it shows with this initiative.

Six years ago, I visited their Dearborne Intranet team.

They showed me their daily intranet “TV show” for all their ops around the world. What I saw all those years ago is impressive even by today’s standards.

With their Bold Move video blog, I especially like the inclusion of many outside voices.

As the old saying goes, it’s not what you say about yourself, but what others say about you that counts.

And look what it has you and I saying…

I guess Im not the AVERAGE american car buyer following the trend…I just bought a new 2007 Tahoe. What did I trade in? A 2001 Chevy Malibu. Now that would be in sharp contrast to what the “rest of america” is doing.

“Ford isnt in the luxury market”? – They own Land Rover (“luxury” SUV), Jaguar, and Aston Martin.

The irrational exuberance in Silicon Valley demonstrating the “look at me” mentailty isnt representative of the entire US.

Troy: it’s not, that’s true, but other parts of the nation don’t have the wealth that exists here in Silicon Valley.

Damn, I forgot just how big a company Ford is. Thanks for reminding me.

Dave: we need more incentives to get off of the foreign oil habit we’re in, not less. And lowering gas taxes/prices would just encourage people to use more of the stuff.

Ever wonder why Europeans come up with better engines? Cause their gas costs $9 a gallon.

Dave: >But let’s remember that the profit margins on trucks, SUV’s and Minivans dwarf those of small cars and that impacts profits big time

Yup, which is why Ford wasn’t first out of the gate with a hybrid. Toyota, who takes a longer term view, was and is cleaning up and making the industry react to it.

I think there are many valid points here 2 I think are really key:

1)Pensions are killing GM & Ford
2)Unions are killing Ford * GM [and many other manufacturing industries...but Im sure I will hear an earful for this comment]

Also, GM Has Just Extended Their Warranties to 5 year, 100K miles.

Troy: and GM did that in response to blog requests.

Ford’s bold moves website and video is silly. They have turned their real and serious issues into a soap opera. It’s entertaining, sure, but it has nothing to do with running a good business. Only a marketing guy could love this fluff.

And it is ridiculous to blame the unions. Who made the deals with the unions? Oh yeah, it was Ford management. Who didn’t reserve adequately for their pension program back in the days when they were making money? Ford management. Who didn’t invest in new technologies like hybrid engines the way the real “forward” thinking companies did? Ford management. Who squeezed their suppliers so hard that they went into bankruptcy? Ford management. Who blames external factors like $3 gas for problems of their own making? Ford management.

Ford management got Ford into this mess by screwing up badly for years and years. And what is their “bold” answer? A soap opera and a pretty web site. Brilliant.

Gobi: I agree with you that the management made some really bad choices over the last few years. But now that they are in the bad place they are I’d rather that they were transparent about it and show off how they are working to dig out of the hole they are in.

You are correct Gobi. The top management of the past is to blame – completely and totally.

The old top management should of stood up to the corrupt and communist unions long ago. But much like fighting terrorists today, it would not of been a popular concept.

We had a Democrat/socialist run Congress at the time that would of probably socialized the US automakers in those days by calling them a monopoly. This socialist/communist/Democrat kabal brought in the union laws that made it all possible – and the DNC collects payment to this day for it.

That was the climate in those days. So the top management took the easy way out, took the profits they could get then, took their golden parachutes and skated – knowing full well the bill would come due eventually.

Much like the Clinton Administration did with the war on terrorism – do nothing and skate away. Welcome to eventually – in the automotive business and the terrorist business. Bills always come due eventually.

Man, Scoble. Stick to things you know about (whatever that is). It’s definately not the auto industry. “Ford’s not in the luxury car business” BWAHAHAH! yea, right.

Not amount of blogging or transparency will solve Ford’s problem’s You need to get that type of thinking out of your head. When a company is losing billions of dollars, while blogging my look like they are trying, is had absolutely NO impact on their ability to turn around their business. At least a company the size of Ford. It might be able to turn around some small geek company in the Valley where that is the only place anyone hangs out to get information. But in a company the size of Ford or GM? You’re dreamin’.

I’m assuming Mullaly will now get rid of his Lexus? Not sure Mullaly is the right guy. Making airplanes is not the same as making cars. Very few competitors in the airline business

Ford is doing some really dumb things. Jaguar is bleeding money hourly. They should dump it. Yet they talk about getting rid of Aston Martin. That’s just stupid. Aston Martin has gone from sell 44 cars WW a few years ago to selling about 4400 a year. Hello? They should also kill of Lincoln/Mercury and Land Rover. Concentrate on Ford, Truck, Mazda, and Aston Martin. Not sure where blogging fits in to the plan, though.

Ford needs to focus (no pun intended) on the business that can make them money. Get rid of

@20. I call bullshit on that. If GM is being run by comments on Lutz’ blog then they are in deeper trouble than anyone could ever imagine.