Last week I received a news release from domestic vehicle manufacturer with an opening sentence that I never imagined I would read. More to the point, a sentence with a noun that is absolutely jaw-dropping: “Ford Motor Company today said it is making further reductions to its North American truck production plan while adding more small cars, crossovers and fuel-efficient powertrains, as the company responds to the continued deterioration in the U.S. business environment and the accelerated shift away from large trucks and SUVs.”
“Deterioration”!?!
That’s synonymous with decline, failure, breakdown, decay. . . .
None of which are pretty.
Yes, this is a period of transformation. And on the surface, as there is, in the words of Ford president and CEO Alan Mulally (pictured), an “accelerating shift in customer demand away from large trucks and SUVs,” it seems as if all is bleak.
Don’t get me wrong. For thousands of people who have worked in light-truck plants—at Ford or at the other Two—people who have lost their jobs, things are bleak. Management at the Big Three have consistently ignored or misread the evidence of ever-climbing gasoline prices. Mulally and Robert Nardelli at Chrysler get a pass on this count because they essentially came into the business after the avalanche had started. The same can’t be said for GM chairman and CEO Rick Wagoner. Nor for the executives under him, nor for all of those who remained in place after Mulally and Nardelli came into the auto industry.
What were these guys thinking? Did those people seriously think that in a world where the people in China and India have started buying more cars and trucks, in a world where the lion’s share of petroleum is sourced from places that are politically charged, that the pickup and SUV market would roll on forever?
Is anyone going to take responsibility for these blunders? Are the consequences going to go further than the plant shutdowns and layoffs?
And what of the future? Are the people who chose to ignore the changes, who apparently didn’t have plans ready for implementation in the likely event of astonishingly high gas prices, going to be the ones who will continue to plan? Let’s hope not. There needs to be people in place who have the sensibilities that are characteristic of other industries—think, for example, of consumer electronics—where the name of the game is “Change,” not “Status Quo.”
On the upside, I would hereby nominate Alan Mulally as Executive of the Year for this statement alone: “We view the move to smaller, more fuel-efficient vehicles as permanent.” Perhaps it is because he came to the industry from another that he has the willingness to face and speak to reality. Let’s not forget that when Mulally was at Boeing, things were not going swimmingly well for that company. Changes were needed. Changes were made.
Sad, really, how some other executives in this town seem to believe that it is simply an aberration and that there will be an “adjustment” to high gas prices. Those people should be given the cardboard box. Pronto.
Mulally describes the “smaller, more fuel-efficient vehicles” as products that “customers demand.”
And I see some upside for some people—many of whom may be reading this (e.g., you, perhaps)—as at least Mulally gets it: “We remain absolutely committed to accelerating the development of new products that customers want and value.”
This means the accelerated product development of more fuel-efficient cars, crossovers, and possibly even trucks. Ford will be bringing in products developed for its European and South American operations. But it is also developing vehicles in North America. And this means there needs to be a transformation of the product portfolio. It needs to be done with speed and economy.
It is the fast development of these products that is essential to on-going employment and investment in the auto industry. We need the technological tools and the educated people who can use them to make this happen in as short a time frame as conceivable.
It isn’t over for those who are seeing reality and anticipating what is to come. Not by a long shot. But for those who imagine that the status quo has hit a bump in the road—well, for them it was over a long time ago, and more’s the pity that a number of them affected a large multiple of people who are now unemployed.
