Ford vows to keep cost cuts hidden from consumers
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<blockquote><font size="1" face="Verdana, Arial">quote:</font><hr> Reuters / May 15, 2002
DETROIT -- Ford Motor Co. Chairman and CEO Bill Ford vowed on Wednesday that urgently needed cost cuts would not lead the automaker to repeat the "sins" of the past when it produced some cheap and admittedly "lousy vehicles."
Bill Ford, as the heir of the company's legendary founder prefers to be called, told an annual meeting of industry analysts that he was "desperately" seeking cost reductions after last year's loss of $5.45 billion.
But he stressed that cheapening Ford's cars and trucks in the eyes of consumers was something he would not allow, even as the automaker works toward its previously announced goal of cutting $700 from the average production cost per vehicle by mid-decade.
Lower production costs are a key component of the multiyear turnaround plan Ford unveiled in January, when it announced it was closing five North American plants and cutting about 10 percent of its global work force to help the company pull out of a deepening financial crisis.
"We have to be very careful," Ford said of the product cost-cutting drive, and elimination of what experts determine to be "unnecessary" features on vehicles.
To fine-tune the process, known in the industry as "decontenting," Ford said several hundred product engineers had recently been added to a 300-strong team working since January on ways to trim manufacturing expenses without hurting vehicle quality or customer satisfaction.
For high-volume automakers like Ford, even a $1 saving on a model can create a windfall when multiplied by thousands of vehicles.
"The real artistry for us, as we go through this, is to get costs out but not to cheapen what the customer expects and wants," Ford said.
"We'll lose this game if we cheapen our vehicles in the minds of the customers," he added, saying he would not repeat the mistakes the automaker made in the early 1980s, when product cost-cuts were made with what industry experts have described, not as a scalpel, but a very dull knife.
"We've spent a lot of years paying for our sins of poor vehicles in the early '80s, which were just stripped, four cylinder, lousy vehicles," Ford said.
"You all remember such stellar products as the EXP and the Fairmont and some of those others," he added jokingly, harking back to some of Ford's most famously forgettable and uninspiring cars.
'LASER-LIKE FOCUS'
"There is a fine line between urgency and panic and we're not crossing that line," Ford said at one point in his lengthy comments to analysts, suggesting that while he and other officials were working "fast and furious" on the turnaround plan they would not lose sight of the big picture.
"There's no need for panic but there is a need for absolute laser-like focus on what we're doing, and we've got it," he said.
Ford conceded the plan was still in its infancy and stressed, as he did in January, that "we can't cost-cut our way to prosperity."
But he said the company will book a profit this quarter, after four straight quarterly losses, and was on track toward its goal of annual pretax operating profits of $7 billion by the middle of the decade. The plan anticipates a $3 billion reduction in the cost of materials.
"We're going to address our cost structure in a way that protects our key product program," he said.
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in many ways the focus is heavily decontented from the escort.
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