Strategic shift helped Ford make U-turn
Profits show firm is on right path
DEARBORN, Mich. — Four years ago,
Ford said yesterday that it made $2.6 billion from April through June, its fifth straight quarterly profit. The company, which reported record losses in 2008, now predicts it will end 2011 with more cash than debt.
With its two longtime Detroit rivals still finding their way after spending time in bankruptcy last year, Ford, which never took government bailout money, extended its success story.
President and CEO Alan Mulally said the company is ahead of where he thought it would be in its turnaround. It now sells the most popular pickup truck in the United States, the F-Series, and the most popular crossover SUV, the Escape. “Our performance this year gives us great confidence going forward,’’ he said.
In the past year, Ford has gained a bigger share of the American market, the equivalent of about 154,000 cars and trucks. Rivals
Mulally, a tough manager masked by a boyish face and gee-whiz demeanor, joined Ford in October 2006, a year into a turnaround plan that called for closing plants, cutting jobs, and dropping some of its models.
He removed obstacles, put new managers in place, and forced feuding parts of the company to work together. He had cards printed out for every employee exhorting people to work together and accelerate development of new products.
Michael Robinet, an analyst for the consulting firm IHS Automotive, said the biggest reason for Ford’s success is an overhaul of its factory and sales strategies.
When the company was losing billions last decade, it kept cranking out cars and trucks even if they weren’t selling, because high labor costs made it too expensive to shut down production. But late in 2008, the United Auto Workers union gave up a provision known as the jobs bank, in which automakers had to pay laid-off workers even if their plants were closed.
Now, workers have to take jobs at other factories or risk losing wages and benefits. With 12 fewer factories and a North American workforce that is half the 140,000 people it was five years ago, Ford can limit production when demand is slow.