Ford 2005 Annual Report Download - page 6

Ford Motor Company Annual Report 2005 5Ford Motor Company Annual Report 2005 4
Ford Motor Company Annual Report 2005 5Ford Motor Company Annual Report 2005 4
So, in January 2006, we launched the most
fundamental restructuring in our history, which we call the “Way
Forward” plan. Developed by senior executives Mark Fields and
Anne Stevens and their team, Way Forward is a comprehensive
plan for restructuring and reinvigorating our automotive business
in North America. It touches every piece of our North American
business to make it more customer-focused, product-driven and
efficient, including:
– A renewed commitment to bold design, improved safety
and technological innovation to differentiate Ford Motor
Company and its products in the marketplace.
– New product investments using Ford’s global
architectures and scale to deliver more new products
faster, including more crossovers, hybrid vehicles and
new small cars, as well as increased spending to
strengthen Ford’s truck leadership and launch products
in new segments to reach more customers.
– More clarity for the Ford, Lincoln and Mercury brands,
with a sharper focus on the customer and a clear point
of view that will appeal to more buyers.
– Pricing that is clear, credible and simple, which will
further improve residual values.
– North American capacity will be realigned to match
demand – with 14 manufacturing facilities to be idled –
resulting in significant cost savings and reduced
employment of 25,000-30,000. Capacity will be
reduced by 1.2 million units, or 26 percent, by 2008,
which represents the majority of actions within the plan’s
2006-2012 period.
– Salary-related costs cut 10 percent in North America,
with the reduction of the equivalent of 4,000 salaried
positions by the end of the first quarter 2006. In
addition, the company’s officer ranks are being reduced
12 percent by the end of the first quarter.
– Material cost reductions, excluding special items, of at
least $6 billion by 2010.*
– A new low-cost manufacturing site is planned for
the future.
This plan will restore our North American automotive
operations to profitability by 2008. It reflects lessons from our
successes around the world – including Mazda, where Mark led
a remarkable turnaround by telling his team: “Change or die.”
The Way Forward has similar strong medicine for our
North American business. But it also contains the vision and
strategic focus to rebuild the business, because we know we
can’t just cut our way to success. Along with our substantial
cost restructuring, we are changing the business model that’s
existed for many decades at Ford.
How will we do this?
First, we are taking a more far-sighted approach to
creating shareholder value. Because of the tremendous volatility
of market conditions, we will no longer issue quarterly or annual
earnings guidance. We still have extremely rigorous targets for
costs, capacity utilization and other traditional metrics. But we
want to underscore an important point inside the company and
out: We cannot succeed in the long run if we’re focused only on
the short term.
Instead, we are guided by our long-term goals of
building brand, satisfying customers, developing strong
products and accelerating innovation. We also will be managing
to allow our employees more freedom, to take smart risks
and to demonstrate their creativity. Over time, we believe this
approach will lead to sustainable profitability. You’ll be able to
judge our results as we report our progress.
Second, we’re going to sharpen our focus on the
people who determine our success – our customers. We’re
going to go way beyond what we’ve ever done before at Ford
to find out what’s on their minds. Our business decisions will
originate from our knowledge of what our customers want, both
today and tomorrow. We’re going to figure out what they want
before they even know it, and we’re going to give it to them.
In the past, our product decisions were sometimes
driven by plant capacity concerns. From now on, our
products will be designed and built to satisfy customers,
not just fill factories.
This is going to require change number three: We are
unleashing our spirit of American innovation. To me, innovation is
seeing what others can’t see, and using that vision to build what
others have never built. Innovation resolves contradictions and
flattens old barriers. It’s the heart of all progress.
We have a proud history of innovation at Ford. It is what
built our company and made it great. Innovation helped
us create the first affordable car and put the world on
wheels. We are going to reclaim this legacy to build a distinct
competitive advantage.
We will use innovation to drive the bold American
designs of our cars and trucks, giving them the uniquely
American look and feel that reflect our country’s spirit, ingenuity
and sense of adventure.
F-150
In 2005, Ford F-Series recorded its 24th straight year as America’s best-selling
vehicle with models such as the F-150 pickup. For 2006, Ford is offering an
ethanol-capable F-150, as well as Ford Crown Victoria, Mercury Grand Marquis
and Lincoln Town Car with an option to run on a mixture of clean, renewable
ethanol and gasoline.
*At constant volume, mix and exchange, and net of new product content and regulatory changes.