Ford Leaders Look to Squash Problems Early

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Automotive News Print Version

May 20, 2014

As Ford Motor Co. prepares to bring out 16 vehicles in North America this year, a handful of the company's most senior executives have changed the formula in an effort to assure trouble-free launches.

Joe Hinrichs, Ford president of the Americas, said the top bosses are getting together earlier and more often in an attempt to root out problems that might otherwise languish without high-level intervention.

The group includes himself, COO and next CEO Mark Fields, manufacturing boss John Fleming, purchasing chief Hau Thai-Tang, product development head Raj Nair and quality boss Bennie Fowler.

"We've been working hard earlier in the process, getting the leadership together because ultimately they're leadership decisions," said Hinrichs.

Taking action early in the process is a key goal, Hinrichs said: "If you wait too long to make a decision about where you really are in a program, it all ends up falling on the actual launch itself in the plant."

Ford calls this year's launch schedule the most ambitious in its history. Key vehicles include the 2015 aluminum F-150 pickup, the Lincoln MKC crossover, the Mustang and the Transit commercial van.

Ford's most conspicuous botched launch was the 2013 Lincoln MKZ. Parts shortages and quality glitches overwhelmed quality processes at the plant in Hermosillo, Mexico. Delivery of the car—Lincoln's contender in the highly competitive entry-luxury sedan market—was delayed at least three months.

Ford said last week it is recalling nearly 700,000 Escapes and C-Max Hybrids for safety issues involving an airbag software glitch and improperly latching door handles; no deaths or injuries have been linked to the recall.

Ford's senior leadership team, as it strives to identify and fix problems early, needs to take responsibility for managing launch timetables and creating a culture where people aren't criticized for identifying problems, he said.

"It's hard to move a Job 1 date for a lot of reasons," Hinrichs said. "Everything is focused on that Job 1 date—the manufacturing plan, the supply base plan, the marketing plan."

The biggest test of this process will be the launch of the 2015 aluminum F-150 pickup, due in dealerships by year end. One big hurdle will be getting Ford's aluminum suppliers—primarily Alcoa and Novellis—geared up to handle F-150 volumes, Hinrichs said.

Another challenge will be converting the body shop at Ford's Dearborn truck plant from steel to aluminum, a process that will begin this summer.

"I can tell you sitting here in early May that everything is on plan," Hinrichs said, adding that "that curve gets a lot steeper as the months go by."

Ford has struggled with quality problems since the introduction of its MyFord Touch infotainment system. Ford had cracked the top 10 in Consumer Reports magazine's reliability survey in 2010 but plummeted to 27th out of 28 brands in 2012. In 2013, the Ford brand was 26th and Lincoln was 27th. The Ford brand has seen similar declines in the annual J.D. Power Initial Quality Study.

Hinrichs said Ford's internal warranty data show the company's efforts to improve quality are paying off. He was referring to the most recent vehicles coming out of Ford factories.

Both Ford and General Motors saw warranty claims and accrual rates—funds set aside to cover future warranty claims—fall to "extremely low levels" in 2013, according to Warranty Week, an industry publication.

"After multi-year warranty cost-cutting efforts, they're each saving hundreds of millions of dollars per year in warranty expenses and have freed up billions in warranty reserves," the publication said.

Ford's warranty reserve balance as of Dec. 31 was $2.5 billion below its 2005 level, according to Warranty Week, which says this is an indication that Ford anticipates reduced warranty costs.

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