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The Honolulu Advertiser
Posted on: Monday, January 11, 2010

Ford's new focus paying off

Associated Press

Hawaii news photo - The Honolulu Advertiser

Ford President and CEO Alan Mulally brought his Boeing expertise to the company and cut brands such as Jaguar and Volvo to focus on just 20 nameplates to control labor costs.

LAURA RAUCH | Associated Press

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DEARBORN, Mich. In a year that humbled most automakers in America, Ford came out looking smart.

As 2009 unfolded, auto sales slowed, General Motors and Chrysler nearly collapsed and Toyota faced safety questions after its largest U.S. recall ever. But Ford Motor Co. turned a third-quarter profit, gained market share and saw sales jump 33 percent in December. It was a big turnaround for the second-largest U.S. automaker, which three years ago teetered on the brink of financial ruin.

Thanks to some shrewd moves, Ford is blazing a trail for its Detroit rivals. Under CEO Alan Mulally, Ford borrowed billions before credit markets froze, allowing it to quickly invest in cars and trucks that have stabilized its sales. It also trimmed its lineup, streamlined development and began standardizing most parts for its cars no matter where they're sold in the world.

Those efforts are culminating in the launch of the 2012 Ford Focus at the Detroit auto show this week. Ford hopes the car becomes the standard for how to economically build a vehicle for the world.

This new "world car" shares about 80 percent of its components with twin models in Europe and Asia. Because of the way the 106-year-old company was organized, previous models of the Focus were designed separately by region and didn't share many parts.

While Ford's global product development mimics systems already used by the Japanese, Germany's Volkswagen AG and others, it's far ahead of domestic competitors. Chrysler LLC, which sells relatively few cars outside North America, only recently gained the kind of global reach that Ford has had, when Italian automaker Fiat SpA took control. General Motors Corp. has a global product development system, but it's struggling to shed brands and put a new management team in place.

Ford is on track to beat others in the globalization race. Michael Robinet, vice president of global vehicle forecasts at CSM Worldwide, predicts that by 2015, Ford will be making 719,000 cars off every vehicle underbody it has compared with an industry average of 450,000. Toyota Motor Co. will be making 835,000.

"Ford truly has a global brand, which GM doesn't have," said Erich Merkle, president of the consulting company http://www.autoconomy.com. "You don't buy a GM. You buy a Chevrolet or an Opel or a Daewoo or a Buick. Their brands are very fragmented around the world."

Ford had similar problems in 2006, when it had 97 different vehicle nameplates and was saddled with costly labor agreements, sliding market share and a dysfunctional bureaucracy. Mulally, hired from Boeing Co. by Chairman Bill Ford Jr., developed a plan to cut brands such as Jaguar and Volvo and focus on just 20 nameplates, while controlling labor costs and combining Ford's global design and engineering. The changes have transformed Ford.

Money saved by sharing parts globally gets pumped back into new technology, such as hybrid batteries and better air bags, that can be spread more quickly across a common lineup. Fewer designs mean fewer glitches and costly repairs. And U.S. buyers will now see more small cars because Ford believes it can make a profit on them. Ford says it has cut vehicle development costs by 60 percent since 2006.

Mulally, 64, said his years at Boeing helped him immediately grasp what Ford needed to do.

"You'd never have a 737 that would be different for the United States and Europe. I mean, it's a plane," he told The Associated Press in a recent interview. "It's exactly the same if you're Ford and you're a global player."

Other players have been doing this for years. A wider version of Honda Motor Co.'s Japanese Accord is sold as the Acura TSX in the U.S., while Nissan Motor Co.'s Versa is sold as the Tiida and the Latio in Europe, Asia, South Africa and South America. These automakers have reaped profits from small cars because they stopped designing individual versions for each market.