WWW.FORDBOLDMOVES.COM : EPISODE 2

The second video installment in the Ford Motor Company's (tm) peak inside the "Glass House" is entitled "Committment to Design."

It begins with dealers and other plebeians pointing out the importance of "design" and the apparently universal lack of it in modern cars (conveyed photographically by shots of a parking lot full of Ford Tauruses, which ironically was in better times the progenitor of functional "aerodynamic" styling in the low-priced classes).

Then the insiders take over. Elena A. Ford, Hau Thai-Tang, J Mays, Mark Fields and Peter Horbury carry the executive load this week (Where's William Clay Ford, Jr. ('lil Billy)?)

Fields and SVT Boss Thai-Tang rip the best sound bites . . . Fields' contribution is his well reported quip about getting back Ford's "design mojo."

Boss Thai-Tang correctly observes that the natural tendency is to unoffensively slouch to the "lowest common denominator."

Peter Horbury, Ford's latest design guru under retro king J Mays, dominates the latter half of the video. He spins bits about "optimism" and "American design" without really explaining what these concepts mean. His words are backed up with Ford's recent auto-show trial balloons, such as the chopped-top Super Chief pick up (how do you see out of that thing?), a chrome-look knockoff of the legendary Shelby Daytona Coupe (Mr. Waltrip, your chrome car is ready . . . nope, it's not powered by Toyota) and a wholly-whimsical "tri-fuel" sports car.

Not much there to suggest Ford's "way forward" on "design."

"Design" is a double-edged sword.

Great designs like the 1932 V8, the 1949 Ford and the 1964 Mustang became popular milestones. Weirdness for the sake of "uniqueness" or "having fun" (such as the 1996 Taurus, the Pinto, GM's "dust-buster minivans and 4th generation F-bodies, and the 1958 Edsel) typically result in disaster.

Designers who get ahead of the public, such as the engineering-driven design of the Chrysler and DeSoto Airflow sedans in the 1930s, end up creating huge losses and often setbacks for otherwise practical innovations.

Designers who get behind, such as the Iacocca Chrysler folks who kept pushing endless variations of the tepid, boxy K-car (e.g. Dodge Dynasty, Chrysler Imperial, Chrysler New Yorker) , are just as costly.

Good design includes organic practicality, performance, functionality and timeless elegance.

Yet all the "style" in the world won't make up for failure to deliver value, quality and performance (see. e.g. the latest retro Thunderbird).

As Carroll Shelby once observed "if the car's good, the name won't matter and if it's bad, the name won't help." While styling elements aren't as easily dismissed as a name (after all, automobiles are in a sense mechanized, rolling sculptures and do make an aesthetic statement on behalf of their owners), wonderful design won't paper over cheap materials, bad quality, poor reliability, impractical features and below-expected performance.

American car buyers tend to want it all: Style, quality, practicality, comfort, athleticism/performance, economy, durability, novelty, bling-bling, luxury, convenience, simplicity, importance, uniqueness . . . .

Successful designs are based on first staking out functional territory in the marketplace, and then delivering a noteworthy, yet practically transparent affective experience. They are outstanding without standing out like a sore thumb. They function as well as inspire. They evoke purposefullness without being coldly utilitarian. They transcend the narrow span of time when they are marketed by meaningfully advancing the art of automobility.

Successful designs project a sense of friendliness and action without intruding on practicality.

Unfortunately, Episode 2 of " Ford Bold Moves" does not convey that Ford's current leadership understands this.

TRICINDA: IT TAKES A COMMITTEE . . .

Kirk Kerkorian's Tricinda Corporation responded on 07 Jul 06 to GM's initial moves on the proposed "Renault Alliance" and partnership between GM, Nissan and Renault by calling for a "full and objective evaluation of this unique opportunity" through "establishment of a Board committee that receives independent financial and legal advice."

Clearly an "opportunity" as complex as this one requires more than breezy journalistic and internet commentary to fully evaluate.

Summary dismissal of the proposed alliance, as is occurring through the blogosphere and Detroit's hometown press, is premature and unreasonable. As the old cliche' goes, "the Devil is in the details." Or as Alfred North Whitehead observed "we think in generalities but we live in detail."

While the "Renault Alliance" seems to reflexively trigger knee-jerk self-protection reactions among the Detroit status quo, only a fair and full evaluation of the risks and benefits of the proposal will permit all the stakeholders to make rational and informed decisions about it.

An OBJECTIVE GM Board committee is a positive step in determining whether the "Alliance" plan is a grand dream or a grandiose nightmare.

MOTOR CITY'S MOSSBACKS RAIL AGAINST THE "RENAULT ALLIANCE"

Long-time ad-man Peter M. DeLorenzo wails and laments in the Autoextremist e-zine/blog about the "unmitigated disaster" that would occur if GM, Renault and Nissan form an alliance. http://www.autoextremist.com/page2.shtml#Rant

DeLorenzo's lenghty yarn, entitled "Kerkorian + York + Ghosn = Disaster for General Motors," argues that the "deal" is driven by the "Three Amigos of Greed, Unfulfilled Aspirations - and Ego," each of which is conveniently personified by three leaders in the proposal: Billionaire Kirk Kerkorian (Mr. Greed), "Spear-carrier"/"bagman"/human computer Jerry York (Mr. Unfulfilled Aspirations), and "one trick" "hatchet-man" Carlos Ghosn (Mr. Ego).

DeLorenzo's self-described "rant" is, of course, long on opinion and generalizations, but short on facts (other than observing that Nissan and Renault haven't faired as well as some in the current global auto industry down-turn).

The principal "evidence" DeLorenzo claims is that Kerkorian is a successful capitalist, York is a brilliant, unfulfilled numbers man, and Ghosn (1) had the chutzpah to helm two corporations at once, (2) ripped Nissan's USA offices from their "spiritual home" in the People's Republic of California for cheaper digs down home in Nashville (neatly flushing out of the company all of the wankers who lacked sufficient dedication to make the move), and (3) that he benefitted from "OPT (other People's Talent)" when he "dismantled Nissan" and restored it "ground up," keeping it in business long enough to capitalize on "a product renaissance that was well underway before he even got rolling at Nissan in Tokyo."

DeLorenzo concludes:

"Kerkorian + York + Ghosn is a formula for disaster for General Motors. I see no reason to sugarcoat that fact. These mercenaries will destroy everything in their path to get what they want - at 89 years old, Kerkorian gets to play The Game a little longer, York gets the respect he has hungered so long for, and Ghosn gets to inflate his runaway ego even further."

Stripped of all the ad-man hyperbole and ad hominem conclusions, DeLorenzo's "analysis" is simply the sort of predictable "defense" that arises anytime some outsider with money criticizes the Detroit establishment and dares to suggest reasonable changes. (anyone remember the insider reactions when Crazy Old Ross Perot dared criticize Roger Smith's GM twenty years ago?)

DeLorenzo bolsters his "street cred" by reminding all the other "extremists" that he DOES criticize the Wagoner regime from time to time. How hard is that?

But DeLorenzo's argument is self-contradictory. While most certainly Kerkorian is in it for the money (and what's wrong with that?), he seems to ignore that Mr. Unfulfilled Aspirations (York) and Mr. Ego (Ghosn) both seem to actually WANT to be in the car business, not the "get-rich-quick" liquidation business. Thus, the personality defects DeLorenzo asserts motivate two of the "amigos" would be fundamentally opposed to wrecking GM. How would such a wreck generate any "respect" for York? How would a "disaster" feed Ghosn's alleged ego? DeLorenzo omits this analysis, apparently concluding that Kerkorian's co-conspirators are blind to the "obvious" disaster aligining GM with Renault and Nissan would allegedly be.

Some criticize www.fordboldmoves.com for its dramatic Episode One title "Change or Die." Yet that's precisely what faces GM and FoMoCo.

The "change" part isn't in short-sighted window dressing moves, such as starving the highly useful Panther platform or abandoning V8s and RWD. Nor is it in simply off-shoring every possible job to avoid the UAW's unrealistic greed and excessive Federal regulations.

The "change" part is in figuring out how to bring better value and better quality to customers more quickly. It is in gutting the bureaucracy and increasing responsiveness. It is in bringing more of a market sensibility and sensitivity to managment. It is in reducing fiefdoms and decisionmaker isolation. It is in building value for all stakeholders through serving customer wants and needs. Nothing in DeLorenzo's essay proves that the "Renault Alliance" will block or hinder any of that.

DeLorenzo's conclusions are merely "inside Detroit" fearmongering at its worst.

One wonders whether DeLorenzo would be so critical if Kerkorian's face team included a bona fide Detroit product whiz, such as Robert Lutz. Of course an alleged egomaniac who lives off of OPT like Ghosn undoubtedly has a few such "experts" in his Palm Pilot . . . .

[Of course, all car guys must remember that auto manufacturing is a BUSINESS. Auto history is littered with beautiful, innovative, novel and "bitchin" designs which never had a chance because their creators lacked sufficient resources to effectively develop and market them. In short, to paraphrase Tom Wolfe: No bucks, no Buicks.

Moreover, if the market-proven Ghosn is such a ego-mad hack, as DeLorenzo asserts, what does that make William Clay Ford, Jr. ('Lil Billy)? Or his hired hand, Mark Fields?]

DeLorenzo makes hay with the "culture clash" in DCX, implying that melding three different nationalistic, parochial cultures would be even worse. Yet, while DCX unified a weak third player in the US market with a tarnished continental powerhouse, it has resulted in some notable product successes. It seems to also have consigned the vestiges of 1980s Iacoccaism from Chrysler, in favor of a much more robust vision.

Of course, Ol' Lido did once team up with Kerkorian in a bid to takeover Chrysler . . . .

Would "Tribalism" sink the "Renault Alliance?"

Automotive News International Editor Charles Child has opined that "tribalism" would doom Kirk Kerkorian's dream link-up between GM, Renault and Nissan.

Child's main support comes from recent "failed marriages" in the auto sector:

"But would a GM alliance with Renault and Nissan help the GM elephant dance? Not a chance. In fact, a Renault-Nissan-GM alliance would be a monstrosity, a cumbersome exercise that would simply distract GM's leaders.Look no further than GM's recent history to see why.GM's alliance with Fuji Heavy Industries Ltd. (Subaru) foundered last year. . . Earlier, GM tried to make its alliance with Isuzu Motors Ltd. work. . . .GM's alliance with Fiat also flopped, costing Wagoner $2 billion to extract GM. Recent auto history is littered with other troublesome alliances and acquisitions: BMW and Rover, Daimler-Benz and Chrysler, and Ford and Jaguar, to name a few."

One problem with virtually every example cited by Child is that most of the alliances were little more than rescue efforts. Rover was the "English Patient," terminally suffering from years of neglect, nationalization, labor issues and underinvestment. Jaguar also has a lengthy, sad history of market decline, uncompetitiveness and poor performance. Fiat was virtually bankrupt and lacked competitiveness outside limited sectors (ultra-performance exotic cars, and domestically in Italy). Subaru is a minor niche player (AWD) and uses odd-ball boxer engines (unlike 99% of the rest of the market). Isuzu failed to deliver any useful technology or markets, other than medium-duty trucks and diesels.

Ford Motor Company's stewardship of Jaguar is informative. Although it has given Ford a respectable foothold in the luxury market, Jaguar's lack of direction, uncompetitiveness and inherent resources have led to a one-way relationship: Ford sustains Jaguar, but what does Jaguar do for Ford in terms of engineering, platform sharing, distribution channels or economies of scale?

Moreover, Child conveniently omits Ford's conquest of Volvo's car division and its controlling stake in Mazda. Excluding the Mustang (which is assembled in a half-Mazda plant), Ford would have virtually no new car models in the USA without Volvo and Mazda expertise. Although Speedzzter can vigorously debate the current direction of Ford, neither he nor Mr. Child can deny the synergy of the Volvo and Mazda ties to Ford's "Way Forward." That being said, William Clay Ford, Jr. is often criticized for failing to adequately manage "tribalism" WITHIN the traditional confines of Ford . . . .

Of course, DCX can hardly be classified as a failure at this juncture.

The Kerkorian proposal is signficantly different from each of the cases Mr. Child cites. The major market segments for the three companies are each different, but complimentary. Although limited intramurial competition does exist (e.g. Opel and Renault in Europe, Nissan & GM trucks and suvs in the USA, the China market), the major advantage of the "Renault Alliance" is that each company can reap engineering and procurement benefits without giving up much in their domestic markets.

The second problem with Child's analysis is that he discounts Carlos Ghosn's ability to play the enforcer and mediate between the various parochial fiefdoms. Sadly, William Clay Ford, Jr. can't take a management class from Carlos . . . .

Further consolidation among OEMs in the world vehicle market will occur. The question is whether it will be "gentle" win-win deals like Kerkorian is suggesting. Or whether it will be more hostile and cutthroat.

2006 Renault Alliance? Not so fast . . .

Corporation watchers can never count out the self-preservation instincts of top executives. Case in point: the proposed GM-Renault-Nissan "alliance." Reuters and the Wall Street Journal report that "[GM CEO Rick] Wagoner and his management team intend to treat the alliance proposal as a hostile move against management."

And the new advertising darling of the Detroit 3, DCX's own "Doctor Z" (Dieter Zetsche) warns that the benefits of large scale "alliances" are hard to come by because "very few suppliers . . .are able to offer you parts in that quantity, and the scale effect goes to zero."

One could speculate that these moves indicate corporate style self-preservation at its best.

No report on William Clay Ford, Jr.'s reaction to the Kerkorian mega-alliance plan (maybe the news hasn't reached the Detroit Lions weight room yet). But one suspects his own self-preservation instinct will lead him to sympathize with those who view the alliance proposal as a "hostile move against managment."

SEGMENT VEHICLE TEAM?

Fending off rumors that SVT is dead, SVT boss Hau Thai-Tang gabbed to Autoweek and other reporters about Ford's latest Plan-of-the-week for the "Team." ( http://www.autonews.com/apps/pbcs.dll/article?AID=/CW/20060706/FREE/307060001/1111 )

Boss Thai-Tang claims SVT has "60 engineers dedicated to developing SVT products" and that with future projects will niche into three segments: "Race-inspired performance," SVT-badged vehicles (a truck and a Mustang according to the "Way Forward") and Non-badged "Enhanced performance" (i.e. limited-edition street posers based on "appearance packages, some customization, minor engine and suspension modifications, and special wheels and tires.")

Boss Thai-Tang ominously commented that the poser "enhanced performance" segment would be "getting the most attention, because it represents the fastest-growing part of the market and a profitable area not previously tapped by SVT."

While this is better than nothing, SVT fans wonder if this isn't just more cynical corporate spin to cover a greatly reduced role (and budget) for "pure" SVT-type products.

After all, how many engineers do you really need to do forgettable style-over-substance jobs like Mustang Bullitt, Mach 1, the Pony package or the "California Special?"

SVT was best when it was focused on building high-value, exclusive, high performance vehicles. Only time will tell if SVT becomes little more than a "tape-stripe and bling" operation (not that the FoMoCo dealers need much help in the useless add-ons department).

What I'd like to see is Boss Thai-Tang & his cadre of engineers figure out how to get more and cheaper "power adder" (supercharger, turbocharger) and "power-adder ready" engines into more Fords . . . and that includes more forced-induction 4v V8s than just the mega-buck GT and $20,000 over MSRP GT500.

BEST COMMENTS ON 'LIL BILLY AND LINCOLN YOU WON'T READ AT WWW.FORDBOLDMOVES.COM

Some readers of www.autoblog.com really get to the point while lamenting L-M's mindless starvation of the Wixom-Built Lincoln Town Car.

"I've said it before, Bill Ford is the most overpaid executive in the car business and he draws no salary. Imagine what the Town Car could have been with justa fraction of the money he has p***** away on Jaguar." Richard Elsbree

"Will there be Lincoln in ten years? It looks like Ford is trying to join John Wilkes Booth as a Lincoln killer." GOKARTN

Speedzzter couldn't have written it better himself!

FoMoCo Dealers: Widespread suffering with intermittent fits of GREED.

Two items of interest:

1. www.fordboldmoves.com "Community Buzz" (http://www.fordboldmoves.com/communitybuzzdetail.aspx?episode=1&id=f3b9eb88-6812-4ce9-a684-61508f706ab7 ) posted a link to a MOTOR TREND board discussion of engine weights.

Not much enlightenment among the MT set (no hard data). But embedded in the thread was this salient comment on rampant FoMoCo dealer gouging:

"I'm not sure that GTs are sitting on lots around the country because they're not desirable, or because people react to them the same way your girlfriend does. I may be wrong, but let me at my 2 cents. I think it's due to the greedy $#@% dealers. This is anecdotal, so take it for what thats worth. The dealership in town has 2 GTs in the show room(at least two weeks ago) and owner has refused to sell them for MSRP. According to my salesman, the owner has had a lot of $10K to $25K offers above the sticker, but he wants $50K for the white and blue GT, and more than that for the Black and Silver GT. If the cars had started out at $200k that'd be one thing, but anyone looking at a GT knows that the MSRP is just under $150K. The GT has been out for over a year and I think folks just get %*^$%$# when they understand that dealers are trying to rape them."

"My salesman tells me that a guy from LA has expressed considerable interest in the White GT, and has made a number of offers. That tells me that all of those dealerships with GTs are pulling the same crap. Otherwise, why negotiate a sale in Arkansas when you live in LA?"

"Dealers are killing this car as surely as they rotted away interest in the Thunderbird--with that car, a mid $40K car, all but one dealership in our area refused to let people test-drive the t-bird, and all of them were asking outlandish 'premiums' for the first year and a half. I think I told everyone about my mom's experience at the local Ford lot while looking at t-birds--wasn't good."

"Even if Ford, GM, and DCX change their way of doing business and produce some very desirable rides, their crappy network of dealerships are going cause a lot of problems."

http://forums.motortrend.com/ubbthreads/showflat.php?Cat=&Number=90634&page=&view=&sb=5&o=&fpart=all&vc=1

Of course L-M dealers did the same thing with the 2003-2004 Mercury Marauder--even though its paltry 300 h.p. and minimal added value wouldn't really even support strong sales at MSRP, much less the outrageous additional dealer mark-ups ("ADM") that killed initial demand.

And its happening already with the GT500.

One dealer rep I interviewed said "We won't have a GT500 until next month. . . and we won't have it long. We've already sold it for $30,000 over sticker . . . . We even turned down a guy who wanted to post a $30,000 cash deposit . . . We only expect to get two of them . . . . "

Such antics make it hard to have much sympathy for FoMoCo dealers. Or for the FACTORY which is enabling the performance customer "rape-fest."

2. Yet Automotive News reports that horrible "mainstream sales" are driving many FoMoCo and other Detroit 3 dealers to the poor house. Only half of the Ford dealers surveyed said they were profitable (as compared with 91% of Honda dealers). Twenty-five percent of Ford dealers are losing money.

Yet despite sales that are significantly below last-year's depressed, pre-employee pricing sale numbers, Automotive News reported that a full 2/3rds of FoMoCo stores polled don't want another "employee pricing" sales blitz to clear the floor(plan) for 2007.

Of course, any price cutting will undoubtedly ignore Ford's high performance models . . . .

A "BOLD MOVE" would be to treat Ford's loyal high-performance customers as fairly as the ordinary "mainstream" mopes Ford works so hard to court.

Don't count on it.

FoMoCo Dealers: Widespread suffering with intermittent fits of GREED.

Two items of interest:

1. www.fordboldmoves.com "Community Buzz" (http://www.fordboldmoves.com/communitybuzzdetail.aspx?episode=1&id=f3b9eb88-6812-4ce9-a684-61508f706ab7 ) posted a link to a MOTOR TREND board discussion of engine weights.

Not much enlightenment among the MT set (no hard data). But embedded in the thread was this salient comment on rampant FoMoCo dealer gouging:

"I'm not sure that GTs are sitting on lots around the country because they're not desirable, or because people react to them the same way your girlfriend does. I may be wrong, but let me at my 2 cents. I think it's due to the greedy $#@% dealers. This is anecdotal, so take it for what thats worth. The dealership in town has 2 GTs in the show room(at least two weeks ago) and owner has refused to sell them for MSRP. According to my salesman, the owner has had a lot of $10K to $25K offers above the sticker, but he wants $50K for the white and blue GT, and more than that for the Black and Silver GT. If the cars had started out at $200k that'd be one thing, but anyone looking at a GT knows that the MSRP is just under $150K. The GT has been out for over a year and I think folks just get %*^$%$# when they understand that dealers are trying to rape them."

"My salesman tells me that a guy from LA has expressed considerable interest in the White GT, and has made a number of offers. That tells me that all of those dealerships with GTs are pulling the same crap. Otherwise, why negotiate a sale in Arkansas when you live in LA?"

"Dealers are killing this car as surely as they rotted away interest in the Thunderbird--with that car, a mid $40K car, all but one dealership in our area refused to let people test-drive the t-bird, and all of them were asking outlandish 'premiums' for the first year and a half. I think I told everyone about my mom's experience at the local Ford lot while looking at t-birds--wasn't good."

"Even if Ford, GM, and DCX change their way of doing business and produce some very desirable rides, their crappy network of dealerships are going cause a lot of problems."

http://forums.motortrend.com/ubbthreads/showflat.php?Cat=&Number=90634&page=&view=&sb=5&o=&fpart=all&vc=1

Of course L-M dealers did the same thing with the 2003-2004 Mercury Marauder--even though its paltry 300 h.p. and minimal added value wouldn't really even support strong sales at MSRP, much less the outrageous additional dealer mark-ups ("ADM") that killed initial demand.

And its happening already with the GT500.

One dealer rep I interviewed said "We won't have a GT500 until next month. . . and we won't have it long. We've already sold it for $30,000 over sticker . . . . We even turned down a guy who wanted to post a $30,000 cash deposit . . . We only expect to get two of them . . . . "

Such antics make it hard to have much sympathy for FoMoCo dealers. Or for the FACTORY which is enabling the performance customer "rape-fest."

2. Yet Automotive News reports that horrible "mainstream sales" are driving many FoMoCo and other Detroit 3 dealers to the poor house. Only half of the Ford dealers surveyed said they were profitable (as compared with 91% of Honda dealers). Twenty-five percent of Ford dealers are losing money.

Yet despite sales that are significantly below last-year's depressed, pre-employee pricing sale numbers, Automotive News reported that a full 2/3rds of FoMoCo stores polled don't want another "employee pricing" sales blitz to clear the floor(plan) for 2007.

Of course, any price cutting will undoubtedly ignore Ford's high performance models . . . .

A "BOLD MOVE" would be to treat Ford's loyal high-performance customers as fairly as the ordinary "mainstream" mopes Ford works so hard to court.

Don't count on it.