Blue Oval counting on Taurus, Fusion for success

Monday, December 29, 2008

Top exec says new models will help company navigate a volatile year ahead.
Bryce G. Hoffman / The Detroit News

The upcoming launch of the new Ford Taurus and Fusion sedans is "critical" to the success of Ford Motor Co., according to Ford Americas President Mark Fields, who also acknowledged that the company cannot get enough batteries to meet demand for its hybrid cars and sport utility vehicles.

The comments came in a wide-ranging online chat with employees last week, a transcript of which was obtained by The Detroit News.

Fields sought to reassure workers that Ford is in a stronger position than domestic rivals, urging them to "share the positive things going on at Ford" with "friends, family and neighbors." He also responded to questions about upcoming white-collar layoffs and said Ford will "do whatever is necessary" to stay competitive with General Motors Corp. and Chrysler LLC as they pursue government-mandated restructuring.

"Our biggest challenge in 2009, in my opinion, will be our ability to continue to stay ahead of a very volatile market," Fields said.

"Both Taurus and Fusion are critical. Taurus will further strengthen our car lineup, offering head-turning design and outstanding driving dynamics -- introducing some buzz in the full-size sedan segment for us. At the same time, Fusion -- with a new powertrain lineup and an all-new hybrid that will be America's most fuel-efficient midsize sedan -- helps build Ford's credibility as an industry leader in fuel efficiency."

Ford's U.S. sales are down 19 percent year-over-year, which is worse than the industry as a whole.

The new Taurus will be unveiled at the North American International Auto Show in Detroit next month. The redesigned Fusion and new Fusion Hybrid debuted at the Los Angeles auto show last month.

Ford has been touting the Fusion Hybrid's segment-leading 41 mpg rating, which handily beats the Toyota Camry Hybrid. But Fields admitted that Ford cannot get enough batteries to keep up with consumer demand for the vehicle and its sibling, the Mercury Milan Hybrid, let alone the two hybrid SUVs it already has on the market.

"We are constrained by the amount of components -- including batteries -- that the supply base can provide us," he said. "That said, we will continue to work with suppliers to look at every opportunity to meet demand and still provide a good return for the business."

Analysts doubt Ford is making money on any of its hybrids, but that does not mean they are not important.

"You cannot overstate the PR significance of those mileage numbers," said analyst Erich Merkle of Crowe Horwath. "These are green halo cars that actually benefit the entire product line."

As for the Taurus, he said it may well be the car that saves Ford twice. The original Taurus brought Ford back from the brink in the 1980s. While the current version is lackluster, he says the redesign looks like another home run.

"People are overlooking the Taurus right now. They have a real opportunity to do something special with the new one," Merkle said. "People are going to be very surprised -- particularly with the styling. It's 1986 all over again."

The questions themselves reveal much about employees' anxieties, as well as their confidence in Ford's decision to chart a separate course from its crosstown competitors.

One asked why Ford does not consider an across-the-board pay cut for salaried employees instead of another round of white-collar layoffs.

"This is a really good question and one I receive from a lot of employees," Fields said. "The most important thing we can do in our business is ensure we have the appropriate structure to be competitive going forward. As part of that, it's important that we have the right level of personnel to support the business. And to ensure we have the appropriate talent to fill those necessary jobs, our management team believes we should pay competitive wages and salaries."

Another asked if Ford has contingency plans to deal with supply issues if GM or Chrysler file for bankruptcy.

"This is a really important question, given the environment," Fields said. "In the case of the supply base, we continue to analyze and work with our suppliers on scenario planning to ensure that no matter the circumstances, we are in a position to continue to smoothly operate our business."

One employee asked what Ford would do if a bankruptcy court threw out GM or Chrysler's contracts with the United Auto Workers.

"We are prepared to do whatever is necessary to make sure Ford Motor Co. remains competitive -- in all cost elements," Fields replied. "We have a very good relationship with the UAW, and they have the same interests we have, which is for Ford Motor Co. to be successful. It's too early to tell how things will work out for GM and Chrysler. But what we know is that it's essential for Ford to be competitive in all elements of the business."