Business Insight Zone

Consider this snippet from the Wall Street Journal’s coverage of GM’s sales:

GM’s China Sales Surge

. . .

The U.S. auto maker’s operations in its home market have been much weaker. For example, GM’s November sales in China more than doubled from a year earlier to 177,339 vehicles, while in the U.S. they fell 1.7% to 150,676.

Forget the growth/decline rates for a second and just look at the raw figures. Then ponder this: GM (through its Chinese joint ventures) sold more cars in China than it did in its home market. Wow.

I admit I have a soft spot for Ford Motor Company. My friend Scott Monty has been leading their social-media efforts for a while — and was nice enough to let me interview him on that subject late last year. Through a connection of Scott’s, I was able to attend an impressive presentation by one of Ford’s sustainability leaders, John Viera, last year. And in the broader picture, it was clear even long before the bankruptcies and bailouts of General Motors and Chrysler that Detroit was no longer home of the “Big Three,” but rather of “Ford and the Other Two.”

Now CEO Alan Mulally’s turnaround plan — which emphasized “dealing with reality” from the start — is bearing fruit:

Ford Reports Nearly $1 Billion Profit
The latest and strongest sign of the automaker’s comeback comes as it pays down debt and adds to U.S. market share

Mind you, Ford isn’t out of the woods. Even with this big quarterly profit, it’s running a multi-billion loss for 2009. It has more than $20 billion in debt, though conversely it has a similarly large stockpile of cash. It’s also highly reliant for profits on its financing arm, rather on vehicle manufacturing itself. Beyond all that, Ford is reliant on a consumer economy that’s still quite shaky, and that may be facing a long jobless recovery.

Still, credit where it’s due: Ford took more hard business medicine, and did it earlier, than either of its Detroit peers — and now it is reaping the rewards.

~

Related posts:

• What does the future hold for the Detroit car makers?
• Ford’s Sustainability Focus.
• Ford’s approach to social media: an interview with Scott Monty.
• What next for Detroit?

~

Don’t get me wrong, I love the tradition of Buick represented by the Roadmaster here — and in fact I’m in the small group of American drivers under 40 who’s owned a Buick. But the brand has been trending old for years and years, and it won’t do for GM to watch the Buick customer base die of old age.

Sure, they’re trying to change that.¹ And the brand has been going gangbusters in China.

But is that enough? Given GM’s troubles overall, shouldn’t Buick head straight to the chopping block?

Care to convince me otherwise?

~

Photo by dave_7.

Consider two old-school titans of American high-tech business — Hewlett-Packard and Motorola.

Imagine that exactly ten years ago, in the run-up of the tech/dot-com boom, you had bought equal amounts of each stock, figuring that both of them would benefit from the burgeoning activity in the tech sector, and that both of them provided you with the sort of “margin of safety” that Warren Buffett has always sought, thanks to their standing in American industry, the strength of their brands, their patent portfolios, etc.

The more dramatic of the two companies in the intervening ten years, I would argue, has been Hewlett-Packard, especially with its 1999 spinoff of Agilent (regarded skeptically by some at the time) and its 2002 acquisition of Compaq (regarded more than skeptically by many at the time). Compared to those moves, and even considering its 2004 spinoff of Freescale Semiconductor, Motorola’s trajectory has been tame.

But disastrous. Compare this 10-year chart of HP . . .

To this 10-year chart of Motorola . . .

This chain of thinking is inspired by this morning’s headlines about Motorola:

• MarketWatch: Motorola to post loss, cut 4,000 jobs: Wireless-phone sales fall even sharper than expected
• Reuters via the IHT: Motorola to cut more jobs as sales decline

It’s time (or past time) to dismember the company. Motorola’s long, distinguished history can’t save it from market irrelevance under its current configuration. What shape it needs to take, I don’t know. But it’s not this.

~

Related posts:

• When do you kill a business? (See the last item in the post.)
• Mark Hurd’s 3-minute management clinic.
• Phase A and Phase B.
• Zander’s departure at Motorola.

~

With this morning’s post still fresh in mind, I read these two items with interest:

1. David Leonhardt in the New York Times: $73 an Hour: Adding It Up

Leonhardt breaks that $73/hour figure — frequently tossed around as the average price the Big 3 pay for their workers — into its components, including (a) wages for current workers, (b) benefits for current workers, and (c) pensions and other benefits for retired workers.

Yes, UAW workers are “overpaid” a bit in comparison to non-union workers who staff U.S. plants for Toyota, Honda, Daimler, et al. But much of the differential in labor-related costs between the Detroit Big 3 and others stems from legacy costs — costs that the companies took on in much plusher times and that would be borne, in other countries, by government-funded pension and healthcare regimes.

I’m not saying which system is better. But I do think it’s worth keeping in mind that the Big 3 are operating under unavoidable conditions somewhat different than their non-U.S.-headquartered rivals.

2. Andrew Leonard of Salon: Senate GOP to UAW: Drop dead

Leonard covers this story with much more attention to political detail than I do, which is interesting in itself, but he also gets at a point I tried to make a while back in “Should” versus “should” in the Wall Street bailout. I think I made the point a little better — or at least much shorter — in the comments on this morning’s post:

[W]hat we’re really up against is two definitions of “should”:

1. What “should” happen to the car makers (or the UAW, or bad financiers, or whichever bad actors) so that they get their just desserts;

2. What SHOULD happen so that the economy doesn’t spiral further into recession.

The second question is hard enough to get a bead on even if it’s a strictly technical discussion limited to how much government intervention should occur, what shape it should take, how it would best be administered, etc. But thet you get the first question layered in on top of it, with all the emotional, philosophical, and political debate that it implies.

Here’s Leonard’s take:

The U.S. economy is in much worse shape than it’s been for at least a quarter-century, and appears to be unraveling at terrific speed. Thus, an even more timely case can be made for saving Detroit as was offered for Wall Street. Does it really seem like right now is the best time to see what happens if G.M. declares bankruptcy? As a worst-case scenario, might not it be better to help Detroit limp along for another year or two . . . ?

Though I’m holding my nose about it, I’ve come to believe that some sort of bailout for the Detroit automakers must happen, if only to soften the blow as the U.S.-headquarted automotive business goes throgh a fundamental restructuring that is not merely necessary but inevitable.

What form the bailout will take — much less what the Detroit auto business will look like afterwards — is beyond me. At a bare minimum, I would guess that the Pontiac, Hummer, and Buick brands will be discarded, and that overheads (plants, dealerships, payrolls, etc.) will be cut even deeper than any of the Big 3 have yet visualized.

These changes will be wrenching, especially for the town economies in the Midwest that rely so heavily on automotive and auto-part plants. But there’s no reason to make them more wrenching or more abrupt than they have to be.

Regardless of what we think Detroit’s just desserts are, the U.S. economy as a whole is on life support at the moment, and I don’t think we’ll benefit from increasing the strain on the patient before normal breathing and circulation are restored.

~

ADDENDUM, a few minutes later: As part of any bailout package, I would not be averse to a bare-knuckles investigation of the finances of Cerberus, especially one that gave a reduced amount of aid to Chrysler and required Cerberus to pony up (dog up?) billions of its own money. For more on why a harsh investigation might be in order, see this Forbes item:

Chrysler’s Hidden Coffers

Thanks to reader Joseph Miller for pointing out this story.

~

Photo of a Buick from Detroit’s happier days by pyntofmyld.

Earlier this year at South by Southwest, I had the good fortune to meet Scott Monty, a heavy hitter in social media who was then doing consulting work in his longtime home of Boston. Over the summer, Scott made a big career move when he took Ford Motor Company’s offer to direct its social-media efforts.

Ford’s been in the news plenty lately — and I’ve written about the company myself — so I wanted to know from Scott how a company like Ford hopes to strengthen its business using social media. He answered my question in generous detail, as you’ll see from the transcript.

~ ~ ~

Q: You were well-ensconced in a consultancy tied to Boston’s vibrant social-media scene before you moved to your current job. What convinced you to pick up stakes and move halfway across the country to work for an old-school company like Ford?

It’s a good question and one that I get a lot, as you can imagine. When I was first approached by Ford, I turned them down flat, because I didn’t want to move to Detroit. After a while, we reconnected and I was a little more open to speaking with the communications team; after taking the time to fly to Michigan to meet with key team members in marketing and communications, I was sold on the passion, talent, and intelligence of everyone I met. When I heard that I would have the full support of the Vice President of Communications and the Group Vice President of Marketing, that clinched it.

In addition to the people of Ford, I stopped to think about the opportunity that was being presented to me: I was being given the chance to lead social media efforts for a top Fortune 500 company (#7 at the time), doing exactly what I had been doing for the past year an a half. When else would that happen? Further, I knew that the U.S. auto makers were behind the competition in terms of perception, and I thought that I’d like to be part of the effort to turn that around. To me, it’s a much more exciting and challenging opportunity than leading marketing & communications efforts for a brand that simply needs to maintain its status.

Q: What have been the biggest transitions for you to make in terms of your daily work?

The most significant change in my daily habits is that I don’t have as much time to dedicate to reading the blogs in my feedreader. There’s just so much information that we’re creating at Ford (and materials that I need to review in order to be effective at my job) that I don’t have time to spend time in my feedreader. On the other hand, since I’m now commuting in the car for 25-30 minutes each way, one of the things that I’ve been able to take up again is listening to podcasts.

In terms of time management, I’m constantly battling the two-headed beast: my inbox and the constant requests (and need) to attend meetings. At at company this size, it’s imperative that we share information, and in our current model, that comes in the forms of email and meetings — both of which take up an inordinate amount of time.

Q: A century-old car maker might not be the most obvious breeding ground for social-media innovation — what do you aspire to accomplish at Ford?

Ultimately, I’d like to see Ford recognized as a leader in digital communications and as the world’s leading social automotive brand. This isn’t going to be easy, by any stretch of the imagination. When you consider our global market and the various nuances between regional social networking habits and information consumption, along with our vast audiences (customers, employees, suppliers, dealers, investors, retirees, etc.) and various departments that have the need for social media (marketing, communications, HR, product development, customer service, IT, etc.), it’s a very complex assignment.

If we can start with a solid social media strategy and begin to execute both internally and externally, we’ll be in a position to humanize the company to the outside world. If the world at large could be made more aware of the stories we have to tell (and of the storytellers themselves), and if we give them the ability to share these stories with their own communities, we’ll begin to see perceptions changing, and, ultimately, to see a rise in sales.

Q: In what areas of social media do you see Ford making an impact?

One of the areas I started on very early was the idea of opening up our media events — in-vehicle programs and forums with our subject matter experts — to bloggers at large. Historically, these have been open to traditional journalists and, more recently, to automotive bloggers. But my contention is that nearly everyone needs to buy a car, so if we can form relationships with mainstream bloggers, we can reach more mainstream customers — the readers of these blogs who trust the authors because they’ve been following them for so long. With that theory in place, I’ve been pushing to reach out to bloggers interested in technology, environmental issues, luxury/design, and parenting, to name a few.

Aside from blogger relations, we’ve got an immediate opportunity to help change the perception through my own personal participation on Twitter, blogs, and forums. I do a lot of commenting on posts that may have some misinformation, and I share news and information from my unique position within the company. And I hope I do all of this in an authentic way, to give the company a little more of a human element.

Q: What are the biggest impediments — technical, cultural, financial, or otherwise — that Ford faces as it tries to become a social-media-savvy company?

Overall, I think this is going to be more of a cultural effort than a technical one. Sure, we’ll have to train people on rudimentary tools and the rules of the road, but the technology will continue to evolve. What needs to happen is that Ford employees need to be empowered, trained, and trusted on digital communications in general, and various levels of leadership need to demonstrate that this is a crucial part of Ford’s business plan moving forward.

I often compare the corporate culture of fear that runs rampant through legal departments everywhere — the fear that employees will say something they shouldn’t say — with the same panic and skepticism that they met e-mail with some 15-20 years ago. I think e-mail has turned out pretty successfully, don’t you?

Managing risk is always at the top of mind for legal teams at large companies, mostly because in today’s litigious society, there’s always a chance of public statements being used against a company. But if we approach the practice with common sense (they haven’t removed our phones or e-mail accounts) and clear communications guidelines, things should work out. If a company has policies in place and an employee abuses them, then there will be consequences, no matter what the format or venue of those transgressions.

Q: I’ve praised Ford for its recent efforts at improvement, but the company has also lost more than $20 billion since 2006. How do you sell the benefits of social media at a time when the company must be tempted to keep its focus on the short-term bottom line?

We also had our first profitable quarter on our way to a turnaround under Alan Mulally in Q1 of 2008. Were it not for the spike in oil prices and commodities, as well as the housing and financial market crisis, we’d be in a better place. But I digress.

There are two ways to think about social media and our focus on our bottom line: one is that it’s a low-cost channel that has the potential to garner disproportionate impact. So we were to shift some money from a more traditional media spend to social media efforts, [and] we can show immediate and measurable results. The second is, as we tell the press in general, we have a plan and we continue to take fast and decisive action to implement that plan. Digital communications is a key part of that plan and of the future of Ford.

~ ~ ~

My thanks to Scott for sparing the time for this interview. Since Scott and I talked the other day, he wrote a long, impassioned post at his personal blog that shines even more light on his efforts at Ford:

How You Can Use Social Media to Help the U.S. Auto Industry

If you’re at all interested in the fate of the Detroit-based auto makers, by all means take the time to read what Scott has to say.

Meanwhile, I’ll hand the mic to you:

What do YOU think of Ford’s efforts in social media?

~

More than a year ago, when I reviewed the generally sorry state of Detroit’s automakers, I wrote that “The Big Three will hardly dry up and blow away anytime soon.” Probably that’s still literally true, since even a Chapter 11 filing — which plenty of industry watchers are talking about openly for GM these days — would not immediately shutter auto plants. These ancient beasts of General Motors and Chrysler, whose talks for a merger may gain speed after Election Day passes, don’t give up their last breath so easily.

But it’s a testament to the lingering appeal of unrealistic expectations that GM finds itself in this predicament at all. Chrysler’s plight we’ve seen before, back before Lee Iacocca improved its performance and restored its pride in itself.

But GM? Even after all these years of its mediocre-to-awful financial performance, many Americans still feel a wave of nationalistic pride when they think of the company that dominated the global auto industry for long. And yes, that is in the past tense, because although GM remains the #2 auto maker in the world, after Toyota, its influence seems to be waning by the day. The latest indignity: the Treasury’s signal that, no, what’s good for General Motors is not good for the country, and therefore GM will likely not receive Federal money to help its efforts to acquire Chrysler.

If the deal does go through, national industrial pride — or at least job protectionism — will take another blow when the combined GM-Chrysler closes plants and lays off thousands of workers. Those moves would inevitably follow the merger, because they follow every merger of the type: when two giants in an industry converge in HP-Compaq fashion, the underlying motive is to “rationalize” the costs of infrastructure, combining the customer bases of the two businesses while eliminating redundancies.

Maybe — maybe — a Mark Hurd-caliber chief executive could achieve the best of both worlds in blending GM and Chrysler by achieving both great scale and profitability. But such a feat is rare indeed, and there must pass much more water under the bridge, and much more hand-wringing about it, before General Motors ever regains its lost might.

~

Related posts:

• What does the future hold for the Detroit car makers?
• General Motors — Company of the Day (9/26/2007)
• Ford gains on Toyota — the Toyota way.
• Company of the Day archive.

~

Little by little, fills the pot
–Swahili proverb

The latest ratings from Consumer Reports show that Ford Motor Company keeps “pull[ing] away from the rest of Detroit” and gaining on Japanese makers like Toyota and Honda in terms of quality and reliability.

Even better, they’re doing it the right way — the Toyota way — by making “small, incremental changes over time.”

We’ve talked many times before about how such a deliberate, methodical approach can improve the performance of both organizations (like the Tampa Bay Rays) and individuals (like Will Smith).

We already know what works

This principle was laid out — in typcially lucid terms — by New Yorker business writer James Surowiecki earlier this year:

The Open Secret of Success

The piece isn’t long; by all means go and read the whole thing when you have a minute. Meanwhile, though, here’s the kernel:

[I]f Toyota doesn’t look like an innovative company it’s only because our definition of innovation — cool new products and technological breakthroughs, by Steve Jobs-like visionaries — is far too narrow. Toyota’s innovations, by contrast, have focussed on process rather than on product, on the factory floor rather than on the showroom. That has made those innovations hard to see. But it hasn’t made them any less powerful. [...]

[O]n the whole, the results are hard to argue with. They’re also phenomenally difficult to duplicate. [...] Toyota’s innovative methods may seem mundane, but their sheer relentlessness defeats many companies. That’s why Toyota can afford to hide in plain sight: it knows the system is easy to understand but hard to follow.

Grinding out the details

As Surowiecki’s colleague Malcolm Gladwell pointed out in this scintillating 2006 lecture [warning: PDF link], the Detroit automakers have succeeded in the past with blockbuster innovations — the GM-style portfolio of brands, the muscle car, the minivan, the SUV.

Meanwhile, Toyota and Honda were spending decades ironing out every little detail of quality, reliability, and durability. In recent years, they’ve also focused on getting hybrid engines — an idea that’s been around for 100 years — to run smoothly at a cost low enough to make them practical for economy cars.

The big trouble is, can you make that [hybrid] engine so that the transition from one motor to the other is seamless? You can’t have an engine that has all kinds of jolts and jumps and stops and starts — it has to feel smooth. Well, working out that feeling of smoothness is incredibly difficult. It takes years and years and years of incredibly painstaking, patient, careful engineering.

The concept extends far beyond the example of the hybrid engine. Detroit has often relied on Big Ideas (the “conceptual” breakthroughs that Gladwell compares to the artistic production of Picasso) at the expense of iterative improvements (the “experimental” or experiential breakthroughs that Gladwell links to the paintings of Cezanne).

BOTH A and B

Gladwell says — and I agree — that it need not be an either-or proposition. We should want both Big Bangs of insight, in the mode of Apple’s iPod, and the incremental innovations represented by Dell’s direct-to-consumer selling model. But when you must choose between the two, the smarter bet over the long haul is improvement by steady increments, as Ford has apparently learned.

I’ll be talking more about Ford soon: following up on my post of a few weeks ago about the company’s plans to make more efficient cars, I got to talk with a couple of the company’s leaders about Ford’s efforts to make its manufacturing operations more sustainable as well. I’ll be writing up my findings from that talk soon.

Meanwhile, kudos to Ford for getting better now AND laying the groundwork to get even better in the future.

~

Related items:

• Malcolm Gladwell in The New Yorker: “Late Bloomers.”
• Ford’s Sustainability Focus.
• How to succeed in business: the simple version.
• What does the future hold for the Detroit car makers?

~

(Photo by St0rmz, used under a CC-Share Alike license.)

In this case, the gleaming windshield of an immaculate 1962 Studebaker GT Hawk.

Other days, as the saying continues, you’re the bug. While today wasn’t a bad one, it’s been more on the “bug” end of the spectrum than the “windshield” end. No special reason — and I’m not even a traditional hater-of-Mondays.

Here, then, are a few things I’ve been thinking about today, in no special order besides how they’re arranged on my desk or the browser of my computer.

~ ~ ~

–Item: Bloglines gets the heave-ho from yours truly. My once-trusty Bloglines RSS reader has been reallly spotty of late. Turns out it’s not just me, as this TechCrunch item makes clear:

Destruction Of Bloglines Now Complete; Founder Prepares To Switch To Google Reader

Users who hadn’t already left Bloglines for Google Reader and other functional RSS readers are doing so now, largely because Bloglines has stopped working and the company has done absolutely nothing to communicate to users what is going on or when it might be fixed. . . .

At the recommendation of a friend, I used the easy-peasy option of exporting all my RSS feeds to an OPML file (like HTML, but for feeds), then uploaded the same file to the free NewsGator online reader, which works much like Bloglines, with the difference that it actually works. The export was simple — and believe me, if I can do it, you can, too — and it even kept my feeds organized in the folders I set up in Bloglines. The OPML process is explained in more detail by the estimable Marshall Kirkpatrick here.

~ ~ ~

–Item: Sometimes, ONE LITTLE WORD can set me off. Thanks to P.R. visionary Brian Solis and Austin’s own social-media-realty maven Lani Anglin-Rosales, I’ve been trying out all sorts of tools to improve my Twitter usage. (By the way, this is not just for fun — besides its other benefits, the Hoover’s Twitter account has already brought us some warm leads for new customers.) Two of these tools, however, earned a demotion in my book with their thoughtless use of language — even though I acknowledge their potential utility:

1. follow cost lets you see how “expensive” it will be to follow a particular Twitter user by telling you how often they tweet (i.e., how often they circulate messages to everyone following them). But on their lovely, minimalist home page, they don’t say “How much attention will it cost to follow X” or the like. No, they say, “How annoying will it be to follow _____ on Twitter?”

Annoying? Where did that come from?

Far from being annoyed, some people enjoy reading frequent tweets. On the other side of the coin, some tweeters manage to be annoying by tweeting very little but being a jerk in each and every tweet. Others tweet all day every day in a delightful stream of free association.

In short: what does frequency have to do with annoyance?

2. Qwitter has a good idea — if it’s used right: who stopped following you after which tweet? This could help you figure out which topics (or tones of voice, etc.) tend to drive people away, and if it’s used to reform your own behavior, good. But the tagline for the service is “Catching Twitter quitters” — which stinks.

My own experience tells me there are many reasons to quit following someone on Twitter: too many tweets, too much anger or cynicism or whatever, lack of shared interests, and so on. Once in a while, I go through the whole list of my Twitter followers and tidy things up along these lines; at other times, seeing a tweet from someone reminds me that I’ve been meaning to stop following them, even though the tweet of the moment is unobjectionable. (I’ve made this point before.)

This is no different than the decision to stop reading a particular opinion columnist, or to stop keeping in touch with a particular acquaintance, or to let a magazine subscription lapse. And it’s senseless to talk about “catching” such “quitting” in any of these contexts, because readers are always free to leave when they please.

~ ~ ~

–Item: Jason Zweig talks sense.

Take a Deep Breath, Turn Off the TV, Calm Yourself
With Stocks Swinging Wildly, It’s Easy to Panic; Some Advice for Fighting the Herd Mentality

Fear is a defense mechanism. It bursts forth in our brains the instant we sense that we, or others near us, are threatened. When fear leaps from one person to another, it turns into panic. . . .

Viewed this way, today’s financial markets — in which tens of millions of investors watch each other’s fears unfolding in real time on television and online — constitute one giant panic-transmission machine.

We’ve talked before (twice) about Zweig’s take on the irrationality in the markets. His advice is well worth keeping in mind as the markets continue to gyrate around us.

~ ~ ~

–Item: Rio Tinto sees biodiversity and profitability going hand in hand. It’s amazing to read this NYT interview with CEO Tom Albanese and remember that the words are coming from the mouth of the head of one of the largest mining outfits in the world.

Madagascar is a great example because it is known to be incredible for its biodiversity. But what is less known is that most of the natural forests have already been degraded. In some cases they have been completely removed largely as a consequence of overpopulation and poverty. It’s important to recognize that the worst villain of biodiversity is poverty.

To the extent that mining opportunities can bring jobs into areas, you basically create alternative solutions that can help with forests. It has to be very holistic. It’s not just recreating or replacing the biodiversity that will be impacted by mining, but also providing for those local communities alternative sources of, say, forest products, that, as we regenerate forests, stop them from being cut down again.

~ ~ ~

–Item: Larry Dignan takes the pulse of IT executives. If you’re interested in where IT spending is headed, read Dignan’s writeup at ZDNet:

State of the enterprise tech economy

. . . Despite this perfect storm it’s hard to generalize the enterprise technology economy. Simply put, it’s not all gloom and doom. And technology executives seem calm–in IT there’s no panic. But there is a general feeling that the tech sector and all the executives in the ecosystem have been here before and will manage through a downturn again.

~ ~ ~

–Item: Jay Walker’s library is super-awesome. I’m not related to entrepreneur Jay Walker (he started Priceline.com, among other things), but I wish I were if it meant I could hang out with him in his spectacular home library, which is something like a cross between the British Museum and a medieval “cabinet of wonders” . . . if it were built my M. C. Escher. Be sure to check out the pictures here:

WIRED: Browse the Artifacts of Geek History in Jay Walker’s Library

~ ~ ~

(Photo by Dave_7, used under a CC-Share Alike license.)

Recently I got to attend an information session held in Austin by John Viera, director of sustainable business strategies for Ford Motor Company. His audience included journalists, Ford dealers, local politicos, environmental analysts, and alternative-energy industry players. After we all ate lunch and got to know each other a bit, Viera took us through a slide deck as he explained Ford’s projects over the near, medium, and long terms.

Start with available technology

Ford believes that it must build more environmentally friendly vehicles using technologies that are affordable and attainable at volume. This makes sense to me: even though Ford CEO Alan Mulally has said that he intends for the company to be smaller but more profitable in the future, it’s clearly not going to become a bit player in the industry. So even if the company might like to flip a switch and skip a couple of generations of technology, the reality is that it has to move at a pace the mass market will stand.

Viera made it clear that Ford is also dedicated to offering a full product line going forward. This includes the SUVs and pickups that he himself spent years of his earlier career designing; there still is demand for these vehicles, even with the price of fuel as high as it is. Viera said that Ford’s challenge now is to deliver the F-150 and other models with better environmental performance — including better fuel economy.

Going forward, many of these vehicles will be built using updated components, especially the EcoBoost engine that is the centerpiece of Ford’s plans. The company expects that EcoBoost engines will power 90% of its North American fleet by 2013.

Two key technologies are involved:

• Direct injection (DI). Over the past few decades, cars from makers around the world have shifted from carburetion to fuel injection, with attendant improvements in power and fuel economy. Now Ford is touting its DI technology, which injects pressurized fuel directly into engine cylinders. Viera says this technique is more efficient than older fuel-injection methods.
• Turbocharging. The DI technology works in concert with improved turbos that deliver compressed air into the engine’s chambers. According to Viera, EcoBoost engines burn cleaner as compressed direct-injected fuel combines with the compressed air. This means better engine performance across the board: higher torque, better fuel economy, lower emissions.

From the standpoint of vehicle design, the EcoBoost will allow Ford to get comparable performance from smaller engines. EcoBoost V-6’s should perform like old V-8’s, and EcoBoost inline-4’s should perform like old V-6’s — all while using less gasoline, and while costing less than hybrids.

The company is also tweaking the designs of its vehicles to make each of them 250 – 700 pounds lighter — which would make them more fuel-efficient even without the new engines.

Alternative engines and fuels

Although its emphasis is on the EcoBoost, Ford continues to expand its production of hybrid engines; Viera said that the company is doubling annual production of hybrids from 25,000 to 50,000 units for 2009. Although this still puts the company well behind hybrid industry leader Toyota, Ford does expect hybrid-engine vehicles to be a permanent part of it product mix. These cars should be especially attractive to drivers (e.g. taxi operators) who do most of their driving in cities, since hybrids’ mileage advantages are most pronounced for in-town driving. The company is experimenting with plug-in hybrid vehicles (PHEVs) as well, but won’t introduce them at scale until the technology is more affordable

Viera also talked about the company’s long-range efforts to improve and expand its offerings of cleaner-burning diesel vehicles, as well as vehicles that run on biofuels — including corn ethanol today, and cellulosic biofuels in the future.

He also talked briefly about the future of hydrogen vehicles. Ford has a small test fleet of hydrogen-powered cars for R&D, but Viera agreed with the sober independent analyses that I’ve seen: hydrogen vehicles are a looooooong way from being “affordable and attainable,” much less at volume.

Realigning global production

Ford has also announced big changes lately to make its manufacturing operations more flexible. For now, it is shifting production away from pickups and toward smaller cars, but Viera said that in the long run the company plans to make its plants easier to retool quickly in any direction so that the company can better keep pace with market shifts.

In concert with this, the company has realigned its product design operations. Instead of having separate suites of vehicles for sale on each continent, Ford will mix and match its offerings globally. As a first step, it has announced plans to bring six of the small, fuel-efficient designs it sells in Europe to the North American market for the 2010 model year.

In the future, Ford should be better able to make changes like this regularly. As an example, Viera talked about a diesel version of the Ford Focus that is popular in Europe, where gasoline and diesel fuel sell at about the same price. Ford doesn’t market that model in North America because diesel sells at such a premium here. But if, hypothetically, Congress changed fuel taxes in a way that made diesel more attractive to U.S. motorists, Ford would be able to respond quickly to sell the diesel Focus in the United States.

More bad road ahead

Ford has had a hard go of things lately. For the second quarter of 2008, when even the best performing auto makers experienced flat sales in North America, Ford reported a loss of $8.7 billion — the largest quarterly loss in its long history. Viera didn’t talk about that, of course (nor would I have expected him to), but it’s the headwind against which he and his mates at Ford must labor. The company’s plans sound good, and I think that Ford is much improved since Mulally took the helm two years ago, but it’s not in the pink yet.

Viera himself is an impressive advocate for the company — energetic, intelligent, and approachable. He’s been with the company, mostly as an engineer on the truck side, for 24 years. His enthusiasm for the technology was obvious: he joked that he would have to keep himself from talking for an hour about each one of the engine diagrams and other technical slides.

The presentation that I attended was all about Ford’s efforts to be greener on the consumer-facing side of its business — i.e. in the vehicles that it sells. But since a big chunk of a car’s lifetime environmental impact comes during the manufacturing process, I hope to talk with Viera more in the future about what Ford is doing to improve the environmental footprint of its manufacturing operations.

~

Related posts:

• American Airlines, Ford Motor, and the price of oil.
• What does the future hold for the Detroit car makers?

~

* Sorry, I couldn’t resist the pun. But in fact, the Focus came up several times in the presentation as a key piece in Ford’s fuel-efficient product offerings.