As Ford struggles financially, the question they're asking in Detroit is: How long can CEO Jacques Nasser keep his job? Rumors circulate daily that Nasser will be gone by year end.
The pressure mounted when the board of directors cut the stock dividend in half this month. But there are other problems. In the USA, the company has lost 1.5 points of market share this year. Quality fell below General Motors, and Ford posted a $3 billion (E3.3 billion) pre-tax charge to cover the cost of the Firestone tire recall.
People have begun to scrutinize Nasser's three-year-old administration, revealing wrong turns, misjudgments and mistakes. Critics say he made six fundamental errors:
1 Ford lost its focus as an automaker.
Under Nasser, Ford became a consumer company providing automotive goods and services.
The result: Ford began struggling in its core business of engineering, manufacturing and selling autos.
The fix: Ford's turnaround specialist, Nick Scheele, arrived from Europe on August 1. This month, he signaled a change in course. 'We are going back to the basics,' Scheele, the new head of the Ford brand in North America, said. 'The company with the best cars and trucks wins.'
2 Nasser overestimated the importance of the Internet.
In the late 1990s, the Internet began to entice companies with the lure of profits from e-businesses trading at huge price-earnings multiples. Nasser envisioned taking public various units of a newly created Ford e-commerce group, capitalizing on the phenomenal market value of Internet stocks.
The result: The strategy collapsed with the Internet economy. The fallout damaged Ford's relations with a core constituency, its retailers. Dealers are still angry about Nasser's experiments in e-retailing, seeing efforts to sell and service cars over the Internet as a threat to them.
The fix: At the beginning of the month, Ford's top-ranking Internet executive, Brian Kelley, was moved to an old-economy job, president of Lincoln Mercury. Ford Division executives met in Orlando, Florida, last week in an attempt to repair dealer relations.
3 Nasser attempted to go on his own too much.
Nasser tried to personally oversee too many aspects of running a global corporation.
The result: As many as 16 executives reported directly to the Ford CEO. Intent on single-handedly wielding power, Nasser failed to create a strong operating executive to back himself. Nasser's management style slowed decision-making and put Ford in organizational limbo.
The fix: In July, the Ford board of directors moved to redefine Nasser's role and cultivate a new group of decision-makers. By year end, only 12 executives will report to Nasser. Lines of authority were drawn more clearly. Ford granted Scheele autonomous power to rebuild the Ford brand in North America. The company also gave more power to manufacturing boss Jim Padilla to address poor vehicle quality.
4 Nasser neglected William Clay Ford Jr.
Nasser failed to develop a sensible working relationship with Bill Ford when the Ford scion became nonexecutive chairman in January 1999.
The result: An uneasy balance of leadership. Nasser's hands-on style failed to accommodate Bill Ford's growing influence.
The fix: In July, the Ford board created an Office of the Chairman and CEO, increasing the authority and decision-making voice of Bill Ford. Bill Ford also has more face-to-face dealings with company executives. Bill Ford and Nasser meet regularly, relying on a formal agenda.
5 Nasser underestimated Bridgestone/Firestone CEO John Lampe.
Nasser worsened the Firestone tire recall by underestimating Lampe, who refused to yield when Ford said 13 million extra Firestone tires were potentially faulty.
The result: Nasser and Lampe engaged in corporate clashes in front of the press, Congress and the public. The sight of Firestone blaming the Ford Explorer and Ford blaming the tire maker for road deaths damaged the reputations of both companies. The time Nasser spent on the crisis left other important tasks undone.
The fix: The debate is not over. Bridgestone/Firestone is standing behind its tough tactics, despite a decision to recall more tires labeled defective by the federal government.
6 Nasser spent too much time on Premier Automotive Group.
Nasser acquired Volvo and Land Rover, hoping to create a global luxury powerhouse under the Premier Automotive Group umbrella.
The result: Core brands such as Ford had to wait for management time, talent and money. Nasser's strategy made Ford more vulnerable in North America, the company's chief source of profits.
The fix: The company empowered Scheele to rebuild the Ford brand. But that will take time.
