William Clay Ford Jr. faces a load of problems as he takes over from Jacques Nasser as CEO of Ford Motor Co.
'Our problems are no less difficult just because we have made this management change,' Bill Ford, 44, said in a memo to US dealers last week.
Ford's North American product lineup needs innovative products. The manufacturing system must be overhauled to produce cars and trucks with better quality. The organization requires stability and clear lines of authority. Cash reserves need bolstering.
Meanwhile, the US economy is getting worse, General Motors is gaining strength and Asian automakers are adding US market share.
But is Bill Ford ready for the job? He has the thinnest resume of any major auto CEO. The great-grandson of founder Henry Ford held a number of mid-level management jobs at Ford before quitting in 1995. He has been non-executive chairman since 1999.
An avowed environmentalist, Ford has sometimes been accused of showing more interest in fly-fishing or running another family business - the Detroit Lions football team - than automobiles.
The first member of the founder's family to head the company in 22 years will rely on two key executives: Nick Scheele, 57, and Carl Reichardt, 70. Scheele is the company's new chief operating officer and president of Ford automotive operations. Reich-ardt, a Ford board member since 1986, is the retired chairman and CEO of Wells Fargo & Co. in San Francisco.
Here are the three's key roles:
* Bill Ford will support the foundation by strengthening fundamental relationships.
* Scheele will try to overhaul the automobile business, focusing on improving quality and delivering reliable, fresh products.
* Reichardt will seek to strengthen the ailing balance sheet. In October, Ford halved its dividend and saw its credit rating sink two notches.
While refusing to criticize Nasser directly, Bill Ford said the company had wandered 'too far away' from its core business in recent years. To remedy that, Bill Ford said one an early task is repairing relations with key groups.
'You can't rebuild if you don't have strong partnerships,' Bill Ford said. 'Our dealers, the UAW [United Auto Workers trade union], white-collar employees, suppliers, Wall Street, government - a lot of those are either broken or not helping.'
Ford lost sight of its core car and truck business during Nasser's relentless drive to transform Ford into a consumer products company and an e-commerce powerhouse.
Nasser pushed for organization change, bringing in executives from outside the industry. He experimented with factory owned dealerships and tried reaching customers directly over the Internet.
But vehicle quality faltered, dealers were alienated, market share fell and profits tumbled. In October, Ford announced its second consecutive quarter of losses.
Now, Bill Ford is trying to repair relations with core groups in order to deliver on his back-to-basics promise.
Ford's relationship with suppliers falls between that of General Motors and DaimlerChrysler, said Neil DeKoker, managing director of the Original Equipment Suppliers Association in the USA.
'The demands for price reductions have been quite severe at Ford and quite stringent,' DeKoker said. Now, he anticipates price cuts will be accomplished with greater partnership.
'I think Nick Scheele is going to create a higher emphasis on working with suppliers on a collaborative effort,' DeKoker said.
Last week, Scheele said Ford would not follow DaimlerChrysler's lead in demanding an across-the-board price reduction from suppliers. Ford Motor will work with suppliers on a case-by-case basis to find ways to improve quality, reduce price and speed delivery, he said.
Some white-collar employees sued Ford following the company's imposition of an ABC grading scale.
Intended to create a company of high-achievers, the policy mandated that 10 percent of employees in a department receive the lowest grade, C. Employees could be terminated following two years of C ratings.
The ABC employee performance reviews damaged morale, said Bill Ault, a technical architect at the Information Technology Group. He is suing Ford over the ABC system, which Ford dropped this summer.
'Even the high performers realized it was a terrible way to motivate people,' Ault said.
He is pleased that Bill Ford is eager to improve morale and rebuild relations.
'Still, the morale problems were two years in the making. People who bought into Nasser's ideas will have to be re-educated,' Ault said.
Ford must stop what managers called the 'initiative of the month' under Nasser, he said. 'You can only juggle so many balls. You lose focus on what it is you're really trying to do.'
The day-to-day task of turning around Ford's auto operations falls to Scheele and James Padilla, 55. Padilla succeeds Scheele as group vice president of Ford North America. The two men revived Jaguar in the 1990s.
Scheele defined the job concisely: 'We are a car and truck company,' he said. 'A car and truck company designs, builds and sells great products. So back to basics means you emphasize product and quality.'
- with Gale Kachadourian, David Sedgwick, Charles Child and Reuters News Service