Ford lost as #2 to Toyota
Detroit Flails in Latest Effort to Reinvent Itself
Published: September 16, 2006
DETROIT, Sept. 15 — Detroit is running low on optimism.
Downsizing at Ford
Related
Daimler Looking Outside U.S. For Source of Subcompacts (Sept. 16, 2006)
Dispute Over China’s Auto Tariffs (Sept. 16, 2006)
Despite insisting all this year that they had solutions to their financial struggles well in hand, both the Ford Motor Company and the Chrysler Group conceded Friday that the steps they had taken were not working and that more bad news was coming in one of the deepest auto industry crises in Detroit’s history.
Ford, which has held second place behind G.M. for 70 years, admitted for the first time that it would inevitably be ceding that spot to Toyota because of slumping sales and its decision Friday to close more factories and cut thousands of additional jobs. It also said it did not expect to make a profit in North America until 2009.
At the same time, the Chrysler Group, also pummeled by the decline in sales of big sport utility vehicles and pickup trucks, said it would report a loss for this summer of $1.5 billion, more than double what it had originally anticipated.
Its parent, DaimlerChrysler, also signaled that it did not see how to build a subcompact car profitably in North America, forcing it to turn to China or another Asian carmaker to help build one overseas. [Page B4.]
For its part, G.M., which is cutting 30,000 jobs and closing nearly a dozen plants, is set to decide within a month whether it wanted to link with a Japanese and a French auto company, a prospect that has rattled union members as well as state officials where G.M. employees live and work.
With all of the auto companies here putting themselves on the chopping block, the upheaval shows that Detroit’s basic business strategy — built on the assumption that what has long been thought of as the Big Three would make money simply by dominating the mass market with a full range of vehicles — is irrevocably broken, said James P. Womack, who has written extensively about the auto industry.
“All the old rules of the game are gone,” said Mr. Womack, co-founder of the Lean Enterprise Institute. And, he said, the challenge is now to play by the new rules, as dictated by foreign competitors. “We’re now in the reinvention phase,” he added.
That includes more cuts that will continue at least through the end of the decade. Detroit companies will be focused on closing plants, eliminating blue- and white-collar jobs, and cutting more deeply into their operations to reduce costs. Moreover, the automakers remain liable for billions of dollars in health care costs, both for their active and retired workers.
At G.M., those costs add up to $5.2 billion a year, or the equivalent of $1,440 a car. But for all their efforts to lose excess weight, the biggest challenge facing Detroit’s car companies is convincing skeptical American buyers that their vehicles, developed amid this chaos, are as attractive as those from their aggressive rivals. Thus far, they have been failing, reflected in their falling market share in recent years.
Adding to Detroit’s woes, its Asian competitors are investing billions of dollars more in American factories and hiring thousands more American workers.
Within six years, it is likely that Asian auto companies, led by Toyota, will outsell their Detroit rivals in the United States, according to a forecast by Edmunds.com, a Web site that offers car-buying advice.
The industry has already gotten a look at the lineup of the future. This July, the best-selling companies were G.M., Toyota, Ford, Honda and Chrysler. And what seemed to be a temporary aberration is about to become the norm, said Jesse Toprak, a senior analyst at Edmunds. “It was a sneak peek of what’s likely to happen going forward,” Mr. Toprak said.
That was not what Ford’s chairman, William Clay Ford Jr., was envisioning in January, when Ford unveiled the first phase of a restructuring plan that it calls the Way Forward.
Amid an announcement that it would cut 34,000 jobs and close 14 plants, Mr. Ford vowed that the 103-year-old company, founded by his great-grandfather, Henry Ford, would regain its supremacy in the American market.
“With it, we will retake the American road,” Mr. Ford said at the time.
But Friday, Mr. Ford signaled that his company was allowing Toyota to pass it. At the end of the news release that announced new cuts, including the elimination of 10,000 more salaried jobs, Ford said it expected its share of the market to drop to 14 to 15 percent after this year, 10 points lower than Ford was at the beginning of the decade.
At that time, bets were placed across Detroit whether Ford could surpass G.M.; now, the safe bet is that Toyota will pass Ford to become No. 2 behind G.M., something Mr. Toprak expects to happen for good next year.
“Frankly, our ranking doesn’t matter,’’ Mr. Ford now says. “You’ve seen, over the years, chasing market share with sometimes disastrous results.”
(Page 2 of 2)
But given the unpredictability of gasoline prices, to have any kind of security in the American market, both Ford and Chrysler will have to reduce their dependence on sport utilities and pickups, which make up two-thirds of Ford’s lineup and three-quarters of the vehicles sold by Chrysler. Both vow they will do that by selling more cars and crossover vehicles.
Those will take time to reach showrooms. Although both have new crossovers on the way, the small car that Ford promises to sell in the United States will not reach the market until 2009 — three years behind compacts introduced this year by Toyota, Honda, Nissan and G.M., which has just introduced a refreshed version of the Chevrolet Aveo, built for it by its South Korean partner, Daewoo.
True, the new Dodge Caliber, introduced this spring, is selling well for Chrysler. Yet both Chrysler and Ford have to hope that gasoline prices stay down from their peaks above $3 a gallon this summer, and that they can keep rebates and other deals to a minimum while they sort out their new status.
One unknown in their predicament is the role of the United Automobile Workers, the union that serves as both their partner and adversary. It has granted some concessions on health care coverage to G.M. and Ford, but said last week that it would not cut a deal with Chrysler, because it was not in such bad financial shape. (Chrysler’s latest news could change the union’s mind.)
Beyond that, the union has demonstrated that its priority right now is to take care of the members who will be losing their jobs.
On Thursday, Ford and the U.A.W. reached agreement on buyout packages worth up to $140,000 apiece for 75,000 Ford workers, similar to the deals that were offered to G.M.’s 113,000 hourly workers.
The deals, which have not yet been matched by Chrysler, are a clear signal from the union that workers would be well off to get out now before 2007 contract talks, when some of the protection that the U.A.W. has offered generations of workers may diminish.
Once it gets through its current round of job cuts, Ford is expected to have fewer workers at its American plants than Toyota — a prospect that was hard to imagine in 1986, when Toyota opened its first free-standing plant in the United States.
On Friday, that factory, in Georgetown, Ky., built the five-millionth Toyota Camry sedan. It has been the best-selling car in the United States for nearly a decade, a title once held by the Ford Taurus.
Mr. Womack, whose book “The Machine That Changed the World” studied Japanese automakers’ American plants, calls the Georgetown factory, which now employs 7,000 workers, “the torpedo that came in when no one was looking.”
Reeling from the continuing ripple effects of that explosion, Ford, Chrysler and G.M. need to figure out how to maintain their foothold in a market that they once had practically to themselves. They might take some counsel from the original Mr. Ford.
In his 1930 book, “Moving Forward,” Henry Ford wrote that companies were often bedeviled by “the little things that are hard to see — the awkward little methods that have grown up and which no one notices.”
Eliminating those tiny wasteful practices, he wrote, could make a big difference between success and failure.
Toyota, at least, was listening. While Ford Motor’s “Way Forward’’ clearly suggests it faces a struggle ahead, the tagline of Toyota’s new advertising campaign is a much more positive “Moving Forward,’’ a direct homage to the path that its Detroit rivals may have no choice but to follow.
Published: September 16, 2006
DETROIT, Sept. 15 — Detroit is running low on optimism.
Downsizing at Ford
Related
Daimler Looking Outside U.S. For Source of Subcompacts (Sept. 16, 2006)
Dispute Over China’s Auto Tariffs (Sept. 16, 2006)
Despite insisting all this year that they had solutions to their financial struggles well in hand, both the Ford Motor Company and the Chrysler Group conceded Friday that the steps they had taken were not working and that more bad news was coming in one of the deepest auto industry crises in Detroit’s history.
Ford, which has held second place behind G.M. for 70 years, admitted for the first time that it would inevitably be ceding that spot to Toyota because of slumping sales and its decision Friday to close more factories and cut thousands of additional jobs. It also said it did not expect to make a profit in North America until 2009.
At the same time, the Chrysler Group, also pummeled by the decline in sales of big sport utility vehicles and pickup trucks, said it would report a loss for this summer of $1.5 billion, more than double what it had originally anticipated.
Its parent, DaimlerChrysler, also signaled that it did not see how to build a subcompact car profitably in North America, forcing it to turn to China or another Asian carmaker to help build one overseas. [Page B4.]
For its part, G.M., which is cutting 30,000 jobs and closing nearly a dozen plants, is set to decide within a month whether it wanted to link with a Japanese and a French auto company, a prospect that has rattled union members as well as state officials where G.M. employees live and work.
With all of the auto companies here putting themselves on the chopping block, the upheaval shows that Detroit’s basic business strategy — built on the assumption that what has long been thought of as the Big Three would make money simply by dominating the mass market with a full range of vehicles — is irrevocably broken, said James P. Womack, who has written extensively about the auto industry.
“All the old rules of the game are gone,” said Mr. Womack, co-founder of the Lean Enterprise Institute. And, he said, the challenge is now to play by the new rules, as dictated by foreign competitors. “We’re now in the reinvention phase,” he added.
That includes more cuts that will continue at least through the end of the decade. Detroit companies will be focused on closing plants, eliminating blue- and white-collar jobs, and cutting more deeply into their operations to reduce costs. Moreover, the automakers remain liable for billions of dollars in health care costs, both for their active and retired workers.
At G.M., those costs add up to $5.2 billion a year, or the equivalent of $1,440 a car. But for all their efforts to lose excess weight, the biggest challenge facing Detroit’s car companies is convincing skeptical American buyers that their vehicles, developed amid this chaos, are as attractive as those from their aggressive rivals. Thus far, they have been failing, reflected in their falling market share in recent years.
Adding to Detroit’s woes, its Asian competitors are investing billions of dollars more in American factories and hiring thousands more American workers.
Within six years, it is likely that Asian auto companies, led by Toyota, will outsell their Detroit rivals in the United States, according to a forecast by Edmunds.com, a Web site that offers car-buying advice.
The industry has already gotten a look at the lineup of the future. This July, the best-selling companies were G.M., Toyota, Ford, Honda and Chrysler. And what seemed to be a temporary aberration is about to become the norm, said Jesse Toprak, a senior analyst at Edmunds. “It was a sneak peek of what’s likely to happen going forward,” Mr. Toprak said.
That was not what Ford’s chairman, William Clay Ford Jr., was envisioning in January, when Ford unveiled the first phase of a restructuring plan that it calls the Way Forward.
Amid an announcement that it would cut 34,000 jobs and close 14 plants, Mr. Ford vowed that the 103-year-old company, founded by his great-grandfather, Henry Ford, would regain its supremacy in the American market.
“With it, we will retake the American road,” Mr. Ford said at the time.
But Friday, Mr. Ford signaled that his company was allowing Toyota to pass it. At the end of the news release that announced new cuts, including the elimination of 10,000 more salaried jobs, Ford said it expected its share of the market to drop to 14 to 15 percent after this year, 10 points lower than Ford was at the beginning of the decade.
At that time, bets were placed across Detroit whether Ford could surpass G.M.; now, the safe bet is that Toyota will pass Ford to become No. 2 behind G.M., something Mr. Toprak expects to happen for good next year.
“Frankly, our ranking doesn’t matter,’’ Mr. Ford now says. “You’ve seen, over the years, chasing market share with sometimes disastrous results.”
(Page 2 of 2)
But given the unpredictability of gasoline prices, to have any kind of security in the American market, both Ford and Chrysler will have to reduce their dependence on sport utilities and pickups, which make up two-thirds of Ford’s lineup and three-quarters of the vehicles sold by Chrysler. Both vow they will do that by selling more cars and crossover vehicles.
Those will take time to reach showrooms. Although both have new crossovers on the way, the small car that Ford promises to sell in the United States will not reach the market until 2009 — three years behind compacts introduced this year by Toyota, Honda, Nissan and G.M., which has just introduced a refreshed version of the Chevrolet Aveo, built for it by its South Korean partner, Daewoo.
True, the new Dodge Caliber, introduced this spring, is selling well for Chrysler. Yet both Chrysler and Ford have to hope that gasoline prices stay down from their peaks above $3 a gallon this summer, and that they can keep rebates and other deals to a minimum while they sort out their new status.
One unknown in their predicament is the role of the United Automobile Workers, the union that serves as both their partner and adversary. It has granted some concessions on health care coverage to G.M. and Ford, but said last week that it would not cut a deal with Chrysler, because it was not in such bad financial shape. (Chrysler’s latest news could change the union’s mind.)
Beyond that, the union has demonstrated that its priority right now is to take care of the members who will be losing their jobs.
On Thursday, Ford and the U.A.W. reached agreement on buyout packages worth up to $140,000 apiece for 75,000 Ford workers, similar to the deals that were offered to G.M.’s 113,000 hourly workers.
The deals, which have not yet been matched by Chrysler, are a clear signal from the union that workers would be well off to get out now before 2007 contract talks, when some of the protection that the U.A.W. has offered generations of workers may diminish.
Once it gets through its current round of job cuts, Ford is expected to have fewer workers at its American plants than Toyota — a prospect that was hard to imagine in 1986, when Toyota opened its first free-standing plant in the United States.
On Friday, that factory, in Georgetown, Ky., built the five-millionth Toyota Camry sedan. It has been the best-selling car in the United States for nearly a decade, a title once held by the Ford Taurus.
Mr. Womack, whose book “The Machine That Changed the World” studied Japanese automakers’ American plants, calls the Georgetown factory, which now employs 7,000 workers, “the torpedo that came in when no one was looking.”
Reeling from the continuing ripple effects of that explosion, Ford, Chrysler and G.M. need to figure out how to maintain their foothold in a market that they once had practically to themselves. They might take some counsel from the original Mr. Ford.
In his 1930 book, “Moving Forward,” Henry Ford wrote that companies were often bedeviled by “the little things that are hard to see — the awkward little methods that have grown up and which no one notices.”
Eliminating those tiny wasteful practices, he wrote, could make a big difference between success and failure.
Toyota, at least, was listening. While Ford Motor’s “Way Forward’’ clearly suggests it faces a struggle ahead, the tagline of Toyota’s new advertising campaign is a much more positive “Moving Forward,’’ a direct homage to the path that its Detroit rivals may have no choice but to follow.
ford started using cheaper parts on their vechicles mainly the trucks. people are complaining about the quality. driving down the road and the ball joint lets loose is not a good sign. as for toyota you can run them for 300000 miles and they will keep running but at about 75000 the body starts to rust away from the frame.
Yep and there having problems with the Powerstroke engines. They are changing to Allison or some company this year in the new designed Superduty. I hate to see Toy take over but it’s at the hands of the "old" big three. They need to rethink their entire strategy. People want what they want and dropping twenty-five to forty k plus on a vehicle is still big money to most of us. Build them right and support them or close the doors. I will say this don't be surprised to find Daimler selling off Chrysler group and getting back to their core products. I read where Toy pays $210.00 per vehicle for health care compared to GM at $1498.00 per unit. That’s allot of profit lost per unit.
ORIGINAL: graythang
I read where Toy pays $210.00 per vehicle for health care compared to GM at $1498.00 per unit. That’s allot of profit lost per unit.
I read where Toy pays $210.00 per vehicle for health care compared to GM at $1498.00 per unit. That’s allot of profit lost per unit.
Unfortuantly, Dodge doesn't seem to be learning from other peoples mistakes (which makes them even stupider). I will say it until my face turns blue, they need diesels in midsize trucks, and they need more fuel efficent cars! How can they not understand this?
It will take GM, Ford, and DCX becoming bankrupt before they realize, that, "hey, they were sending us signals the whole time."
The Dakota has the most pitiful compact/midsize truck mileage (like it or not, its true, don't try to debate, the V-6 should get better mileage, like it does in competitors V-6s, and don't use the "well, its too much weight for the V-6" argument, because that gets really old, and isn't an argument, look at the Dodge Sprinter, 150HP, same weight as a 13MPG GMC Savanna, and it gets up to 30MPG, and I'll give you a hint: its probably because of the small, efficent engine under the hood!)
Power is still important to Americans, but so is mileage. Most people agree that the 4.7L HO isn't that impressive. Dodge can do better.
American automotive companis have been loosing their share for the last 20-30 years, its no suprize why, they just need to get their heads on straight, and they can turn the trend around.
I will never want to buy a Jap car, American brand loyalty is all thats keeping me buying American, but some people don't care about it. [sm=patriot.gif]
Ok I am no gearhead but I do know that "Allison" does not make engines but they make transmissions.....I could see them going to Detroit Diesel or Cummings......but when is comes to Heavy Duty Trucks compairing a Super Duty Ford to a Toyota of any kind is like apples to oranges.......or a mouse (Toyota) to a Lion (Ford)......I am not a big Ford fan but I'd take a F250/350 Super Duty Power Stroke V8 4x4 over any Toyota anyday and if I had the cash and could go nuts I'd be crusing in a Ford F650 http://www.f650pickups.com/indexb.html or International CXT http://www.internationaldelivers.com...family/cxt.asp now thats a TRUCK hehe
The Jap's have not infultrated the heavy-duty truck market... yet. But, as sure as they entered the regular truck market, they will enter the HD market at some point.
This ain't the 70's and 80's no more, the Jap's are something to be concerned about, companies to take seriously. And if you don't... well look at what happened to the American car sales.
Sure, it seems far-fetched right now to say Jap's will be #1 in HD trucks, but back in the 70's, when the Jap's came over here, it seemed far fetched that they would control most car sales, you can't debate facts, but you can change the future.
And lil... why buy a Ford, unless their sporting Cummins, I'd say forget it
This ain't the 70's and 80's no more, the Jap's are something to be concerned about, companies to take seriously. And if you don't... well look at what happened to the American car sales.
Sure, it seems far-fetched right now to say Jap's will be #1 in HD trucks, but back in the 70's, when the Jap's came over here, it seemed far fetched that they would control most car sales, you can't debate facts, but you can change the future.
And lil... why buy a Ford, unless their sporting Cummins, I'd say forget it
2008 Ford F250/F350 Large Truck
Available: 2006
What Edmunds.com Says:This truck definitely lives up to Ford's "bold" new styling directive, but we'll have to wait and see how it performs against the new heavy-duty trucks from GM before giving it full credit.
What We Know: Compared to the current model, the next-generation 2007 Super Duty gets taller, more rectangular headlights. They extend down to the one-piece chrome bumper and place the turn signals in the middle of the headlights instead of below them. The grille is more squared off, too, with bigger vents on each side and an even larger Ford logo. Look closely at our spy photos and you can also make out the words "Super Duty" pressed into the chrome. Earlier pictures tipped us off to the new quarter panel vents just behind the front wheels. They look good but we would be surprised if they're actually functional. In back, the logo is bigger and has been moved to the center, the reverse lights are higher and the same "Super Duty" script used up front is pressed into the bottom of the tailgate. Although the gasoline engine options aren't expected to change much, diesel fans will be glad to know there's an all-new Powerstroke in the works. Built by International, the new diesel V8 will displace 6.4 liters, feature a pair of sequential turbos and generate 350 horsepower and 650 pound-feet of torque. Ford's current Powerstroke has been plagued with problems so the arrival of the new 6.4 can't come soon enough. There are substantial changes to the interior of the Super Duty as well. A spy photo of a test mule shows an interior similar to the F-150 with a cleanly laid out center stack with circular vents on each side. There's yet another "Super Duty" stamp just above the glovebox, so Ford is obviously trying to push the Super Duty brand a little harder this time around. Since these trucks tend to be work trucks more often than not, the designers made sure to include plenty of practical features like power outlets and easily accessible storage space. Sales of the 2007 Super Duty were expected to begin before the end of the year, but a few minor delays have pushed its debut into 2007.
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ORIGINAL: dodgerules86
The Dakota has the most pitiful compact/midsize truck mileage (like it or not, its true, don't try to debate, the V-6 should get better mileage, like it does in competitors V-6s, and don't use the "well, its too much weight for the V-6" argument, because that gets really old, and isn't an argument, look at the Dodge Sprinter, 150HP, same weight as a 13MPG GMC Savanna, and it gets up to 30MPG, and I'll give you a hint: its probably because of the small, efficent engine under the hood!)
Power is still important to Americans, but so is mileage. Most people agree that the 4.7L HO isn't that impressive. Dodge can do better.
ORIGINAL: graythang
I read where Toy pays $210.00 per vehicle for health care compared to GM at $1498.00 per unit. That’s allot of profit lost per unit.
I read where Toy pays $210.00 per vehicle for health care compared to GM at $1498.00 per unit. That’s allot of profit lost per unit.
Power is still important to Americans, but so is mileage. Most people agree that the 4.7L HO isn't that impressive. Dodge can do better.
I'd like to see an example of a Club Cab V-6 truck, that is offered in America and that gets better than the 22 mpg my Dakota gets. I've heard that the similarly equiped Frontiers get real-world numbers of about 15 mpg. Heard about the same for the Tacoma's. These trucks make more power, but, the mileage also suffers.
To keep this post on topic, your argument was mileage if I'm not mistaken.
I'll agree, Dodge can do better.
ORIGINAL: dodgerules86
The Jap's have not infultrated the heavy-duty truck market... yet. But, as sure as they entered the regular truck market, they will enter the HD market at some point.
This ain't the 70's and 80's no more, the Jap's are something to be concerned about, companies to take seriously. And if you don't... well look at what happened to the American car sales.
Sure, it seems far-fetched right now to say Jap's will be #1 in HD trucks, but back in the 70's, when the Jap's came over here, it seemed far fetched that they would control most car sales, you can't debate facts, but you can change the future.
And lil... why buy a Ford, unless their sporting Cummins, I'd say forget it
The Jap's have not infultrated the heavy-duty truck market... yet. But, as sure as they entered the regular truck market, they will enter the HD market at some point.
This ain't the 70's and 80's no more, the Jap's are something to be concerned about, companies to take seriously. And if you don't... well look at what happened to the American car sales.
Sure, it seems far-fetched right now to say Jap's will be #1 in HD trucks, but back in the 70's, when the Jap's came over here, it seemed far fetched that they would control most car sales, you can't debate facts, but you can change the future.
And lil... why buy a Ford, unless their sporting Cummins, I'd say forget it
Something to keep in mind is that Cummins...which is located here in Indiana....just recently announced possible plans with a Japanese automaker to put a Cummins diesel in one of their trucks....which is most likely Nissan.....
A turbo diesel powered Nissan Titan would sell alot of trucks here in the USA...I'd buy one over anything GM/Ford has....and I'd be hard pressed to choose between Dodge/Nissan.
My point is is that too many idiots are brand loyal regardless of whether the products are crap or great. That's the only reason Ford has remained the #1 truck seller....because they dont make **** else....and people are so amped about being a Ford or GM guy...on top of all the discounts and crap that GM/Ford/Chrysler push on people who purchase non-brand vehicles... keeps people buying crap...
The Dakota suffers horribly from being a fullsize built truck in a midsize built body..... They need a better motor in the Dakota. Any moron who says they're running around getting 20+ mpg in city is full of crap. I've owned 2 Dakotas (One V6, one V8)...and the best I ever got was about 20 mpg even on a highway road trip....but I also ran cruise all the way and had nothing in the truck. This was in a Reg. Cab V6... The Dakota V8 is getting 14-16 mpg at best....and that's depending on how you drive it...and what kind of load you have...and that's real world in city driving.
Personally, the small CRD in the Liberty could be put in the Dakota....and beefed up....and would deliver better MPG's and better overall performance....
Just my .02
[/quote]
Any moron who says they're running around getting 20+ mpg in city is full of crap. [/quote]
I don't think that was pointed at me...but, in case it was, I commute 126 miles/day. 95% highway and am getting very close to the 22 mpg that is estimated by the EPA. Between my last fill up and the fill up before, I had more mixed driving than usual. In that case, I averaged 19.4 mpg.
Any moron who says they're running around getting 20+ mpg in city is full of crap. [/quote]
I don't think that was pointed at me...but, in case it was, I commute 126 miles/day. 95% highway and am getting very close to the 22 mpg that is estimated by the EPA. Between my last fill up and the fill up before, I had more mixed driving than usual. In that case, I averaged 19.4 mpg.




