Ford CEO Mulally shares Toyota's vision

While Mulally is lavish in his praise, he's careful to draw a line. Ford is not trying to blindly copy Toyota, or any other company. But the Japanese giant — now the world's largest automaker — is a worthy standard for measuring progress. "I've done a lot of benchmarking of Toyota over the years. I did it at Boeing," he says.

Much of what Mulally admires about Toyota was inspired by a book about the company he read a decade ago. The Machine That Changed the World detailed the waste-reducing lean production methods that came to define the Japanese automaker.

The book's author, James Womack, credits Mulally for moving Ford to some of the basic strengths — "blocking and tackling stuff" — that define Toyota. But he isn't ready to elevate the Detroit automaker to the same level.

"They have a hard time sailing in a straight line," he says of Ford. Mulally has outlined a long-term focus for Ford's future, but Ford's history is filled with strategic zigs and zags. Things like an SUV fixation, a buying spree on luxury brands such as Land Rover and Aston Martin and former CEO, now Chairman, Bill Ford's insistence that Ford become the environmental automaker.

The strategy now, tuned to these recessionary times, is a back-to-basics approach that aims to highlight the no-frills Ford brand.

Some of those who know the company well caution against reading too much into a comparison to Toyota. Certainly not in financial strength, for instance.

It hurts, too, that Ford can't command as high a price for similar vehicles. That's a problem anytime, but it's going to hurt even more with Ford's next generation of vehicles to meet higher government fuel-economy rules. Turbochargers and other gas-saving technology will make cars more expensive to build — costs that need to be recouped through higher sticker prices on the sales lot. Toyota has pricing muscle that Ford currently lacks.

The guy that Ford will count on to sell smaller vehicles with bigger price tags is marketing chief Jim Farley. He believes Ford can compete, saying the new models will look, feel and perform better.

Former Toyota executive gives Ford insight

If anyone at Ford is qualified to judge how well the new models will stack up next to Toyota's, it's Farley. He spent 20 years at Toyota, launching the Scion line of youth-oriented vehicles in the U.S., introducing the Tundra pickup to the working class, then running snooty Lexus — before being plucked by Mulally in an industry coup.

"Ford reminds me of what Toyota was like 20 years ago," he says. At Ford, "there is a single-mindedness to the business plan and the product execution." That's what Toyota had, he says. But now, "Toyota has gotten so big around the world that it's hard to have that single-mindedness."

He echoes Mulally's themes — consistency of product around the world, discipline, long-term focus. Yet he notes differences. For example, Toyota has an intense bottom-up culture. Ford has always been top down.

To be more nimble, Ford has put one executive in charge of its cars worldwide. Derrick Kuzak's mission, as he puts it, is to "make those vehicles consistent in look, sound and feel in all markets globally."

He is reducing the number of chassis on which vehicles are built by 40% to eight.

The goal is to raise the quality of the small cars overall and make them profitable by achieving global volume. If Ford can build small cars better at less cost, it will make money in a product segment where profits have eluded Detroit makers.

To make those cars better, Ford has had to make some attitude adjustments.

"In the past, we made big boasts about how we would beat Toyota and rah-rah-rah pep rallies," says Ford's North American chief Fields. We "never lived up to them."

Now the attitude is, "Let's not beat our chests. Let's lay out the factors that produce good quality and hold ourselves accountable."

Contributing: James R. Healey

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