Losing Market Share, Ford Faces Overhaul ; the Automaker's New CEO Helped Turn around Aerospace Giant Boeing, but the Car Industry Is in Worse Shape

By Mark Trumbull writer of The Christian Science Monitor | The Christian Science Monitor, September 7, 2006 | Go to article overview

Losing Market Share, Ford Faces Overhaul ; the Automaker's New CEO Helped Turn around Aerospace Giant Boeing, but the Car Industry Is in Worse Shape


Mark Trumbull writer of The Christian Science Monitor, The Christian Science Monitor


If only turning around a car company were as easy as turning around a car - or an airline manufacturer.

The new chief executive of the Ford Motor Co., in his most recent role, successfully guided aerospace giant Boeing through a wrenching downturn as the 9/11 terrorist attacks reduced demand for air travel.

At Boeing, Alan Mulally gained experience dealing with union labor, a global supply chain, and building products that contain everything from sheet metal to complex electronics.

Those are skills that Ford desperately needs. The No. 2 US automaker confronts declining market share, mounting losses, and a major shift in consumer preferences toward fuel-efficient cars.

But some of Ford's biggest challenges are ones that Mr. Mulally never faced at Boeing.

Where commercial aviation is dominated by two companies, the auto industry has become a tangle of global rivals - with Chinese automakers now scrambling to become exporters alongside those from Japan, Germany, and South Korea.

Where Boeing and Airbus sell their planes to dozens of airlines, success in the auto industry depends on catering to millions of consumers.

"Boeing is not that much like General Motors" or Ford, says Peter Morici, a University of Maryland economist. Carmakers "produce a complex consumer good that has to be mass-marketed and has substantial branding issues."

The fierce competition puts pressure on Mulally, even though he's an outsider, to move quickly.

The challenge is twofold, analysts say: to cut costs and to rev up the pace of new products that can provide future revenues.

Early this year, the company announced plans to close 14 plants and shed 30,000 workers by 2012.

But sagging sales in recent months have compelled the company to do more. This week, chief executive officer, Bill Ford Jr., stepped aside in favor of Mulally.

The move comes as Ford's share of the US market has plunged from more than 20 percent in 2002 to 17 percent last month. Ford's overall sales through August are down 10 percent from the same period in 2005, while the sales of Toyota have risen 11 percent. At that rate, Toyota could soon pass Ford as No. 2 in the US.

"What Ford is facing is really elevating the urgency" of restructuring, says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "One of the real values of bringing somebody in from the outside is it helps to reinforce the sense of urgency."

Like Ford, General Motors is closing plants, reducing its workforce, and adapting to a market where consumers are increasingly more interested in cars than the light trucks and sport-utility vehicles that have led the US market for years. …

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