Ford: outsource only where it makes long-term strategic sense
I trust you enjoyed the animated discussionon the woes of the US autromotive industry. My take was that these issues facing Detroit represent a microcosm of the problems facing many of today's flagging industries, with urgent needs to transform their business models, product-lines, management talent, labor unions, global supply chains and outsourcing strategies in order to survive. I wanted to share these comments from Rachel Geiger, who is a lead HR executive at Ford Motor Company, where she has held senior HR positions for both labor relations and procurment strategy. Rachel makes some interesting points regarding why Ford is a little different; namely it's focus on ongoing transformation and strategic outsourcing. Over to you Rachel:
"I agree that it is about changing their DNA, or "What does it mean to work at Ford?". Being in the organizational change business, and taking part in driving this cultural change, I can honestly say that I do see it happening.
"What people need to understand is that this is a change in the fundamental way we do business. It is about doing what is right for the long term for the enterprise as a whole. And you can see Ford making this shift. For example, we went to the credit markets before the credit crisis to fund a PRODUCT transformation - mortgaging basically even the Ford blue oval. We knew that we needed to invest in our product future, and we have maintained that course. At the LA Auto Show, we have introduced 5+ new products, all leaders in fuel-efficiency and technology that build on platforms that already are gaining parity with the Quality leaders in every segment. Other OEMs have withdrawn or drastically reduced their planned vehicle launches.
"In the past, it was all about short-term cost and profit. This is why the domestics AND foreign automakers focused on trucks and SUVs. Don't forget that both Toyota and Honda were and are making pushes into the truck and SUV markets. Past crisis brought cost-cutting on products, marketing, etc, relying on the profits of trucks and SUVs to see us through. We would "change plans" often, trying to convince ourselves that the next one would be a silver bullet.
"Now, however, Ford is investing in the future at a time when future investment also means tough decisions in the short-term, such as layoffs and debt on the balance sheet. But we are maintaining the course laid out in our business plan, and started to see the results with a profit in the 1st quarter of the year before the current economic crisis hit. Are we through transforming? Far from it. But I have seen change gaining momentum in key senior leadership and am starting to see it gain even more traction at lower levels.
"This is why strategies such as outsourcing only have their place at Ford now where it makes long-term strategic sense. Impact on emerging markets? Availability of skills and value-add of the work? We are looking at all these, but short-term cost cannot be the only objective - it must be balanced with the long-term competitive strategy."
Rachel Geiger is HRBO, Global Purchasing at Ford Motor Company