Ford begins journey beyond cars
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Ford begins search for 'mobility solutions"
Bill Ford, great grandson of Henry Ford and executive chairman of the Ford Motor Company, doesn’t want to run a car maker for much longer. With 36 years at the family business behind him, it is time for something new.But he is not leaving Ford. Instead the 58-year-old is attempting to turn the company that invented the mass market for cars into a provider of “mobility solutions”, whatever they may be.
“Ford will be a much more integrated part of somebody’s life because if you are a Ford customer your Ford app or portal will take you lots of different places,” he explains.
“It’ll be a very different world. We can’t put our heads in the sand and say, ‘Gee, we wish this was 1965 again when we just had to have a good sound system and a convertible and everyone was happy’.
“We need to completely rethink our business model, really redefine ourselves from a car and truck company to a mobility company.”
Bill has come to Dublin to explain the future of Ford, via a detour to Shannon Airport in County Clare, where his private jet was forced to land after bad weather caused scheduling chaos in the capital.
The Ford family originally hails from the south-west of Ireland, but dense fog combined with the requirement to cross the country in time to speak at the technology conference Web Summit meant there was no chance to admire the ancestral greenery.Still, he has time to talk about rugby, which he watches avidly after playing the sport at Princeton University. But the World Cup is finished and this visit is work not leisure.
His appearance at one of the biggest technology conferences in the world is a sign that Ford, man and company, is facing an increasingly urgent challenge from Silicon Valley. The US tech giants are racing to expand into the car industry with advanced dashboards, self-driving vehicles, car sharing services and new ways for consumers to pay for their transport.
Silicon Valley’s new information tycoons believe that the old industrial magnates of Detroit are ripe for disruption. Billions are being invested and grand plans developed by the newcomers, but Bill Ford has no intention of letting 112-year-old Ford fade on his watch.In fact, he says he saw it coming and seven years ago created a venture capital firm to invest in the technology Ford will need to compete and collaborate.
Efforts intensified this year as the manufacturer parked a research lab in Palo Alto, the Silicon Valley town that incubated Google, Facebook and PayPal. Speaking at Web Summit is, meanwhile, an attempt to raise Ford’s profile among the developers and start-ups in the vanguard of automotive software.
“One thing is for sure on technology is that whatever pace you think it is happening, it is happening faster,” says Ford, who initially joined in the company’s product development department.
“It’s not just the big players like Apple, and Google and Uber but there’s also disruption happening at the start-up level, too.
“We come at it with some inherent strength. We have customer relationships around the world. We can touch people through Ford Credit and we’ve been in the customer satisfaction game, some would say with mixed results, for 100 years.”
The company’s enthusiasm for dashboard technology has indeed made for a bumpy ride. My Ford Touch, its commercial first attempt at a whizzy smartphone-style touchscreen interface in 2011, was a disaster. Consumer Reports, the US equivalent of Which?, said the system “stinks” and had a “fundamentally flawed” design that risked distracting drivers.
The controversy prompted Ford to ditch its software partner Microsoft in favour of BlackBerry. The resulting Sync 3 system, introduced this year, has received much more favourable reviews. But early missteps have allowed Apple and Google to gain ground in their push into the car industry.
They have created versions of their duopoly smartphone operating systems, CarPlay and Android Auto, and offered them to manufacturers with the pitch that they will make things simpler for consumers.Apple has even proposed that car makers such as Ford should become mere app developers, allowing CarPlay to sit at the centre. Ford would need to develop a fuel gauge app, an engine status app, and so forth.
Bill Ford speaks the Silicon Valley language of customer-centricity and talks enthusiastically of working with the consumer technology giants. But he is alive to the danger of ceding control of the dashboard and in-car entertainment.
In a self-driving future where they are an even more important part of travel, Ford could start to resemble an automotive equivalent of Foxconn, the Chinese manufacturer that assembles iPhones for pennies while Apple takes fat profits.
“There were some issues with My Ford Touch and with Sync as well,” Ford admits. “We were first to market and we learnt a lot. I don’t regret it at all and in fact I’m very happy that we pushed the envelope.
“But this is unchartered territory for everyone - not just the traditional auto makers but for the newer players as well. We all need to be very cognisant - I’m very cognisant - that we always need to keep the customer as the focus of what we’re doing.
“I think what we’re trying to do as we go forward is decide strategically who we need to partner with, what we need to own and what we don’t need to own. And where we can add the most value.”
In Bill Ford’s version of the future, his company has a stronger bond with drivers, rather than one weakened by gadget middlemen. Ford is investing not only in interface technology but in alternative fuels. As with the dashboard, bets are being hedged, but the company is increasingly placing what Bill Ford calls “big bets” on batteries.
“It is simply a matter of infrastructure. We can’t tear up global infrastructure multiple times. We can’t go from gasoline to diesel to ethanol to hydrogen to electrification to solar, blah blah,” he says.
Ford ownership will become more like a subscription than a big ticket purchase every few years, the chairman adds as he gazes further into the future. Urban and long-distance travel will be accomplished in different vehicles with different technology, but on the same bill. In cities, car-sharing of the type espoused by Uber is likely to become common, albeit with drivers replaced by software in cars that talk to each other and the environment to prevent jams.
“I think the real magic to all this will be how you integrate it all,” says Ford.
It was only a few short years ago that the company was in no state to speculate publicly on its future. Bill Ford and its then-chief executive Alan Mulally were forced to take drastic action as the US auto industry was engulfed by the financial crisis. They managed to avoid the humiliation of the taxpayer bail-outs that rescued Ford’s crosstown rivals GM and Chrysler by borrowing heavily before the crisis hit.
They also sold off Jaguar and carried out massive restructuring.“Looking back at that period, logically there probably should have been more consolidation but you’ve got governments who aren’t interested in letting that happen. You don’t have pure market forces at play,” says the chairman.
There’s a hint of frustration, but he insists Ford is not looking for a deal: “You never say never, but it’s not high on our radar screen.”
Senior executives are instead increasingly preoccupied with the technological threats and opportunities, he adds, noting that “it’s a pretty full plate and I think M&A within our traditional industry doesn’t help solve a lot of those issues”.
In any case, today Ford’s finances are in a healthier state and the current market, particularly at home, is “buoyant”. The company’s F-150 truck, the bestselling vehicle in the United States for more than 30 years, is speeding off forecourts. Third quarter earnings leapt to $1.9bn from $1.1bn last year and worldwide sales beat most analysts’ expectations.
Despite the buoyancy, Europe has for years been a heavy load for Ford to carry, a burden increased recently by the slowdown in Russia brought on by sanctions. But European losses in the third quarter were $182m, less than half the figure in 2014.
The chairman rejects a suggestion the company could abandon the Russian market.“There’s no question that short-term it’s a rough go in Russia,” he says.
“But one of the things about being a family company is that we do look long term. I believe that Russia is going to be a market that we will be glad we stayed in. We’re willing to take some short-term pain.“
In the rest of Europe things are getting better. But that’s not good enough. The market needs to continue to get better and we as Ford need to continue to get better. But we’re on a good trajectory.”
The VW emissions scandal has added to the uncertainty in Europe, where Ford is heavily invested in diesel. The chairman has been reassured by executives that the company has no skeletons in its own closet and believes his company could benefit from the crisis and potential trouble for the diesel market.
“One thing I feel very good about is that our company has made the investments - whether it’s EcoBoost on petrol, hybrids and electric vehicles - we have positioned ourselves quite well, I think, depending on where diesel goes,” he says.
“Of course we checked. The reality of the world that we live in is that nobody’s perfect. In this case we know we don’t have any defeat devices.”
Such technological nightmares have no place in Ford’s plan for a new version of the American dream. It will not be as easy to pitch as the Model T or a 1965 Mustang, but Bill Ford insists it will make ordinary people’s lives simpler, as they did.
“You start with the notion we have to make their lives better, or simpler,” he says. “I think that gives us the best opportunity to put something together that is meaningful.”
-The Sunday Telegraph·