Free American Icon by Bryce G. Hoffman Page A

later. * On January 23, Bill Ford and Mark Fields revealed the details in a speech broadcast live to Ford offices around the world.
    “We all have to change, and we all have to sacrifice,” Ford told his employees. “The Way Forward contains some strong medicine for our North American business. But it also contains the vision and strategic focus to rebuild the business.”
    Ford went on to list the things he would no longer tolerate at the company.
    “Here is what we will not stand for: incremental change, avoiding risk, thinking short-term, blocking innovation, tying our people’s hands, defending procedures that don’t make sense, and selling what we have instead of what the customer wants,” he said. “In short, we will not stand for business as usual.”
    It was powerful stuff, but it was lost in the details of Ford’s epic downsizing. The
Detroit News
summed up the prevailing reaction with a one-word headline the following day: “Painful.”
    UAW president Ron Gettelfinger called the Way Forward “devastating news for the many thousands of hard-working men and women who have devoted their working lives to Ford” and promised a showdown with the company when the current contract expired in 2007. Ford’s stock leapt more than 5 percent on the news, but many Wall Street analysts remained skeptical. They were still not convinced Ford was cutting deep enough.

    O nce again, they were right.
    By the time Fields’ Way Forward was announced, oil prices were back on the rise. By April, the average price of gasoline in the United States was approaching$3 a gallon for the second time in less than a year. As it did, the moderate shift away from trucks and SUVsthat Fields had predicted in November became a panicked exodus. Since those were the only vehicles Ford sold in North America that were actually making any money, the rapid shift became an existential crisis for the company. In the United States, Ford’s sales fell 7 percent year over year, but that was only because of strong demand for its new mid-sized sedans. Ford’s truck sales dropped 15 percent, while sales of its once-popular Explorer were down a staggering 42 percent.
    When Fields and his team saw those numbers, they knew the Way Forward plan was in trouble. They had factored in the possibility of gas price spikes, but never imagined they would begin three months after the plan was announced. The decline in demand was worse than their worst-case scenario. Prices of raw materials, such as copper and aluminum, were also rising far faster than expected, magnifying Ford’s losses. For years, Ford and the other domestic automakers had forced their suppliers to absorb these cost increases. As a result, many of them were now on the verge of bankruptcy and had no choice but to raise their prices as well.
    “If this trend continues, we’ve got a problem,” Leclair warned Fields.
    In May, it did, despite the launch of an aggressive new marketing blitz. Built around yet another slogan—“Bold Moves”—it was an attempt to strike an emotional chord with consumers and convince them that Ford had found itself again. Because most of Ford’s products were still pretty boring, the original plan called for a series of headline-grabbing moves that were actually bold. Ford’s advertising agency had come up with a long list of them, including lifetime warranties and carbon offsets for every vehicle sold, but Leclair had rejected all of them as too costly. With no actual bold moves to tout, all that was left was a bunch of television ads showing people jumping off waterfalls, riding bulls, moving to New York, and doing other daring deeds. The whole thing fell flat and left dealers fuming.
    June brought more bad news as pickup and SUV sales continued to plummet, taking Ford’s stock price and credit rating down with them. Ford was now trading for less than $7 a share, and its bonds were deep into junk territory. The board of directors cut dividend payments in half.