Bloomberg News

Ford Missing Targets Pressures Mulally to Fix Mishaps: Cars

June 02, 2011

June 2 (Bloomberg) -- Ford Motor Co., ranked the mainstream brand with the fewest defects by J.D. Power & Associates last year, is pressing to remedy what it expects will be a “mixed” performance this year in an area Alan Mulally calls critical.

Chief Executive Officer Mulally says industry-leading quality will be a pillar of the automaker’s success after years of lagging behind Japanese rivals such as Toyota Motor Corp. Yet Ford last quarter missed quality targets because of glitches in new models and high-tech touch-screen dashboard controls.

“We have just a few issues with some of the newer technologies associated with Sync and MyFordTouch,” Mulally told reporters May 31 in Washington, referring to the voice- activated and touch-screen communication system in models such as the Explorer. “It’ll be a lot like consumer electronics where we’ll rapidly bring innovation, but also continue to improve it.”

With researcher J.D. Power releasing new quality rankings June 23, Ford is working to maintain the momentum that enabled the automaker to gain market share and surpass Toyota in U.S. sales last year. Dearborn, Michigan-based Ford said today it is deploying $100 million of laser-guided robots in factories to help reduce wind noise inside its models, a nagging complaint.

“Improved quality has been essential to the revival of the Ford brand,” said Jesse Toprak, an industry analyst at TrueCar.com, a Santa Monica, California, website that tracks auto-sales trends. “It’s been very, very important when you look at the growth of Ford in the last couple years.”

Touchy Touch Screen

Ford also is working to get the bugs out of its touch screen, which helped land its redesigned Explorer sport-utility vehicle at 17th in a ranking of 19 mid-sized SUVs in the June issue of Consumer Reports. The magazine called the Explorer’s touch-screen controls “complicated and distracting.”

“We’ve heard of screens blanking out,” said David Sargent, the vice president of research at J.D. Power who oversees the Initial Quality Survey. “Ford has a concern about how they will perform based on their own data. They’re making an early warning to the market that this may be a problem.”

Introducing new models such as the Focus and Fiesta small cars have stressed Ford’s manufacturing and engineering systems, said Bennie Fowler, the automaker’s group vice president of quality and model introductions.

“All I can tell you is I haven’t been sleeping that much with the amount of products we’ve been bringing out,” Fowler said in a May 31 interview. “That is the biggest challenge I face as the quality leader and the new-model launch leader.”

Laser-Guided Robots

Installing laser-guided robots in 17 factories worldwide is part of Ford’s push to reach “the next level of refinement” in quality, he said. New laser-vision technology will enable robots to install doors on Explorer and Focus models to within a tenth of a millimeter of specifications, reducing wind noise.

Ford is deploying the robotic door technology now because it wasn’t ready when the Explorer went into production in December and the automaker began building the Focus in the first quarter, Fowler said.

“All of this technology is new,” he said. “It has to be debugged and precise.”

Ford has encountered criticism for rolling out MyFordTouch before the bugs were worked out: Consumer Reports dropped its recommendation on the Ford Edge SUV in part because of the controls, and the New York Times ran a review May 29 of the Edge headlined: “Tussling With New Technology.”

“You wonder, ‘How did this get into production?’” David Champion, auto-test chief for Consumer Reports, said in an interview. “If you’re going to be a trailblazer, your trailblazing system has to have a clear benefit, like Toyota did with the Prius that got 41 miles per gallon.”

Most Improved

Ford has become the most improved automaker in Consumer Reports rankings over the last few years, Champion said. The magazine now recommends 90 percent of Ford and Lincoln models. Ford matched Toyota as the most favorably viewed auto brand in a survey the magazine conducted in December in the U.S.

Whether the MyFordTouch system “will hurt them in the long run, we’ll have to see,” Champion said. “It’s a big gamble.”

Ford must take the gamble on new technology to stand out in a competitive and crowded auto market, executive Fowler said.

“The world is changing all the time,” he said. “One of the things we recognize at Ford is either you change with it or you die.”

Ford is adjusting the touch system based on feedback from critics including Consumer Reports and from customer surveys, Fowler said. The automaker has asked dealers to spend as much as 40 minutes training new owners to use the system, he said.

BMW’s iDrive

Bayerische Motoren Werke AG’s quality rankings fell after it introduced a complicated communications system known as iDrive a decade ago, J.D. Power’s Sargent said. The German automaker has since revised the system several times, making it easier to use and less distracting, he said. BMW ranked 17th in last year’s new-car study and was below the industry average. Ford ranked fifth, behind only luxury brands.

“It is a risk to be a technology leader,” Sargent said. “Even if the technology works as designed, consumers can feel frustrated by it and report problems with it because it’s not working the way they want it to. That’s a design flaw.”

That Ford is saying it’s not meeting its goal of improving quality this year “is a big change from the past, when there was more arrogance and less acceptance of problems,” Toprak said.

Fowler said the admission all fits with Mulally’s mantra that “you can’t manage a secret.”

“We’ve been fairly direct in terms of what our performance is,” Fowler said. “It’s a big part of what you have to do to be a company people can believe in.”

Given how long it has taken Ford to establish a good quality reputation, this setback will likely end up a “bump they hit, rather than a wall they run into,” Sargent said.

“It’s easy to lose a good reputation and hard to build one up,” Sargent said. “I suspect they’re working night and day.”

--With assistance from Angela Greiling Keane in Washington. Editors: Kevin Miller, Kevin Orland.

To contact the reporter on this story: Keith Naughton in Southfield, Michigan, at Knaughton3@bloomberg.net.

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net.


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