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News: Analysis & Commentary: AUTOS
The Ford chief's reorganization is sputtering, and he needs a successor
These are trying times for Alexander J. Trotman. The Ford Motor Co. chairman's year-old sweeping global reorganization is getting an overhaul, causing widespread confusion and anger among employees and suppliers. Sales of the redesigned Taurus remain lackluster, even with a $600 rebate. Then there's the vexing question of what to do about Mazda, the troubled Japanese auto maker in which Ford has a 25% stake. Now, Trotman has something else to worry about: finding a successor.
As Trotman struggles to entice price-wary buyers and jump-start his reorganization, sources close to the board say he is under growing pressure from directors on the succession question. The issue has become so hot that one Ford senior executive even recently risked the ire of the often-authoritarian Trotman, who turns 63 in July, by giving him a nudge. A source close to Ford says the exec told Trotman: "Alex, you've only got two years left. Every month you wait is 5% less time you'll have to train a successor."
Trotman's No.2 executive, Edward E. Hagenlocker, 56, is out of the running. Sources close to the board say Hagenlocker is destined for the vice-chairman's job, a position Ford traditionally uses to ease senior executives into retirement. Trotman's path to the top was cleared in 1992 when his chief rival, Allan D. Gilmour, was named Ford vice-chairman. Gilmour ultimately took early retirement after Trotman became chairman and CEO on Nov. 1, 1993. Hagenlocker is taking the blame for the rocky implementation of Trotman's Ford 2000 global reorganization. In any case, Ford's board has never viewed Hagenlocker, a shy intellectual, as dynamic enough to be CEO. A Ford spokesman declined to comment on Hagenlocker's future.
CONTENDERS. Group Vice-President Jacques A. Nasser, 48, appears to be the fastest climber among Ford's senior executives. Insiders see him as odds-on favorite to eventually succeed Trotman. CFO John M. Devine, 51, is also considered a candidate. Nasser, a blunt-talking Australian who loves fast cars and fine clothes, is a favorite of Trotman and the board. He also won over Wall Street analysts with a recent all-day session in Dearborn, Mich., where he promised his new global product-development organization, a linchpin of the Ford 2000 global reorganization, will slash $11 billion in costs over the next five years.
Nasser has managed to escape blame for Ford 2000's problems partly because he was not an architect of the original plan. Hagenlocker may be taking a fall because he was. After moving 15,000 employees into five worldwide product-development centers last year, Ford is reversing itself and returning to a setup similar to its original one. By this summer, insiders say, Trotman will pare the product-development unit down to three centers. Having too many centers, Ford found, led to duplicated work and turf battles. "Our organization needs to evolve...to achieve our ambitious goals," says Nasser.
The reorganization of Ford 2000 has left employees bitter. "People are wondering who they work for," says a consultant to Ford. "There's a widespread perception that things are out of control." Uncertainty is heightened by layoff fears, since Ford says it plans to thin its engineering ranks by 21% by the end of next year, mostly by axing outside contractors. And suppliers complain that they don't know who to call on at Ford as it reorganizes its reorganization. "You can't find anybody anymore," grouses one. "All you ever get is voice mail."
Despite the turmoil, Trotman's future, for now, seems secure. He has managed to stay out of deep trouble with the board and the Ford family, sources close to the situation say, largely because he prepared them to expect transition problems with Ford 2000. The family remains concerned about how the company will adapt to Trotman's changes but seems willing to give him room to prove himself. "The Ford family is fully supportive of Alex Trotman," says Edsel B. Ford II, a board member and president of Ford Motor Credit Co. "We are very pleased with the progress of Ford 2000."
It doesn't hurt that Ford's stock price has climbed to around 34, from 28 in January. It will take longer--six months, at least--for profits to spring back to life. Analysts figure earnings will fall 75% in the first quarter, to $327 million, as Ford struggles with the cost of launching new models and offering extensive rebates. There is little chance the company can abandon the incentives, given Taurus' slow sales. And there are other signs the rebates aren't working as well as expected, including the worrisome news that a generous $1,000 giveback on Ford's Windstar isn't drawing many customers from Chrysler Corp.'s minivans.
MARKETING MAN. Meanwhile, Trotman has other problems, chief among them Mazda. Under Ford 2000, Mazda is losing its important role of developing small cars for Ford. That job, which many viewed as the essential glue in the Ford-Mazda partnership, is being taken over by Ford's European product-development center. Finding a buyer for Ford's stake in Mazda would be tough: It lost more than $1.1 billion in its past two fiscal years and hopes only to break even in the fiscal year ending Mar. 31.
Trotman pledges to stick with his Japanese partner. "We've had a close relationship over the past 20 years, and we'll have more of the same," he says. Exactly how that relationship will evolve, Ford and Mazda aren't saying. But industry analysts speculate that Ford will take a firmer hand in reshaping Mazda into a maker of mass-appeal models and less a purveyor of trendy niche cars such as the Miata sports car. Some even say Ford's top executive working inside Mazda, Henry D.G. Wallace, could become Mazda's CEO.
Back home, Trotman is doing plenty of management shuffling. He moved to boost sales in the sagging Lincoln-Mercury Div. on Mar. 25 when he promoted James G. O'Connor to vice-president in charge of the unit. The glib O'Connor, 53, just finished overseeing Ford's big push into the hot Brazilian market and is expected to bring fresh marketing flair to Lincoln-Mercury's faded brands, which suffered a 9.2% sales decline last year. Ford sent O'Connor's predecessor, Keith C. Magee, 49, to Europe as vice-president for sales and marketing there.
But it will take more than a management shakeup to get Ford's house in order. Trotman has to keep his reorganization on track. If he doesn't, the board could speed up the search for his replacement.By Keith Naughton in DetroitReturn to top