In his first global quarterly earnings town hall as Ford Motor Company’s president and CEO, Mark Fields thanked employees for their work in achieving a $2.6 billion second quarter pre-tax profit and discussed four topics that will help the company accelerate growth and innovation.
"I can’t tell you how honored I am to stand up here in my new role as president and CEO and share with you our great second quarter results," Fields said.
Fields focused on four primary topics during the meeting – the continuation and acceleration of the One Ford plan, product excellence, innovation and going further – before taking questions from the audience.
One Ford – Continuity and Acceleration
"Now I am sure when you see this slide titled ‘Continuity and Acceleration’ you are asking yourselves what that might mean," said Fields. "You’re probably saying, ‘Well what about acceleration? Are you asking us to work even harder or maybe compress our global product development system and maybe cut some corners to get products to the market faster?’ Absolutely not."
Fields explained that the company has learned much in recent years, and is starting to realize the benefits of the One Ford plan. The company now has an opportunity to accelerate those benefits, and should look for ways to accelerate the processes that have proven successful around the globe.
"We should begin taking what we’ve done to date and those benefits and turbo-charging them going forward," said Fields. "That’s what I mean by acceleration."
"The One Ford plan is our bedrock," said Fields. "There is no change to our One Ford plan. And I think that continuity for all of us is a wonderful gift we can give ourselves in an industry that is moving very fast these days."
From there Fields shared quarterly highlights including that the company was profitable for its 20th consecutive quarter and that it posted its highest quarterly pre-tax profit since second quarter of 2011.
Fields added that there was a year-over-year decline in wholesale volume and company revenue of 1 percent, but said that this result is positive considering the amount of investment the company has put forth in preparation for the 23 global launches planned for the year.
Regionally, North America posted a record quarterly profit, Asia Pacific reported a second-quarter record profit and Europe saw its first quarterly profit in three years.
The second quarter also saw Ford and Lincoln jump ahead in J.D. Power 2014 U.S. Initial Quality Study, as well as the reveal of the 2015 Ford Edge, Ford Focus ST, the all-new Ford Escort and Ford Everest Concept in China and the Ford S-MAX Vignale concept in Europe. Additionally, North American production of the new Ford Transit began in the refurbished Kansas City Assembly Plant and Lincoln MKC started in Louisville.
Product Excellence Delivered with Passion
Fields noted the need to continue to focus on Ford and Lincoln, with the goal of delivering the very best vehicles with the best quality, safety, fuel efficiency and technology. He asked that the team give special attention to quality moving forward. Bennie Fowler, group vice president of Quality and New Model Launches, joined Fields and explained Ford’s progress on improving quality.
"A lot has changed in the last eight years,” said Fowler. “What I’d like to suggest today is that our leadership team has reflected upon the journey we have been on, and there were several things that as we looked at quality and launches and our performance we knew we needed to change."
Some of the items the team wanted to improve upon included management oversight, resources, process and suppliers.
Fowler said various internal and external measurement tools show there have been improvements in each of these areas.
"We measure results in many ways; one is through customer satisfaction which is up in nearly every region,” said Fowler. “We’ve also seen improvement in Things Gone Wrong where we are improving better than planned. Warranty and repairs also have seen tremendous improvement."
Fowler added that Ford and Lincoln also have seen progress with regard to external surveys. One such example is the recent J.D. Power 2014 U.S. Initial Quality Study, in which F-150, Edge and Lincoln MKX ranked highest in their segments for quality.
Innovation in Every Part of the Business
Fields took the stage once again to explain why innovation is key to both him and to the company.
"Let’s talk about innovation," said Fields. "It’s about creating value for customers, creating value for our company, solving problems for our customers and making life easier for them."
Fields added that the company’s innovative core came from Henry Ford, who changed the world with the moving assembly line and five-dollar workday, and that drive to stay on the cutting edge has continued through the years with recent developments like Sync®, the EcoBoost® engine and now the groundbreaking new F-Series.
"We have a history of knowing how to innovate and we have a wonderful opportunity in front of us to make this a defining competitive advantage," said Fields.
Fields said innovation will touch every aspect of the business from hardware to design and even service, connectivity and the future of mobility, even innovation around our processes. To be leaders in innovation, Fields said it is going to require us to ask questions, challenge customs and take intelligent risks.
"Think about the F-Series," said Fields. "People said, ‘You are going to build a truck out of aluminum? That’s taking a big risk.’ My answer was, ‘No, it’s not."
"There’s this quote from John F. Kennedy I like where he says, 'There are those who look at things and ask why? I dream of things that never were and ask why not?" said Fields, urging employees to adopt a mindset of innovation – all across the company, in every part of our business.
Fields said how proud he is of the entire company and how it has embraced the Go Further initiative in the last several years, and added that he’d like to take that initiative to the next level by highlighting Go Further stories in Town Halls and other channels.
Fields spoke of Kurtis Powers, an employee who had recently welcomed twins to his family. Powers and his wife, both Ford supporters with deep family roots in the company, agreed that the babies’ middle names would be Ford and Shelby since that was Curtis’ favorite car. Fields joked, “Thank goodness your favorite vehicle wasn’t the Ford Super Duty.”
Fields also spoke of Randy Freiburger, an employee who works with the Ford Interceptor police vehicles. Freiburger recently had the opportunity to experience a ride-along with an officer in California working the night shift. The hands-on experience lead Freiberger to develop a new surveillance module that would detect a body approaching the police cruiser and automatically chime in an alert, lock the doors, close the windows and pull a rearview image up on the embedded screen in the vehicle.
"Randy went further to create value and we applaud his efforts," Fields said.
Fields opened the floor up for questions from both employees in the World Headquarters auditorium and from submissions sent in by employees from other regions. Here are some:
Q. I have a neighbor who bought a Ford Mustang a couple of years ago and recently sold it because he had begun to use services such as Uber for transportation. How is Ford integrating mobility options as so much of the business depends on volume of vehicle sales?
A. This is not about expansion that is not core to our business, but it is about looking at how we can provide integrated transportation solutions going forward for consumers. So we are spending a lot of time looking at that business environment, understanding particularly in urban areas with congestion around the world and pollution and things of that nature; governments are looking for solutions around this.
So as opposed to us saying, "Well that’s not our business," we have to go back to the approach of innovation and say how we can be part of the ever-changing transportation solution. Ford is involved in a couple of ride-share pilots running right now; we will learn from those and ask ourselves how we can be part of that solution for customers.
Q. Tesla uses electricity to fuel the vehicle. What is Ford doing on that side of the business?
A. Again, this is a very important question because as a company, this goes back to our creating value roadmap that involves looking at the business environment and considering economies, competitors and customers. And we’ve spent a lot of time on Tesla to the point where in the last board meeting we spent an hour discussing Tesla’s strategy to understand and learn from it.
Our approach is always, "Who can we learn from?" Tesla has done a very good job of raising awareness of electrified vehicles and they’ve done some very innovative things both on the product hardware side and the customer experience side. And we’re using some of those learnings to guide some of the things we are doing going forward.