Ford's Dysfunctional Production Is Eating Into Profits

Feb. 20, 2023 2:22 PM ET by Gerhard Horn Industry News / 11 Comments

Luckily, Jim Farley has a plan.

Ford CEO Jim Farley spoke to Automotive News to say that he believes the company's internal dysfunction has returned. This follows after Farley acknowledged Ford's quality-related issues in 2022 and said it would take several years to fix.

The American manufacturer has dominated the news cycle recently following a series of high-profile fails. F-150 Lightning production was halted after a fire broke out at the factory, while the production of the Escape had to be stopped over quality issues. And that was just last week.

In 2022, Ford issued more recalls than any other manufacturer, which isn't the kind of accolade you want tied to your brand. All of this is in addition to an $8 billion cost disadvantage compared to Ford's EV-producing rivals. Simply put, how Ford designs and builds EVs is too inefficient to make a decent profit.

Ford

According to Farley, former CEO Alan Mulally cleaned up the internal dysfunction, but it has returned.

"We can cut the cost and the people and do it quickly," said Farley. "But the reality is if you don't change the efficiency of engineering, supply chain, and manufacturing - the way people work - it'll grow back because it did. It all grew back. My job as CEO is to make sure far after I'm gone that it doesn't grow back."

The Blue Oval's executive chair, Bill Ford, explained. "It's been episodic for a lot of my career," said Ford "We get it right, we slide back, we get it right. I think we probably had so much focus on the future that we perhaps took the eye off the ball a little bit on the present. But Jim's got a full-court press on it, and we're already starting to see results."

Ford

Farley has already implemented several measures to increase quality, but he's right when he says it will take years to improve. "We have to design the vehicle totally differently. We have to manufacture it, source it, and sell it totally differently. That's been a big transition." These measures were already implemented with the Mustang Mach-E, which has its own set of unique problems.

Farley wants to redesign the manufacturing process so that assembly workers have less content to install on the line. He also wants to cut the number of fasteners and cast bigger and fewer parts, a la Tesla.

With fewer components to get wrong, the idea of mega-casting could be a perfect fit for a company plagued in the ways that Ford is.