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The Wall Street Journal has now joined the party, here are some of the article highlights.
At Ford, Quality Is Now Problem 1
By Nora Eckert
Updated Aug. 6, 2022 12:44 pm ET
Josh Halliburton joined Ford F -0.46%▼ Motor Co. in January to help improve its shaky quality record. Within months it was clear how big a challenge he faced.
In the first seven months of the year, Ford had 46 separate safety recalls on 6.8 million vehicles, more than any other U.S. auto maker.
Last year Ford set aside more than $4 billion for warranty costs, up 76% from five years earlier. Its total warranty expenses increased about 17% from 2016 to 2021.
Quality problems have long been a drag on the company’s bottom line. Ford took hefty charges against its earnings several times in the last decade to address issues, and it contended with bungled new-model launches that led to delays. When Chief Executive Jim Farley took over in October 2020, he made quality a top priority, pledging to lower warranty-related costs and earn back customers’ trust.
This year, in addition to the recalls, auto-safety regulators also opened a defect investigation into 2021 Ford Broncos after receiving reports of what an auto-safety regulator called “catastrophic engine failures” at highway speeds.
“We continue to be hampered by recalls and customer satisfaction actions,” Mr. Farley said in a July earnings call. “This affects our cost but more importantly, it falls short on our most fundamental commitment to our customers.”
One of the challenges he identified at Ford was that it tried to make too many last-minute design and engineering changes ahead of a new-vehicle launch, increasing the risk of problems down the line. He said workers rallied to fix problems when they blew up, but weren’t empowered to flag them early in the process when there was still time to head them off.
“It wasn’t a top priority,” he said. “Everyone wants to make sure they can hit the targets we are aiming to achieve. If the goal was to launch on time, we were often focused on getting to launch versus prioritizing quality.”
It’s important, he said, to reward those people who do find problems early. “We are aligning specific objectives to the directly responsible individuals for the aspects of quality they are in control of,” he said. “Thus making it much more clear how each person directly fits into our quality goals.”
Mr. Halliburton said he expects to see Ford’s warranty problems improve next year, but it may take two to three years to see the most impactful results. With that, he expects to also mend Ford’s reputation with frustrated customers.
At Ford, Quality Is Now Problem 1
By Nora Eckert
Updated Aug. 6, 2022 12:44 pm ET
Josh Halliburton joined Ford F -0.46%▼ Motor Co. in January to help improve its shaky quality record. Within months it was clear how big a challenge he faced.
In the first seven months of the year, Ford had 46 separate safety recalls on 6.8 million vehicles, more than any other U.S. auto maker.
Last year Ford set aside more than $4 billion for warranty costs, up 76% from five years earlier. Its total warranty expenses increased about 17% from 2016 to 2021.
Quality problems have long been a drag on the company’s bottom line. Ford took hefty charges against its earnings several times in the last decade to address issues, and it contended with bungled new-model launches that led to delays. When Chief Executive Jim Farley took over in October 2020, he made quality a top priority, pledging to lower warranty-related costs and earn back customers’ trust.
This year, in addition to the recalls, auto-safety regulators also opened a defect investigation into 2021 Ford Broncos after receiving reports of what an auto-safety regulator called “catastrophic engine failures” at highway speeds.
“We continue to be hampered by recalls and customer satisfaction actions,” Mr. Farley said in a July earnings call. “This affects our cost but more importantly, it falls short on our most fundamental commitment to our customers.”
One of the challenges he identified at Ford was that it tried to make too many last-minute design and engineering changes ahead of a new-vehicle launch, increasing the risk of problems down the line. He said workers rallied to fix problems when they blew up, but weren’t empowered to flag them early in the process when there was still time to head them off.
“It wasn’t a top priority,” he said. “Everyone wants to make sure they can hit the targets we are aiming to achieve. If the goal was to launch on time, we were often focused on getting to launch versus prioritizing quality.”
It’s important, he said, to reward those people who do find problems early. “We are aligning specific objectives to the directly responsible individuals for the aspects of quality they are in control of,” he said. “Thus making it much more clear how each person directly fits into our quality goals.”
Mr. Halliburton said he expects to see Ford’s warranty problems improve next year, but it may take two to three years to see the most impactful results. With that, he expects to also mend Ford’s reputation with frustrated customers.
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