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Ford chairman bets a chunk of the family business on mobility play

Oct 8, 2016

Bill Ford Jr.’s used to taking shots.

He got whacked repeatedly for touting environmentalism in the global auto industry long before going green was cool. That prompted rivals, even his own employees, to wonder if the son of America’s preeminent industrial dynasty was becoming unmoored from the realities of the family business.

He got criticized for his tenure as CEO. He and Ford Motor’s directors addressed that a decade ago by naming Alan Mulally as his replacement. The new guy from Boeing led a remarkable turnaround financed by private capital — not the taxpayer money of bailouts and bankruptcy.

And Republican Donald Trump rarely misses an opportunity to trash Ford Motor’s decision to move small-car production to Mexico – no matter how many times Bill Ford tells him why the automaker’s doing it and how many jobs it supports in the United States.

Now Ford’s executive chairman is taking a shot of his own on the emerging mobility space. He says the multi trillion-dollar global business promises to transform personal transportation and the auto industry as surely as his great-grandfather’s Model T changed the way people live, work and play.

To hear Bill Ford tell it, the Blue Oval wants nothing more than to revolutionize the business Henry Ford built. The company wants to listen to the transportation needs of everyday customers and to offer customized solutions. It wants to demonstrate the values of humility and collaboration in an industry seldom associated with either. That oughta’ be a challenge.

He says Ford wants to work with municipal governments. It wants to show that what works in New York or Paris may not in Mumbai or Shanghai. It wants to prove to skeptical investors that an Old Economy player can tend to the core car and truck business, expand into mobility, and grow its profit margins.

The goal, Bill Ford says, is to be “less capital-intensive … and less revenue-dependent on fixed-cost investment.”

And if they fail to exploit huge opportunities in ride-sharing, self-driving cars and transportation services, he admits Ford risks being relegated to assembling other people’s technology. That’s a place it does not want to be because of the negative long-term implications for growth, value creation and its future. Michigan shouldn’t want Ford to head there, either.

Done wrong or incompletely, the net effect would be lower profit margins, lower share prices, lower market capitalization and irrelevance. That’s why the mobility mobilization transfixing Detroit and the industry comes down to two words: build value.

They need to understand that the recent and not-so-recent past of mediocre products, operating losses and capital destruction remain bitter lessons for investors of every size. They need to understand that hugely profitable years selling cars and trucks in North America are no guarantee of future success in the tech-driven world of mobility. There, barriers to entry are as small as a single idea executed and properly scaled.

That’s not an area Ford and its largest rivals are accustomed to, but it’s fast becoming the brave new auto industry – whether they like it or not.  

Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.