|From: Glenn Petersen||11/12/2017 11:00:57 AM|
|It is bizarre to watch an all-American manufacturing company get brain-snatched like this. Even the company’s new internal mission statement bears Hackett’s woolly imprint: “To become the world’s most trusted mobility company by designing smart vehicles for a smart world.”’ is not exactly “Built Ford Tough.” |
Can Ford Turn Itself Into a Tech Company?
Its very name was synonymous with the 20th-century economy. Now it’s trying to catch up with Silicon Valley on self-driving cars
By KEVIN ROOSE
New York Times
NOV. 9, 2017
Ford testing a self-driving car at Mcity. Mark Peterson/Redux, for The New York Times
On a sunny afternoon in early October, I drove across a parking lot in Ann Arbor, Mich., and down a sloping road to a second, private lot. A fence lining the lot’s perimeter was covered in black fabric, as if to deter snoops. Behind it was a 32-acre Potemkin village. There were paved roads with names and signs: Liberty Street, Main Street, Wolverine Avenue. There was a traffic roundabout, a covered underpass and a railroad crossing. There were cosmetic props, too — newspaper boxes, sidewalk benches, a row of fake storefronts.
Mcity, as the facility is known, was built by the University of Michigan as a testing ground for automakers, including Ford, which has been experimenting with self-driving cars here for about two years. I parked my rental and climbed into the back of a white Ford Fusion with four spinning Lidar sensors on the roof, each roughly the size of a water glass, and a rack of high-performance computers in the trunk. Next to me sat Randy Visintainer, Ford’s director of autonomous vehicle development. Jakob Hoellerbauer, a young Ford engineer, took the driver’s seat. Wayne Williams, a Ford research scientist, sat beside him in the passenger seat typing on a laptop. We put on our seatbelts, and Hoellerbauer hit the ignition and pulled into the road. A beep came from the dashboard, indicating that the car was ready to engage self-driving mode. Hoellerbauer pushed a button on the steering wheel and took his hands away.
“We are now autonomous,” Williams announced.
The car glided along Main Street to a four-way stop, waited for another car (driven by a researcher) to clear the intersection, then made a gentle right turn. Autonomous cars are programmed to drive conservatively, and any time our Fusion sensed an approaching object — like a Ford employee, role-playing an oblivious pedestrian — it slowed down until it was sure the path was clear, then proceeded cautiously. It felt like being chauffeured by an elderly ghost.
Two minutes into the drive, the car pulled around a traffic circle and up to a blinking red light at an empty intersection. It stopped. A few seconds passed. Perhaps, I thought, it was just being characteristically risk-averse. Then a few more seconds passed, and the engineers started to look nervous. Williams squinted at his laptop.
“So right now, we’re not sure if the intersection is clear, so we’re being very cautious,” Williams said, speaking for the car. “It’s expecting ...” He trailed off and turned to Hoellerbauer. “Why don’t you just overtake it?” Hoellerbauer grabbed the wheel and tapped the gas pedal, overriding the self-driving system and manually steering us through the intersection.
An Argo AI employee testing the recently installed self-driving computer and sensor systems on a Ford Fusion. Mark Peterson/Redux, for The New York Times
“We didn’t see that happen this morning,” Williams explained, by way of an apology. We took another lap around Mcity, and when we reached the intersection again, the car did the exact same thing.
Self-driving cars raise the specter of horrific malfunctions — a code glitch that sends a car careering off a cliff, a remote hack that disables the brakes — but perfectly innocuous problems like the one we experienced will be far more common, and no less an impediment to road-readiness. There are dozens of autonomous vehicles being tested all over the world — 43 companies are testing 295 different self-driving vehicles in California alone — and not one of them has a clean record. A self-driving Uber vehicle zoomed through a red light in San Francisco last year. The sensors on cars used by Waymo, the self-driving-car division of Alphabet, Google’s corporate parent, have struggled in heavy rain and snow. I’ve had half a dozen self-driving-car experiences in my life, including a white-knuckle trip down Manhattan’s West Side Highway in a Tesla Model X whose owner had set it to “autopilot” mode, and I wouldn’t describe any of them as relaxing.
How quickly these rides will improve depends on whom you ask. Silicon Valley futurists, in typically sanguine fashion, predict that we are months, not years, away from a Cambrian explosion of autonomous cars. Waymo has a pilot program for its self-driving vehicles already underway in Arizona and says it’s “really close” to being fully operational. Lyft, which has partnered with a start-up called Drive.ai, is aiming to have a fleet of self-driving cars operating in the Bay Area by the end of the year. And Elon Musk, the founder of Tesla, which has offered semiautonomous features since 2015, has suggested that its cars could be fully autonomous as soon as 2019.
But that’s California, where optimism is the coin of the realm. In Detroit, the timeline looks slower and more incremental. Ford, in particular, believes that the first generation of driverless cars will be limited, capable of traveling only in commercial fleets inside carefully plotted urban areas. Other cars will simply get smarter without being autonomous, with features like collision prevention and self-parking becoming more common. Self-driving technology will eventually be more sophisticated and will one day be capable of full door-to-door autonomy in every possible area and condition, but as Ford sees it, that’s not going to happen overnight, or even very soon.
Despite its pragmatic restraint, Ford has invested hundreds of millions in self-driving cars and is making surprising progress. In a report earlier this year, Navigant Research placed Ford at the top of its leader board, ahead of tech companies like Waymo and Uber as well as auto rivals like GM and Toyota, based on Ford’s advanced manufacturing capabilities coupled with its strides in software development. The report generated headlines like, “Detroit Is Kicking Silicon Valley’s Ass in the Race to Build Self-Driving Cars,” and delivered a morale boost to Ford, which showed up late but finally felt as if it had a chance.
Ford’s big, blinking target is 2021 — the year it hopes to release a vehicle that meets the Society of Automotive Engineers International’s definition of Level 4 autonomy (no human operator required in the area and conditions it’s programmed for). It’s a tough deadline for a company whose culture might be the exact opposite of Silicon Valley’s, where companies release half-finished “minimum viable products” and abide by maxims like “move fast and break things.” Before Ford — or any conventional automaker — produces anything, each part has to pass a grueling battery of tests and certifications. There is a reason “automotive grade” has become a synonym for “reliable.” “Our vehicles have to be a trusted product,” Chris Brewer, Ford’s chief engineer for autonomous vehicles, told me. “That is a little more important than ‘Did my phone freeze or not?’?”
Americans are wary of driverless cars — 56 percent, according to the Pew Research Center, would prefer not to ride in one — and when I talked to Brewer, it occurred to me that some part of that hesitation might stem from who we assume will be producing them: Silicon Valley tech giants, the same stateless behemoths that have spent the last few decades barging into old-line industries like the Kool-Aid Man, destroying working-class jobs and leaving behind cold, modern efficiency. But maybe these skeptics could be persuaded to trust Detroit. After all, Brewer is right — self-driving cars aren’t smartphones. They’re two-ton projectiles that take your parents to the grocery store and your kids to soccer practice, that will need to make billions of computational decisions per second while moving at 65 miles per hour, that contain within them the power to extinguish human life. You kind of want them to take a while.
Leading Ford into this weird new era is Jim Hackett, who was named chief executive in May. Hackett, 62, is an oddity by Detroit standards. A design-minded aesthete in an industry dominated by gearheads and number crunchers, he spent two decades running Steelcase, a Michigan-based office-furniture company whose designers are often credited with — or blamed for — popularizing the open-plan office trend.
At a conference several years ago, Hackett struck up a conversation with Ford’s executive chairman, William Clay Ford Jr., who goes by Bill. He is the great-grandson of Henry Ford, and another auto-world misfit — an outspoken environmentalist who once ruffled feathers at Ford by speaking at a Greenpeace event. The two bonded over their shared vision of “smart mobility,” a fuzzy term, more common among urbanists than businesspeople, for creating a sort of harmony among land use, technology and transportation of all forms. Hackett joined Ford’s board of directors in 2013. In 2016, Bill Ford persuaded Hackett to lead Ford’s newly created smart-mobility unit, and about a year later, he tapped him to run the entire company.
Hackett’s jockish C.V. — he played football at Michigan and briefly ran the school’s athletic department — masks his high-minded streak, which can make talking to him feel like taking a college philosophy seminar after a few bong rips. In the early 2000s, he began traveling to the Santa Fe Institute, a research group started by prominent scientists who wanted to study “complex adaptive systems” — a branch of theoretical physics that imagines the world as a series of complicated networks that are governed by universal laws and patterns, the same way biology is guided by Darwinian evolution. The rules that explained how anthills formed, they believed, might also explain urbanization trends in Southeast Asia or predict economic cycles. It was a formative experience for Hackett, who began to believe that businesses were governed by universal laws, too.
A worker at a Ford supplier conducting final checks of a self-driving Fusion test vehicle. Mark Peterson/Redux, for The New York Times
Hackett also became obsessed with “design thinking,” a new-agey management philosophy that has become trendy in recent years. Adherents believe that instead of optimizing for profit, organizations should put human emotion at the center of every strategy decision and begin by empathizing with their customers. “No technology ever evolves without the human interpreting and altering it,” Hackett says. “Every new technology, the science and the engineering of it, has to give way to human understanding and use.”
Hackett is only six months into the chief-executive job, but his mannerisms have already entered Ford’s bloodstream. I arrived in Dearborn expecting to talk about drivetrains and crankshafts, but in a series of interviews with nearly a dozen executives, barely anyone mentioned cars or trucks at all. Instead, I heard the Ford Motor Company described as a “mobility solutions provider” that engages in “multimodal journey planning.” People spoke about “whiteboarding” and “blue-skying” big ideas. I watched a video that described Ford’s efforts to build a “holistic, organic, interconnected system powered by a transportation operating system.”
It is bizarre to watch an all-American manufacturing company get brain-snatched like this. Even the company’s new internal mission statement bears Hackett’s woolly imprint: “To become the world’s most trusted mobility company by designing smart vehicles for a smart world.”’ is not exactly “Built Ford Tough.” But it’s very much in keeping with Hackett’s worldview, in which everything exists in connection with everything else, and changing one piece of a system necessarily changes the whole. A car learns to drive itself, and a city’s transportation grid shifts around it.
This kind of big-picture futurism is necessary in Detroit today, where automakers are frantically reinventing themselves to stay ahead of what they fear might be coming. The average personal vehicle is driven less than an hour per day. But self-driving cars can, in theory, pick up and drop off passengers all day, which significantly reduces the number of cars a community needs. (Researchers at the University of Michigan estimate that autonomous vehicles could cause car ownership to drop by as much as 43 percent. Lyft, which has a horse in the race, cites research estimating that as many as 80 percent of cars could eventually be eliminated.) And because much of the value of self-driving cars lies in the software that runs them, companies that make only hardware — known in the business as “original equipment manufacturers,” or O.E.M.s — are likely to be squeezed, or worse.
Faced with visions of a bleak future as low-margin widget-builders for Silicon Valley, automakers have spent the past several years trying to catch up. General Motors spent $581 million to buy Cruise Automation, a self-driving-technology start-up. Fiat Chrysler Automobiles struck a deal with Waymo, in addition to partnering with BMW and Intel. Daimler and Volvo each joined with Uber, and Toyota set up a whole research institute in Silicon Valley to build its own self-driving vehicles.
One lesson Hackett learned from his studies is that in order to stay competitive, businesses often have to give up the things that made them great in the first place.
Ford’s plans might be the most ambitious. It wants to have a hand in every part of the self-driving-car industry, including the software that replaces the human driver, the platform that connects and controls the cars and the services that spring up around them. To that end, Ford has spent the past several years quietly snapping up tech talent. It struck a partnership with Lyft and acquired Chariot, a San Francisco-based start-up that runs group shuttles for commuters. It set up an office in Palo Alto that now has 205 employees and created Greenfield Labs, a business incubator. It invested in Argo AI, a Pittsburgh-based artificial-intelligence start-up, and several other companies, including Velodyne, which makes Lidar sensors, and a connected-car software outfit called Autonomic.
Most industry observers believe these are the right moves for Ford to be making. But it’s still tough to reconcile today’s Ford — which makes money by selling millions of combustion-engine trucks and S.U.V.s every year, along with a handful of sedans and hybrids — with the eco-tech-mobility conglomerate Hackett envisions it becoming. One lesson Hackett learned from his studies is that in order to stay competitive, businesses often have to give up the things that made them great in the first place. (He calls this the “perversity law.”) I asked him if this meant that Ford would need to stop manufacturing conventional, gas-powered vehicles to survive.
“Well, part of that statement might be right,” he said. “Right now, that doesn’t make sense.” He clarified, sort of: “I’m really just trying to say the better form of problem solving is to abstract the problems.”
So let’s try abstracting Ford’s problems, to see how they might be solved. First: Ford was born at the beginning of a now-outmoded era of industrial production, one that it arguably ushered in. Back then, companies like Ford simply manufactured goods, and customers bought them. Those transactions represented a change of ownership — a customer who bought a car from Ford was free to install 15-inch subwoofers in it, or paint it bright yellow, or use it in a demolition derby — and they were typically one-time sales. Ford’s responsibility for the car, and its opportunity to make a profit, ended the minute the warranty ran out.
The internet changed that, by allowing companies to wrap physical goods in digital services that can be sold again and again, at much higher margins. Instead of selling servers to corporate I.T. departments, Amazon sells them time shares on a centralized server farm; instead of buying pricey home solar panels, customers can lease them from a solar service, paying for only the power they use. Makers of thermostats, baby monitors and other household gadgets “extend the value chain” by charging customers a monthly fee for information about their home energy use or their babies’ sleep patterns. Even the language these new enterprises use is different. Goods-based businesses spoke in terms of revenues and profits. Service-based businesses count metrics like “churn,” “average revenue per user” and “lifetime value” — the total amount of money they can wring from a customer.
An Argo AI employee calibrating the sensors on a Ford Fusion test vehicle. Mark Peterson/Redux, for The New York Times
This phenomenon — which is sometimes referred to as “everything as a service,” abbreviated as XaaS and pronounced “zass,” among the kinds of people who say these things out loud — has quietly reshaped the entire economy. Trucking companies that once bought Michelin tires now rent them through a pay-per-mile service. Airlines that buy $15 million jet engines from General Electric can subscribe to OnPoint, a “power by the hour” program that includes maintenance costs and data-analysis tools. G.E. Aviation now makes the better part of its revenue from services like these.
The auto industry was slow to come to grips with this new model — in part because it long ago gave away the entire service piece of its business to gas stations, body shops, Jiffy Lubes and a hundred other barnacle industries. Thanks to old and byzantine state laws, most carmakers aren’t even allowed to sell or lease directly to their customers — every transaction has to go through an independent dealer. When it comes to data, automakers are flying blind. As Reilly P. Brennan, a venture capitalist who invests in self-driving technology, put it to me: “The urinal in the men’s bathroom knows more about its users than most carmakers in 2017.”
With self-driving cars, automakers see a chance to fix that. Ford’s executives talk hopefully about one day offering their own suite of software inside their autonomous vehicles, and building interfaces that companies like Netflix and Skype could plug into. They don’t see themselves usurping Silicon Valley, exactly, but they do see themselves playing in the same league. “Two to three years ago, the tech community was holding the auto industry at arm’s length,” said Ken Washington, Ford’s chief technology officer. “They thought we were sort of this curious industry that they could come into and disrupt.” He went on: “Now, when I go to Silicon Valley and I interact with tech companies, it’s a dynamic of much more intense interest in collaborating with us.”
Collaboration takes many forms, of course, and not all tech companies seem interested in an equal partnership. John Krafcik, the chief executive of Waymo, told me that while traditional auto companies “bring a lot to the party” in terms of hardware expertise, they’re not well equipped to solve the software-based problem of replacing a human driver, which requires huge teams of highly skilled engineers and tremendous amounts of technological infrastructure — the kinds of tools available to only a Google sibling company. “The self-driving aspect is really supercomplicated,” Krafcik said. “We’ve spent the last nine years trying to solve that puzzle. It requires a lot of skills.” It also requires focus, which is a problem for companies that still sell millions of conventional cars and trucks a year, that have thousands of employees to pay and quarterly results to deliver, that can’t exactly drop everything and become software companies.
In Detroit, cautious optimism prevails. But outside Detroit, there are real doubts that any auto company can transform itself quickly enough. “Autonomous vehicles are not an incremental shift,” said Carol Reiley, a founder of Drive.ai. “It’s a very transformative shift, almost like moving from the horse and carriage to the car.” Like many tech executives, Reiley saw Detroit’s quest to control the self-driving-car industry as tactically sound but ultimately a long shot. “I don’t know if they can make it,” she said. “There’s a lot of baggage.”
An Argo AI team member completing final configurations on a self-driving test vehicle. Mark Peterson/Redux, for The New York Times
A week after my Detroit trip, I visited the Pittsburgh offices of Argo AI, the artificial-intelligence start-up that is creating the software brains for Ford’s self-driving vehicles. Ford is investing $1 billion for a majority stake and controls two of Argo’s five board seats. Which means that Argo is an independent company, but only barely — 40 of its 230 employees are transfers from Ford, and Ford is its only corporate partner.
Argo’s headquarters is in Pittsburgh’s Strip District, a formerly industrial area just outside downtown that has become a center of driverless-car activity. (Uber’s Advanced Technologies Group is down the street.) Its office is a high-ceilinged space in a modern office building with conference rooms named for famous scientists: Planck, Descartes, Hopper. When I arrived, engineers were eating catered lunch at their standing desks. Squint and ignore the smokestacks outside, and you could be in San Francisco — which is sort of the point. Ford wants Argo to look and feel like a nimble tech start-up, not a subsidiary of a century-old auto company.
I was greeted by Bryan Salesky and Peter Rander, Argo AI’s founders, both well-known figures in the small self-driving-car world. They had been special-faculty members at Carnegie Mellon’s prestigious robotics-engineering program, and Salesky competed in the 2007 Darpa Urban Challenge, a storied self-driving-vehicle race whose alumni now populate the top ranks of the autonomous-vehicle industry. Salesky went to Google to build self-driving cars; Rander went to Uber. They quit their jobs and started Argo AI in November of last year, and in February, with no real product to speak of, and hardly any employees, they announced that they had raised huge sums of money from Ford.
The day before my visit, Salesky made waves with a bombastic post on the company’s blog, in which he accused the autonomous-vehicle industry of overselling its progress. “Those who think fully self-driving vehicles will be ubiquitous on city streets months from now or even in a few years,” he wrote, “are not well connected to the state of the art or committed to the safe deployment of the technology.” It was a rare role reversal — the software engineer throwing up caution flags — and, perhaps, evidence that Ford is trying to stall for time. Officially, Argo is still aiming for Ford’s 2021 target, but Salesky waffled on the firmness of that deadline, saying there’s a chance a true Level 4 autonomous vehicle could be finished later, or possibly sooner. “It’s ready when it’s ready,” he told me.
Salesky freely admitted that he is playing catch-up. Ford won’t share statistics about its self-driving test cars, but public records from California give some sense of what it’s up against. Last year, Ford, which does most of its testing in Michigan and Arizona, logged just 590 autonomous miles in the state, while Waymo’s vehicles logged 635,867 miles. Argo is also building its code from scratch and doesn’t have access to the digital infrastructure that competitors like Waymo and Uber do. “We’re not out there trying to tell everyone we’re going to be first or beat X, Y or Z company,” Salesky said. “The goal is to get to market with something that can scale up.”
Driving isn’t just a mechanical task — it’s a social act, and in order to coexist with human drivers, self-driving cars will need to develop a level of social awareness.
But, he reiterated, this is a hard problem. Driving is a miracle of neurobiological coordination that involves the flawless simultaneous execution of a billion tiny and subtle reflexes, and it turns out that’s a more complicated task for a computer than teaching it to play chess or compete on game shows. A self-driving car has to correctly identify and label millions of objects, understand city layouts and traffic laws and operate in a variety of road conditions. It has to be taught to handle everyday driving hazards (high-speed merges) and rarer incidents (objects in the road), as well as issues that would never affect a human driver (a chunk of debris that flies up and knocks out a sensor).
In order to work properly, a self-driving car also has to understand how humans behave. It needs to know the difference between a car that is idling in the right-hand lane (in which case the autonomous vehicle should steer around it) and one that is about to parallel park (in which case the vehicle should stay in its lane, giving the other car some room). It needs to predict that the jogger running toward the corner will stop for traffic, but that the kid running to chase a basketball might not. It needs to be able to navigate a four-way stop, which in polite parts of the country involves lots of eye contact and you-first hand gestures. “This goes beyond just seeing and understanding the world,” Salesky said. “It means understanding what each of the actors in the world is going to do.”
In other words, driving isn’t just a mechanical task — it’s a social act, and in order to coexist with human drivers, self-driving cars will need to develop a level of social awareness that approaches that of a full-fledged A.I. This is why some computer scientists think Waymo is going to be unbeatable. As an Alphabet company, Waymo has access to some of the best engineering talent in A.I., along with Google’s enormous data troves and the machine-learning systems that have been trained using that data. In other words, the vast data-harvesting powers that make Google’s consumer products so creepy could also make Waymo’s vehicles better at navigating the physical world.
But all this obsessive focus on tech elides a much more foundational question about our relationship to cars. Tech companies tend to view driving as a functional problem — get safely from Point A to Point B as quickly as possible — in which the vehicle itself is largely an extraneous variable. A car might begin its life as a Toyota or a Hyundai, but once it’s autonomous and on a ride-sharing network, it’s just an Uber. Silicon Valley believes that software, not hardware, is what matters to riders, and this will be especially true of self-driving cars — which, at least in early days, will most likely be shared among strangers.
But Detroit has spent decades and billions of advertising dollars persuading us that its mass-produced cars are anything but homogeneous metal boxes — that they carry profound talismanic qualities that transfer to their owners. You can be an F-150 woman or a Mustang man, and those choices signal tribal affiliations that extend far past the act of driving. Ford’s challenge, then, is keeping these storied brands alive for the consumers who still obsess over them, while Argo builds the software that will satisfy the car-agnostic city dwellers. It’s a tricky balancing act, made even more complicated by the politics of a 114-year-old Detroit manufacturing company lashing its fate to a one-year-old Pittsburgh tech start-up, and vice versa. “They’ve put a lot of trust in us,” Salesky said. “We’ve also put a lot of trust in them.”
Argo AI’s self-driving test vehicles at its facility in Dearborn, Mich. Mark Peterson/Redux, for The New York Times
The hall connecting the C-suites at Ford’s headquarters was a mess when I visited in October: exposed wiring, plastic sheeting hanging from the walls. As I made my way to Bill Ford’s office, my P.R. escorts offered an explanation. Parts of the floor were being reimagined as an open-plan creative space, and the chaos had spilled outward. When we reached the end of the hall, Ford welcomed me into his office, a midcentury wooden cavern with a fish tank built into one wall and a panoramic view of Dearborn along the other. The dreary vista stood in stark relief with the golden-era artifacts in Ford’s office: the replica of a 1956-57 Continental Mark II that was designed by his father, William Clay Ford Sr.; a desk that belonged to his grandfather, Edsel Ford.
Bill Ford has been working in the family business for 38 years and spent most of that time as an iconoclast. His interest in “smart mobility” — which amounts to an interest in reducing the number of cars on the road — was until recently considered heretical. But the past few years have vindicated his predictions. He thinks that the coming convergence of tech and transportation could turn Detroit and Silicon Valley into permanent collaborators. He started Fontinalis Partners, a venture-capital fund outside Ford, to invest in mobility start-ups, and flies regularly to San Francisco to meet with entrepreneurs working on transportation-related projects.
“The narrative, probably even two years ago, would have been ‘tech companies win, autos lose,’?” he said. “What’s happened, though, is there’s been a realization that we have a lot more intellectual property than the world realized,” by which he means celebrated lines like the F-150, along with some proprietary under-the-hood technology that I won’t pretend to understand. “Second, we really know how to integrate a lot of what the tech companies have into our vehicles, and we know how to make vehicles as well.”
I was struck by how frequently this simple point is deployed at Ford: We know how to make stuff, and making stuff isn’t easy. At first, I dismissed it as a naïve attempt to steer a conversation about Detroit’s shortcomings back toward its strengths. Apple taught suppliers halfway across the world how to make iPhones with micron-level precision — how hard could it be to slap some metal together and put it on wheels?
But making cars isn’t like making other things. It’s a dizzying logistical ballet that involves heavy machinery, grueling labor and countless opportunities for error. It’s wrangling union contracts while keeping the line moving. It’s paying people enough to ensure that they won’t miss a loose bolt and kill someone. It’s designing objects that not only work well but also fill a psychological need for buyers. In the end, maybe the self-driving-car race will be decided not purely on technological achievement, but also on these much more prosaic questions — who can make good things and persuade people to use them? After all, the Model T wasn’t the first car invented, or the best at the time. But it was accessible and functional and spoke to people’s needs in a simple way during a time of confusing technological change. That conversation is about to begin again
Kevin Roose is a business-and-technology columnist for The Times and a writer at large for the magazine.
|RecommendKeepReplyMark as Last ReadRead Replies (1)|
|To: Glenn Petersen who wrote (62)||11/15/2017 1:41:15 PM|
|Good Post, Glenn.|
I've got a different question, tho, and I was hoping that someone on this board could help answer.
Has Ford sold it's stockpile of Palladium from the early 2000s or does it still have it, fully written off, as a "hidden asset" now worth several times the price?
|RecommendKeepReplyMark as Last ReadRead Replies (1)|
|To: IntoOLEDs who wrote (63)||11/15/2017 4:52:05 PM|
|From: Glenn Petersen|
|I would guess - and it is just a guess - that Ford has utilized all of that Palladium over the last fifteen years.|
From a January 4, 2017 article:
The metal headed for its biggest two-day gain since August 2015, rising 8.3 percent on bets demand from carmakers will grow after improving manufacturing data in the U.S. and China. General Motors Co.’s December deliveries beat forecasts while Ford Motor Co. and Nissan Motor Co. posted surprise gains. Gold rallied as the dollar weakened.
Palladium for immediate delivery delivery soared 21 percent last year, outpacing gains in platinum, silver and gold. The metal, used to reduce dangerous engine-exhaust gases, is the most industrial of the four and has been buoyed by demand from the world’s two largest economies.
“Demand is outstripping supply,” said Peter Thomas, a senior vice president at Zaner Group LLC in Chicago.Recent car sales figures have been monstrous -- that’s a reflection of demand. The fundamentals are driving the market.”
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||10/6/2018 10:14:56 AM|
|Ford, an Automaker at a Crossroads, Seeks Cuts and Partners|
By Neal E. Boudette
New York Times
Oct. 5, 2018
An F-150 pickup truck on the assembly line at Ford’s Rouge complex in Dearborn, Mich. The automaker’s bottom line is weakening despite record sales of its pickups and sport utility vehicles.CreditCreditCarlos Osorio/Associated Press
DEARBORN, Mich. — When Ford Motor was celebrating the 100th anniversary of its Rouge industrial complex last week, its chairman, William C. Ford Jr., offered an optimistic outlook for the years ahead.
The company is still solidly profitable, he said, and while it is losing money overseas, it is working on a solution. Furthermore, he praised the ability and leadership of Ford’s chief executive, Jim Hackett, who he said was doing “a really good job.”
“I don’t think it’s even close to a crisis,” he said.
Not everyone shares his confidence.
The automaker’s bottom line is weakening despite record sales of its pickup trucks and sport utility vehicles. In August, its credit rating was cut to one level above junk status. And Ford’s stock price has fallen to its lowest point since 2009, when the United States economy was in a deep recession.
“The foundation of Ford — the trucks — is still healthy, but there are concerns about whether Ford has prepared for tomorrow and the future,” said Karl Brauer, executive publisher of the auto information providers Autotrader and Kelley Blue Book. “Ford hasn’t been effective enough in convincing investors that they are.”
In the latest move to cut costs, Ford is reorganizing its worldwide salaried work force of 70,000 with the goal of having a leaner staff by the second quarter of 2019. The move, outlined to employees on Thursday, is likely to eliminate several thousand jobs, said Karen Hampton, a company spokeswoman.
“We believe there will be reductions as part of it, but we don’t have specific targets,” Ms. Hampton said. She said the reorganization was meant to speed decision-making and cut the time it takes to develop new vehicles, two points that Mr. Hackett has emphasized.
The effort was first reported by The Detroit Free Press.
Part of the frustration among those sizing up the company stems from Mr. Hackett’s slow rollout of a recovery plan. Since taking the helm in May 2017, Mr. Hackett has outlined broad cost-reduction goals, but has stopped short of explaining how they will be achieved. Ford once planned a daylong meeting with Wall Street analysts on Sept. 25, but canceled it in July, saying it needed more time.
Elements of the plan are emerging bit by bit. Beyond the reduction in the salaried work force, another initiative involves partnerships.
Ford is in talks with Volkswagen about a broad alliance that could help turn around its ailing operations in Europe and South America. It is also discussing ways to expand cooperation with Mahindra, the Indian automaker. India is another market where Ford is struggling.
Mr. Ford, a great-grandson of the company’s founder, Henry Ford, acknowledged the discussions at the Rouge complex, now the site of a plant that produces the F-150 pickup.
William C. Ford Jr., Ford Motor’s chairman, at an event marking the 100th anniversary of the Rouge complex. The plant was a cost-cutting innovation of Mr. Ford’s great-grandfather Henry Ford that made cars affordable to a mass market.CreditRebecca Cook/Reuters
“We don’t ever rely on a partner to fix things for us,” he said. “We have to get our own house in order first. Partnerships can help with capital intensity and things like that.”
Analysts said a partnership with Volkswagen could help both companies. Ford makes money on delivery vans and other small trucks, an area where Volkswagen struggles. The cooperation could involve helping Volkswagen produce small pickups like the Ford Ranger and sharing the cost of developing electric vehicles and other technologies to meet more stringent emissions regulations in Europe.
“Volkswagen is definitely intriguing,” said Brian Johnson of Barclays Capital. “You can definitely see the business logic behind it.”
A century ago, Ford revolutionized auto manufacturing when it opened the Rouge complex. A marvel in its time, it produced cars and all their parts, including glass, tires and engines. It generated its own electricity, had a hospital and police station and employed as many as 100,000 workers. This vertical integration helped Ford lower costs enough to produce cars that ordinary people could afford.
Today, Ford must again find ways to cut costs. In July, Mr. Hackett said his restructuring plan could involve charges of $11 billion over the next three to five years. That news arrived as Ford reported net income declined by nearly half to $1.1 billion in the second quarter.
The urgency was highlighted last week when Mr. Hackett said on Bloomberg television that the Trump administration’s tariffs on imported aluminum and steel would raise Ford’s costs by $1 billion. The company said the costs would be incurred in 2018 and 2019.
The tariffs could erode the profit margins of the F-150, which has aluminum body panels. But Mr. Ford said the automaker had taken the tariffs into account and did not need to modify its turnaround plan.
“We just want to work with the administration on trade issues, tariff issues, and they’ve been quite good about it,” he said. But Ford “runs a lot better when we have certainty and we don’t have big gyrations,” he added. “Our business is at its best when we have certainty with tax regimes, trade regimes.”
Another trade move by the administration was welcomed by Ford — the agreement that keeps Canada in a three-nation trade zone in North America. Ford makes trucks and sport utility vehicles in Ontario.
F-150s on the Dearborn assembly line. Ford is planning new S.U.V.s, truck variants and electric vehicles as it phases out sedans for the United States market.CreditRebecca Cook/Reuters
Just two years ago, Ford seemed like the healthiest of the three Detroit automakers. But while it makes a solid profit on trucks and S.U.V.s like the Explorer, recent earnings reports have shown it losing money on its cars. At the same time, profit has plunged in Europe and Asia, efforts to turn around its South American business have shown little progress, and returns in North America, by far Ford’s largest region, have slumped.
“The problem is they didn’t update and redesign their products enough,” said Michelle Krebs, executive analyst at Autotrader. “It comes back to being slow on product decisions and product development.”
Now Ford’s lineup faces a radical revamping. In April, the company said it would stop making sedans for the United States market to shore up profits. Within a year or two, familiar models like the Fusion, Focus, Fiesta and Taurus will disappear from showrooms. In their place, Ford is planning new S.U.V.s, truck variants and electric vehicles.
Mr. Hackett has talked about how Ford will make decisions and develop vehicles faster — or increase the company’s “clock speed,” as he terms it. Ford announced in June that it had purchased Detroit’s crumbling train station and intended to make it the base of some 2,000 employees working on businesses related to self-driving cars — an effort Mr. Hackett was running when he was called on to replace Mark Fields as chief executive.
But his reluctance to spell out the elements of his restructuring plan has rankled analysts who follow the company and try to predict how much money it will make.
Mr. Hackett was hailed for his previous tenure as chief executive — at the office-furniture company Steelcase — but he is facing a tougher challenge in running Ford, a much larger company with 200,000 employees and dozens of plants around the world.
“We’d like him to be crisper in going from high-level statements into the actionable plans they are going to carry out,” Mr. Johnson of Barclays Capital said.
The tension was evident in a July conference call when Adam Jonas of Morgan Stanley expressed frustration at the lack of detail on what the $11 billion in charges will cover. He asked Mr. Hackett if he would still be around when it came time to assess the results.
“I think there should be zero question about that,” Mr. Hackett replied.
In the meantime, plenty of questions remain.
A version of this article appears in print on Oct. 5, 2018, on Page B1 of the New York edition with the headline: Ford, at a Crossroads, Seeks Cuts and Allies . Order Reprints | Today’s Paper | Subscribe
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|To: Savant who wrote (67)||10/10/2018 12:45:35 AM|
|Savant, Sadly all the Ford cars in the pictures on that site are SEDANS. What is Ford thinking in eliminating sedans?|
I'd heard great things about their hybrid sedans....I just don't think they got the word out. They would have made great UBER cars. Good luck UBERing with a coupe or a truck!
I'm one frustrated long.
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