Can this car save Ford? (page 2)

Getting different regions to cooperate is second nature to most car companies, which never allowed separate empires to emerge. BMW basically sells the same car around the world: Whether you are in Gdansk, Poland, or Gainesville, Fla., you will always find the starter button in the same place. Not so at Ford. It set up its European operations back in 1967 with the mission of creating cars just for the European market. Ever since, Europe and North America have tended to take separate paths in ways big and small. (Try finding a diesel four-door compact in the United States.)

When North American engineers are calibrating the ride and handling of a new car, for example, they equip it with all-season tires inflated to the same pressure. In Europe they use summer tires inflated with unequal pressure; this, they believe, provides the best ride and handling characteristics. It's a small thing, but it affects the way the suspension is tuned and, in turn, the quality of the ride.

Matters have been further complicated by the success of Ford Europe. While North America posted $20.1 billion in pretax losses in the past two years, Ford Europe made $1.1 billion. Not surprisingly, then, Europe has resisted change, concerned that adapting to a single global model could mean losing what has made it successful. To create coherent and consistent incentives, Ford is adjusting executive compensation so that managers on different continents can agree on what's best for the company, not just what is best for their region- a problem that helped cripple earlier efforts.

Mulally could have selected a dictator to work out the messy details. Instead he chose a diplomat: Derrick Kuzak, a career Ford engineer known for his methodical work habits. The self-effacing Kuzak, 57, has worked in both Europe and North America. He understands the personalities - and politics - on both sides of the Atlantic and manages to work smoothly with everyone. "There are a lot of big egos around here, but Derrick doesn't have one," Samardzich says. "Derrick is all about the product."

Kuzak was in Europe earlier in the decade when Ford began unlocking the product-development secrets of Mazda, Ford's Japanese affiliate (Ford owns 33.4%). Mazda knew a lot about computer-aided design and engineering, and Ford Europe tapped its expertise to begin to build and prove out vehicles virtually instead of with physical models. This "digital pre-assembly" cut 14 months out of a typical four-year car development program and enabled engineers to check 16,000 design elements before fabrication.

Ford Europe was also ahead of Dearborn in making more exciting cars. For a time, Kuzak recalls, Europe was missing "emotion in design, harmony among vehicles, and a clear point of view." Enter Martin Smith, a veteran of Porsche, Audi, and Opel, who joined Ford in 2004. His solution: a style he calls "kinetic design." Says Smith: "I was told to make cars that were drop-dead gorgeous, and that's what I set out to do." Gorgeous comes easier to a Ferrari than a Ford, but Smith has made headway.

For the Fiesta he created a high belt-line with a slashing diagonal, a large trapezoidal grille below the front bumper, and bold wheel arches. By contrast, in the United States Ford was putting out functional but bland designs such as the Taurus sedan.

In 2005, Kuzak headed back to the United States to run North American engineering, bringing the European sensibility with him. The timing was spot-on: High gasoline prices and concerns about global warming were driving Americans toward European tastes for smaller, well-equipped cars.

The following year Mulally put Kuzak in charge of global product development, making him the second-most-influential executive in the company. Kuzak has weekly meetings to synchronize new-model plans for each of the major markets. That means coordinating the phaseout of old models and ensuring that each region has the resources in place to launch new ones. No more pinching pennies by selling new models in Europe and older versions in North America, as happened with the Focus.

Timing dictated making the Fiesta the poster car for the new strategy. Since it was already due for an overhaul, Europe could get to work on it right away, and then North America could pick it up. (In the future the idea is that all this will happen more closely in sync in all of Ford's markets.)

The Fiesta features projector-style headlamps found on more expensive cars, high-style wheels, and instrument-panel controls laid out like a cellphone. "We know the Fiesta will be successful and redefine the subcompact segment," Smith brashly promises. To demonstrate his confidence, he made the blue-oval Ford emblem on the hood 30% larger.

This kind of global product development simplifies engineering requirements, reduces time to market, and costs less. Complexity is reduced, and purchasing becomes more efficient. Ford used to use 28 different seat structures around the world, involving frames, springs, and so forth. Now it has two. By 2012, Kuzak says, eight basic car architectures will supply 70% of the company's volume, vs. 30% today.

Some regional differences remain. Americans want more powerful air conditioning and can't stand hatchbacks, so they will get a four-door sedan that blasts AC. And after much discussion, Ford also decided to make two distinct key fobs. Americans like to hear a beep following two light flashes when they lock the car; Europeans find the beep intrusive. "We hope we get to the point where this sort of thing isn't necessary," says North American designer Peter Horbury. "What we must avoid is selling to the fish in the middle of the Atlantic."

But at least these Fiestas are fish in the same ocean; the differences are minor compared with, say, the 1981 Escort, and the variations among them are well within the normal range of market preferences. BMW, for instance, delayed its introduction of the new 1-series in the United States because American customers wouldn't accept the hatchback sold in Europe.

Considering that Ford has tried and failed three times before to create a global car, no one is assuming that success is inevitable this time. Though early reviews of the Fiesta in the automotive press have been enthusiastic, the only review that matters comes when the car actually hits the road against the competition. But if Mulally can get all of Ford's disparate parts to work together to create appealing (and profitable) small and midsized cars, he could go down in history as the company's most significant CEO whose last name isn't Ford- and the Fiesta as the most important car since the Model T.  

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