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Ford vs. GM: Who’s Ahead?

AP's Tom Krisher penned a story last week titled GM, Ford at Different Stages of Recovery, where he proposes that GM is further along the transformation path than Ford. 

The essential difference between Ford and GM, according to some industry analysts, is that GM went into the tank first and is ahead in the restructuring game. "I consider Ford to be in crisis and GM to be in transition," said Gerald Meyers, a former chairman of American Motors Corp. who now teaches leadership at the University of Michigan. "The future is not clear yet at General Motors. There is a future. It's just a matter of how much and when, and that's a big step ahead of Ford."

Far be it for me to criticize a former chairman of AMC... we know how successful they were.  Or at least those of us that go back that far.  I can understand the superficial rationale of GM hitting bottom first while Ford just announced rather phenomenal losses, but that isn't the only criteria when evaluating turnaround efficacy.

But the Dearborn-based company [Ford] doesn't have the momentum that GM has, said Rebecca Lindland, an auto analyst at Global Insight, an economic research and consulting company.

"The biggest difference is GM is on track. They have a mission. When I talk to the people there, when you see the products, you get a feeling of confidence and empowerment," she said. "With Ford, all we hear about is conflict, turmoil, uncertainty. Internally this is at all levels."

Ok, so now we have anecdotal evidence of the beginnings of a culture change at GM.  A "feeling of confidence and empowerment"... perhaps similar to that felt by the troops on the eventual losing side of World War II?  Don't worry, the analogy ends there.  I guess having a positive-minded set of troops is better than the alternative, so I'll let this slide.

Meanwhile, Ford is "conflict, turmoil, uncertainty."  Is that necessarily a bad thing?  I would be more concerned with a company that was "complacent, steady, overconfident" to use just one set of antonyms.  In fact, we've written before about the Toyota culture, which has a presumption of imperfection. That type of stress can be good, and the fear of a cataclysmic industry or market disruption is often what drives the most successful lean manufacturing efforts.  Change is hard; you have to really want to change... or be scared into doing it.

A lean transformation takes real leadership, and that's where we see a wide disparity between Ford and GM.  On the Ford side we have CEO Alan Mulally who came from Boeing, a company with a very strong lean program.  We have some problems with Boeing's offshoring practices, but much of that is driven by political necessity.  Bottom line is that he understand lean, and just recently visited archrival Toyota with VP Mark Fields.

At a private dinner on Wednesday, Ford CEO Alan Mulally told journalists that the recent visit he and Mark Fields made to Toyota's headquarters was born out of a desire to understand more about the Japanese automaker's manufacturing and product development processes, which Mulally holds in very high esteem. He went so far as to refer to Toyota as "the finest machine in the world, the finest production system in the world," adding that "we (Mulally and Fields) went to study with the master."

How many CEO's do you know that would visit a competitor and then hail them as being the best?  And it says something about Toyota that they welcome a competitor, and they are well-known for helping teach other companies, and even competitors, how to manufacture better.

Then we have GM. CEO Rick Wagoner has an obsession with being number one... number one in sales, not in profits.  So much so that he's considering an investment in an unprofitable Malaysian automaker simply to keep total vehicle sales bragging rights in GM's court.

So on one side we have Ford with a leader who understands lean and is willing to visit the best in the world to learn, with a stressed workforce that is in the middle of tumultuous change.  On the other side we have GM with a confident workforce and a "leader" who is investing in unprofitable companies to maintain an egocentric metric that has no relationship to long-term success.

Which company is really ahead? 

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9 Responses to "Ford vs. GM: Who’s Ahead?"

  • Patrick Lefler
    28 January 2007 - 4:33 pm

    It’s this type of thinking that got Ford and GM into this mess in the first place. The world does not revolve around Ford or GM anymore. Each is so worried about what the other is doing, that they can’t focus on other (much more) powerful competitors. I really don’t care who is ahead – and they shouldn’t either. Start using Toyota or Honda as their benchmark – then I will care…and maybe think about buying one of their cars.

  • Ron
    28 January 2007 - 7:16 pm

    Excellent post and brings up such an interesting topic. I have not worked in the auto industry but am amazed at how arrogant GM seems in the press, etc.

    I do hope Ford gets things moving in the right direction and by the sounds of it they are.

    It will be interesting to hear of their progress this year.

  • John
    30 January 2007 - 8:38 am

    I have to say I disagree and feel it was a bit of a cheap shot at Wagoner. GM and Wagoner had a spectacular year last year by any measure both in restructuring and also in new product perhaps best capped by the sweep of car and truck of the year by the aura and silverado. I also think you are looking at the approach to Proton all wrong. If GM followed your reasoning they never would have purchased Daewoo which was practically bankrupt when they purchased them. Now Daewoo has become the #2 automaker in Korea and is surging (watch out Hyundai) and has become a great feel good success story in Korea. More importantly, Daewoo has become a central design and engineering center for GM as part of the global restructuring of product development and is now bringing needed expertise to design of small fuel-efficient vehicles. No question Daewoo was a success. And with the explosive growth of the middle class in India and China and the sudden ability of many to purchase a vehicle reaching out to purchase an automaker in South East Asia now seems to have some reasonable thinking behind it. Somebody is going to make a ton of money in these countries and you are not going to do it if you are trying to import from the U.S. or even Japan. Trust me, Toyota knows this well. For that matter the explosive growth of GM in China and other parts of asia is a part of the story that is rarely mentioned in stories or blogposts looking negatively at GM these days. Not saying everything is perfect at GM or that there is still a question of survival. The hurdles they face are tremendous especially in the area of perception and reputation. But I don’t see this is as arrogance but rather a company that has their feet under them finally and is moving with a sense of mission.

  • Josef Horber
    30 January 2007 - 11:26 am

    Buying other car companies in order to boost GM’s sales is nonsense. The GM family already has more companies and brands then it needs.

    This is a solution to a problem, that does not exist, because the problem is not the lack of brands or access to markets. GM could set up factories in any region of the world and produce close to their customers, just like Toyota does.

    The real problem is, that they can not produce quality cars, that meat the customer’s expectations even with their current brands and companies. At least for Europe, it does not matter, whether it´s called Opel, Cadillac, GM, FIAT, Daewoo and whatever else, they all have the same customer perception… miles behind others.

    Investing just half of their time and effort into design and production excellence, instead of buying other companies and integrating them into the same old business system, that proved to fail is not going to help them. But I guess, this seems easier then admitting Your weekness, reflecting on what You should change, and attacking Your real problems.

    Seems like the GM execs’ only tool is a hammer, and now all their problems tend to look like nails.

  • Barry "aka the Hillbilly"
    1 February 2007 - 3:27 am

    The critical question is probably not which one is farther ahead of the other. It’s how far behind Toyota and Honda are they still?

    There are still a lot of problems that each is going to have to tackle going forward.

    It’s going to be a rough road for both.

    Best of Luck to them both!

  • Mallinath
    2 March 2007 - 7:35 am

    I totally disagree with the above article. GM is lagging behind is not because of they are technically or financially not sound as Toyaota. The reason why GM lags behibd is it’s work culture. It has a vey slow approach which they need to change. GM management should extract 120% of work from their work force, this can be done only when “strech” becomes your work culture. See GE, how it extracts work from their employees. GM should adopt John Welch’s approach.

  • Don
    10 September 2008 - 4:14 pm

    Jack is a nickname for John. Nice try though Graham.

    Both ford and GM will be fine in a few years. Both Companies are coming out with vehicles that are meeting or exceeding the quality of the “foreign” companies. If you were to take a survey of the general public you will see that their reputation is improving. the American public does not care about manufacturing or who is in charge, they care about who has a good reputations and the price of vehicles. Price sells cars and Ford and GM selling cars makes them money. With anything in life, you need to stick with the basics and you will succeed.

  • john martino
    17 March 2009 - 7:07 pm

    I just bought ford stock and also bought a 450 ford diesel pick up truck. I spent the last two years buying work equipment vehicles and test drove and studied all the white sheets. Ford was clearly ahead of Gm and Chysler/Dodge. However watch out for Toyota’s truck division Hino which I also purchased It is light years ahead of anything american including international/navistar etc. Toyota is also scheduled to unviel thier heavy duty pick up the likes of which we have never seen. It’s a deisel dually that climbs walls. For now I think Ford will be the survivor between the big three.