Ford CEO, Jeff Nemeth, talks about a number of important topics in the motoring industry.
What is your background and training, and what drew you into the motor industry?
I was raised in a small town in Indiana, America. My father was a schoolteacher and my mother was a stay-at-home mom. We always had second-hand cars that my father fixed back in the day when you could actually work on cars without a computer. I happily tinkered with my father’s cars, so it was quite natural that I landed my first job at a petrol station, changing oil, pumping petrol, replacing starters and alternators. I loved what I was doing so I attended school and qualified as a mechanic. I then attended the University of Notre Dame, Indiana where I obtained my BBA and MBA. I raced drag cars and built racecars to help pay my fees. I have been in the auto industry for almost 30 years, starting with General Motors, and for the past 19 years with the Ford Motor Company. I have been through all the disciplines of the industry, from marketing to IT, to product development and designing dealerships.
What were the lessons and skills you learned during your nine years with Ford in Asia?
Patience and persistence; the Asians are fanatic about process discipline and take a long time to understand an issue and make a plan. Only after careful consideration will they begin the task. The result is a very efficient implementation timeline and stable, predictable results.
How valuable is skills learning and skill transfer by doing something innovative and dramatic as you did by taking a large amount of workers on a trip to India to experience a foreign work ethic, culture and set of processes? How difficult was it to get approval from the board?
The new Ranger programme included exports to Europe, which has some of the most quality-conscious customers in the world. The quality output of our plants had to improve to global levels; we had never developed an understanding of European customer requirements nor implemented Ford’s global production system. Our local employees underwent extensive training in India to ensure that the final products meet Ford’s stringent global quality standards. Two hundred team leaders from our Silverton Assembly Plant in Pretoria were taken to India as part of a leadership training and mentoring programme in preparation for the building of the new Ford Ranger. The benefits were up skilling, quality, leadership and global process awareness. The board had faith in the leadership team and the workforce of our South African operations. They were confident that the Ford Production System was a sound base and that we had a great plan to develop our people to use it.
What quantifiable economic impact and value did the skills training experiment have?
The Rangers assembled in Silverton are some of the best quality performing vehicles in the industry. Our workers are now business managers of their areas of the plant and they have driven efficiency to record levels.
What lessons or skills from Africa and South Africa could you take back with pride to Asia for them to learn from us?
Our local employees are like learning sponges. They don’t know what they can’t do so they will try anything. The result is incredibly fast implementation of new processes and improvements. We have invented a process called ‘Managing the Change’ to ensure adequate communication and co-ordination is in place prior to incorporation. I’d like to package this enthusiasm, ownership and passion for the business, to take back to Asia.
The rising fuel cost will have an impact on consumer attitudes - what are the specific challenges Ford are focusing on in this regard and what are the opportunities for your brand?
With challenges come opportunity and, at Ford, we have always focused on making our cars part of our customers’ lives. Rising fuel costs have made us more innovative about our products. Our EcoBoost engine is an example of the great engineering that goes into making our products affordable and fuel-efficient. Ford has done a lot of work around fuel technology. The bottom line is we cannot run on fossil fuels forever, as they’re a finite resource. There have been developments across the industry to achieve better fuel economy and green, safe and high quality smart fuels. At Ford, we aim to be the leader in developing technology that allows for better fuel economy. Ford believes in doing this for a better world. We have great products and we know that, with rising costs, our customers want better fuel economy.
Greening is another perennial hot topic. Right now where do you see the real benefits? Are the key opportunities for Ford about more economical vehicles, cheaper fuel or by going hybrid, electric or even solar?
Ford is continually looking for greener alternatives. Ford’s “reduce, reuse and recycle” commitment is part of the company’s broader global sustainability strategy to reduce its environmental footprint, while at the same time accelerating the development of advanced, fuel-efficient vehicle technologies. One of Ford’s key goals is to use more recycled or renewable materials without compromising performance or durability.
You have a plan to double production annually up to 2016? What percentage is for local and what for the export market?
We manufacture about 70% of our Rangers for export. As Africa’s middle class continues to grow we expect to expand our production to meet the bakkie needs of the continent. With over a billion people, rich natural resources and a youthful population, the potential is great.
How do you see this playing out over the next two to five years, given the state of the economy, fluctuating exchange rates and prices and consumer pressure?
Economic growth will continue to have ups and downs as the global economy evolves and governments find their place in the global space. Successful companies will have competitive costs and quality with a nimble workforce. Companies that are bureaucratic or resistant to change will find the lack of stability in external influences a challenge.
How do you think people from other countries would react to our specific e-toll setup in Gauteng? Are South Africans just unused to paying for things we usually expect to have for ‘free’?
E-tolls are a very sensitive issue for road users, and I think that while South Africans learn more about them and try to understand them, as responsible citizens they’ll need to obey the rule of law. Cities such as London and Singapore have e-tolls that are working successfully. There are various dynamics that influence the attitudes that road users and the public have towards e-tolls. While government, the private sector and citizens iron these out, road users will have to incorporate the costs associated with e-tolls and utilize available methods to make these costs more manageable.
South Africans love travel and our cars are real status symbols. What do you see happening in terms of consumers being resistant to downgrading? What has been your experience from other countries?
Vehicle downgrades are always hard for customers but I believe that time, efficiency and convenience have influenced the definition of what a status symbol is. Quality, efficiency, innovation and safety now influence the decision that goes into purchasing cars as status symbols. We’ve also seen that heritage and legacy are now influencing status-car purchases, whether one downgrades or not. Ford products have all these and they are also affordable and relevant to the changing needs of customers. With people keeping their cars for longer, we’ve had to invest in our research, products and innovation. Ford SA imports some of its entry-level vehicles from other countries such as India. What are the business implications, benefits to consumers and impact on the economy? Presumably all ‘inter-company’? If so, what are the economic benefits of being able to ‘shop cheaper’ by buying from your own overseas division? By manufacturing with economies of scale in large plants, with a robust local supply base, Ford is able to export vehicles globally at competitive costs. The customers are the winners as our One Ford global vehicles are available and attainable to customers across the globe. Technologies such as Sync, EcoBoost, Econetic, adaptive cruise control and a fully connected car, are helping drive mobility solutions in all the markets in which we operate. Our global One Ford strategy is key to having a strong business and providing great products to our customers, with environmental solutions that create a better world.