His company is in the red. His workforce is shrinking. He blames the Japanese. Is the head of Ford UK a chairman obsessed?
Ian McAllister, the gently-spoken Ford UK chairman, comes with a reputation. He is, according to his admirers, sharp, eloquent, thoughtful and the best spokesman the UK car industry has had for over a decade. Tell that to the Japanese.
McAllister, 49, boss of Britain's largest car company, broke motor industry ranks earlier this year with a sharply-worded attack on the role of Japanese producers in the UK. The criticism, initially contained in written evidence to the House of Commons employment select committee, raised more than a few eyebrows in the normally tight-knit circle of major manufacturers. Editorials and letters followed. McAllister expressed 'surprise' at the rumpus caused. This, perhaps, can be taken with a pinch of salt. His views echo the increasing dissatisfaction of Ford's parent company over the role of Japanese manufacturers in the US. Car industry experts suspect a co-ordinated lobby in the making.
Born in Scotland and raised in Bolton, McAllister is a 30-year Ford man. His expertise has been honed through stints at Ford in Germany and in the US. Indeed, he is as close to the heartbeat of the manufacturer's Detroit head office as is possible. It is McAllister who has the daunting task of hauling Ford UK round from its recent huge losses. Moreover, he must prove, with the launch of the Mondeo in March, that the company can still produce a world-beating car. No one is underestimating the size of these tasks. Cynics would say that chucking tacks under the wheels of Japanese manufacturers' rapid growth in the UK is not a bad move to start off with.
A medium-height, well-covered man, McAllister is married with three sons and a daughter. He runs the company from a large, bland suite on the sixth floor of Ford's large, bland management HQ in Warley, Essex. He would not win prizes for flamboyance - he lists computer studies and running as his hobbies. But then flamboyance never won you points at Ford. The decor in his office, for example - car prints, G-plan furniture and lots of beige - has probably not changed in decades.
But his open, hands-on style of management has impressed many during his 18 months in charge. 'It's a markedly different approach to some of his predecessors,' says a long-serving Ford executive who has watched his rise. 'He is not just a good businessman, he is prepared to listen, too. Sometimes when you are at the top of large organisations it is difficult to retain that balance. And he's got a good chunk of common sense.' He will need it, as the problems that confront him are huge. Ford is in crisis. Last year it announced a 1991 loss of £430 million (against 1990's £136-million profit), and revealed that it was seeking 3,000 job cuts across its 33,000-strong UK workforce. This month it is likely to declare another large loss (for 1992), and a continuing drive on 'efficiency', which will take its workforce below the 30,000 mark for a long time to come. It still holds a leading 23% (down from 29%) share of the car market in Britain (GM/Vauxhall is next with 17%), but it has had to deal with the worst drop in demand since the war, worse even than the oil crisis in the '70s.
Its response to the slump - slowed production, the short-term shutdown of some of its 21 plants and workers put on three-and four-day weeks - proved to be not swift enough. Its plants consistently produced more cars than people wanted throughout the sales slide. Now that slide has bottomed out, and sales may even be beginning to rise. Ford is hoping to catch the tide with its Mondeo launch and push itself back into profit for 1993.
McAllister believes the car, the replacement for the Sierra, is the best Ford has produced in years. He agrees its success is crucial to the firm, both financially and in terms of morale. 'We had to demonstrate to ourselves and to our customers that we had the technology and the confidence to build a car that was the best of its class,' he says.
That does not mean that previous launches were not, he counters. Not at all. 'But I think there is more passion in this car than any of the others. We set out to say, "Look, we're going to show the world what we can do with this bloody thing." We wanted to show we could beat the Japanese and we have. We have beaten them on technology, on safety and on the environment.' He confidently predicts that the Mondeo, already well-received, will dent the competition from Vauxhall as well. Its share gains, he says, have been entirely in the fleet market, and based mainly on the Cavalier. 'The Mondeo knocks that into a cocked hat.' He adds a caveat, however: 'As I keep being reminded, we produce 1.5 million cars for sale in Europe a year and 1.2 million are not Mondeo.' This is all very different from the market McAllister joined as a graduate from University College London in 1964. Then - pre-Ford Cortina - British Leyland bestrode the UK with a 60%-plus share. McAllister, the conscientious son of a Scottish tax officer, was looking for a firm which offered good training. He plumped for Ford, entering as a finance trainee. He was immediately sent to Langley to take apart engines and gearboxes (he still can). He worked his way up steadily through operations and marketing. Then he was fast-tracked through a bewildering array of jobs, rarely staying put for more than two years. He had a number of job offers en route to the 46e top - British Leyland (of course), British Aerospace, Hawker Siddeley, Chrysler - but he never budged from Ford. 'I was having too much fun,' he says. He only wavered once, in 1968, when he was depressed that Ford would not send him to Harvard. He thought about leaving and paying his own way. In the end he decided to accept a promotion to Ford in Germany. 'I have a simple management rule,' he says. 'Always accept promotions. They don't come around that often.' That said, he baulked twice at going to the US after his tour of duty in Germany as head of sales. By then it was obvious to all his colleagues that he was being buffed up for the top UK job. Ford wanted him to do a stint in 'central staff' in the US first. McAllister wanted to be closer to the market. He won, and ended up spending three years (1989-92) as general marketing manager of Lincoln Mercury. It was an unusual move for a Brit. Lincoln staff were surprised. 'Their reaction was, "Gee, who is this guy, and why?"' remembers McAllister.
Now all that experience is being put to the test, as he tries to haul Ford UK back into profit. How is he going about it? By not chasing volume, obviously. The repeated claims by rivals that Ford has been desperate to flog off its over-production at just about any price, clearly irritate him. 'One of the things that really pisses me off,' he says, 'is when the press say we are the big discounters. We are not big discounters.We discount far less than the competition, yet we are accused of chasing numbers all the time.' You might guess that the Japanese have also been getting his goat recently. The rapid success of Honda, Nissan and Toyota in the UK is in stark contrast to Ford's ever shrinking workforce. The two situations are strongly linked, McAllister believes. As he told MPs in his evidence to the employment committee: 'With the growing presence of Japanese transplant operation assembly facilities in Britain operating with the advantages of a greenfield site and extremely low levels of engineering and manufacturing integration, it should not be surprising that an established company such as Ford must shed labour to ensure its future competitiveness and prosperity.' In short, the Japanese, with their grants and greenfield sites, have been unfairly helped. It will take Ford, with its antiquated plants, older workforce and out-of-date working practices, years to catch up. It cannot be expected to change overnight, nor should the Government allow the Japanese to tear the indigenous industry apart.
It was a good, old-fashioned bit of tub-thumping. Furthermore, coming from McAllister (member of the American Chamber of Commerce, board member of Business in the Community, observer on the president's council of the CBI) it was probably taken very seriously.
It was well timed, too, taking the heat off Ford as it chased redundancy targets at its Dagenham plant, among others. Don't blame us for the job losses, runs the sub-text of McAllister's statement, blame the DTI for letting the Japanese in so easily.
Some might accuse Ford of 'scapegoating' - if you cannot cure the problem find someone else to blame - but perhaps the company has a point. 'It's simply that the Government has been looking at Japanese inward investment from a particular viewpoint,' says McAllister. 'We are saying that this particular viewpoint should be widened to more than just establishing a particular plant in Sunderland and Derby.' The more sales the Japanese take away from indigenous manufacturers, runs the argument, the more those manufacturers' level of investment in the UK is jeopardised. As McAllister puts it, 'In a static market someone else's extra sales are our lost sales.' But hang on, are there not some inconsistencies here? First, you don't have to have spent 30 years at Ford to realise that this is how markets work. And second, Ford is not even British, so surely it is a bit cheeky to demand protection from the British government? McAllister's eyes narrow. 'No, we are not British but we have been here since 1910.' Does that make Ford more British than the Japanese? 'I think so,' says McAllister, 'because we would argue that our commitment to Britain is greater. Go and look at Dunton - there are 3,000 engineers down there. Then go and ask the Japanese where they do their engineering. That's the big difference.' So Ford is not a transplant? 'No. I have had discussions with government ministers on this issue. They say, 49e "You are no different to the Japanese, you are American". And I turn round and say to them, "Just look at the investment here, more particularly look at the investment in the infrastructure."' McAllister is no stranger to the corridors of power, as ministers, buttonholed by him on a range of subjects from the economy to exclusive dealer networks, have discovered. Arguing with him is a bit like trying to shift a huge boulder - uphill. But there are those who think this kind of special pleading, however closely argued, is not well thought through. For a start, why bash Japan when Ford has a 25% stake in Mazda? And how can Ford expect the Government to offer more protection? If the same scenario happened in packaged goods, for example, it is inconceivable that a new foreign competitor would be held back to give another, longer-established one time to catch up.
McAllister says Ford is not asking for protection, just the ubiquitous 'level playing field' (see The Uneven Playing Field, p58). Why? Because Ford is the only manufacturer left in Britain who can design, engineer and build a car here. And the UK needs a vibrant motor industry as a prerequisite of a strong economy.
But is the whole point not that cars are now a global business? When was the last time Ford actually did design, engineer and build a car totally in Britain? 'The Escort and the Mondeo,' says McAllister proudly. But isn't the Mondeo, as its name reflects, and as Ford have been loudly boasting, the company's first 'world car'?
'But the engineering was done here,' says McAllister. 'Well, some of it was done in Germany, but the lead engineering was done here - with British engineers in charge.' Even so, is the real truth not that the Japanese have simply got better products, and that the indigenous car manufacturers are ripe for the taking, having squandered their natural advantages, such as customer loyalty and knowledge of the market? McAllister bristles slightly. Not so, he says, Ford has the products, and it knows it can produce them as efficiently as the Japanese because it already does so in plants situated in Mexico, Chicago and Atlanta. It just takes time. The danger for McAllister is that, in arguing out these issues, and defending Ford's position, he could easily be portrayed as a man obsessed. Certainly there is very real concern in corporate America about how Japanese companies have taken advantage of the West's open-door industrial policy, using transplant subsidiaries as a Trojan horse to help establish market dominance. The worst-case scenario depicts Japanese multinationals establishing tinpot screwdriver companies, ruthlessly repatriating profits and degrading indigenous technology. But to believe that, you have to pile supposition on supposition.
McAllister is, however, taking a more aggressive stance than Ford ever has in the past. Is he going to change the Ford image? No, he says. Certainly not in the strict advertising sense. He is particularly pleased with Ford's umbrella slogan, developed under his predecessor, Everything We Do Is Driven By You. 'It means something not just to us and the public: it is a rallying call to the dealer organisation and the employees.' He follows the advertising process closely, making sure each ad is heavily researched before it is released. And yes, he will wave through ads he does not like, if he can be shown figures proving they hit the mark. He admits that the recent Escort TV campaign, for instance, was not one of his favourites. Still, he was hardly the target market.
Once a week he tours the dealer network, quizzing the salesmen, trying to find out what Ford programmes are working for them, and what are not. He wants Ford's British dealers to learn from their American counterparts, who, he says, are far more customer friendly. The trick is to make everything as simple as possible for the public. Hence the marketing of Ford's innovative Options finance programme - a form of hire purchase, but one that takes into account the future second-hand value of a new car. McAllister helped develop the scheme at Lincoln Mercury. 'We were trying to get customers away from just thinking about buying a car. We wanted them to bear in mind usage as well. Advertisement research showed that if we explained the programme to customers they were put off. But if we told them what it wasn't, the interest level went up dramatically.' He was chuffed when the programme won Ford UK a marketing award last year.
Colleagues say that he is as open with journalists as he is with employees. A regular guest on Radio 4's Any Questions, he is happy to chat on all kinds of subjects, such as marketing or morality, or even the concept of systemic thinking in philosophy. His thoughtful manner is accompanied by a certain sophistry, no doubt a useful weapon when dealing with journalists. Quizzed about the motor car's effect on the environment, he replies, straight-faced, that people should simply buy more new cars. Why? Because the air coming out the back is now often cleaner than that going in the front. No doubt he will need more of that kind of logic in the battles ahead. l of that kind of driven logic in the battles ahead.