The Ford We Didn’t Know

Ford CEO Jim Farley exposed significant product-development lapses during his company’s fourth-quarter-2022 earnings call.

Ford Mustang Mach-E: Released with a wire harness that measures nearly a mile longer than necessary, according to Ford’s CEO. (Ford)

Ford CEO Jim Farley exposed significant product-development lapses during his company’s fourth-quarter-2022 earnings call on February 2. Ford’s 4Q profit performance was no-excuses dismal. Its causes, he stated, run deep. So, in front of investors and media, Farley boldly lifted Ford’s PD skirt to reveal alarming management and process issues behind the dysfunction. The fire had to be lit.

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“We didn’t know that our wiring harness for Mach-E was 1.6 kilometers longer than it needed to be,” Farley stated on the call. “We didn’t know it’s 70 pounds heavier and that that’s [worth] $300 a battery. We didn’t know that we underinvested in braking technology to save on the battery size.” Credit to CNN’s Chris Isidore for roping these EV-specific details (apparently overlooked by the other reporters) into a Feb. 3 story.

Later that day I called two Ford engineer friends to see how their boss’s frankness was playing out among the technical staffs in Dearborn. They’d been smarting from another bomb: Ford’s engineering ranks are at least 25% overstaffed compared with competitors, the CEO announced.

“Yeah, his observations were humbling to say the least,” one of my friends, a 10-year Ford veteran, said. “It’s embarrassing. But how did Mach-E get released with a harness that’s a mile too long?”

No OEM can afford oversights like that. It’s part of why Ford is getting killed with warranty cost, my other pal noted.

The most surprising words in Farley’s Mach-E revelations are, “We didn’t know.” Does that more accurately mean internal communication failed? Surely the Mach-E development team was aware of state-of-art electrical architectures during the program’s design phase. Did Ford cut back on its in-house competitive teardowns? Were the major benchmarking firms — A2MAC1, Caresoft, and Munro & Assoc. — involved up front in Mach-E development? Or were they called in after launch to identify where Ford’s sporty new EV needed to lose complexity, weight and cost? I’d guess the latter scenario, given the “we didn’t know” admission.

As legendary statistician W. Edwards Deming once told Ford’s leadership, 85% of all product-development issues related to quality are related to management decisions. Deming had been called in to advise Ford in the early 1980s, during a period where the company was bleeding red ink. Ford chairman Don Peterson faced pressures perhaps greater than those Farley is facing today. Peterson’s solution was to establish the now-famous “team” approach to design, engineering and manufacturing that spawned the best-selling 1986 Ford Taurus and Mercury Sable. That ground-breaking, $3.25-billion vehicle program, led by the late, great engineer Lew Veraldi, spearheaded a quality “culture” at the Blue Oval.

Deming’s influence and Veraldi’s leadership — he was later promoted to head advanced vehicle development — ushered in statistical process control, initiated Six Sigma management techniques, and applied Taguchi methods across Ford’s PD and manufacturing operations.

As the program embarked, Veraldi’s team naturally tore down and scrutinized the Honda Accord and Toyota Camry — the Tesla Model Ys of their era — to learn their inner workings. But they also dug into the BMW 5-Series, seeking insight and inspiration outside and above Taurus’s targeted competitive set. The result was a transformation — reduced development time, lower costs, fresh thinking — that made “Quality is Job 1” and “Ford” synonymous.

My engineer friends are confident their company will learn from its current state of confusion, and never again be caught in a “we didn’t know.” That’s a vow Lew Veraldi would heartily approve.