Tag: Ford

Tesla’s real problem isn’t its shareholders

Peter Parks | AFP | Getty Images
Elon Musk

Elon Musk made a wise decision when he withdrew his proposal to take Tesla private. While Musk's external advisors showed him a viable path to privatization, the complexities of the process would have been a great distraction from the real issue facing Tesla: its lack of an experienced leadership team to run the company.

Musk may be the most exceptional entrepreneur of this generation, but he has a long way to go from being a creative innovator to building an organization that can run a global automobile company.

In recent months Musk has become increasingly frustrated with his shareholders and the questions they were asking — so much so that he issued a simple tweet on August 7: “Am considering taking Tesla private at $420. Funding secured.”

After a flurry of activity with bankers, investors and the Tesla board, Musk announced last Friday that he had changed his mind and Tesla would continue to be a public company.

All this investor focus has been a giant diversion from Tesla's real problems. In fact, Tesla's investors have been its biggest supporters, running its market valuation to $53 billion, higher than either General Motors ($52 billion) or Ford ($40 billion). Meanwhile, Tesla continues to lose billions of dollars with a dwindling cash balance.

In the recent past Musk has lost 40 key executives, including his heads of product development (Doug Field), sales and marketing (Jon McNeill) and finance (Susan Repo), plus Solar City's Peter Rive and Lyndon Rive. As a result, Musk is trying to do it all himself, even sleeping at the factory to try to get the Model 3 up and running.

No one can run a big company like Tesla alone. Leading a global automobile business is an extremely complex task requiring a strong, diverse team of executive leaders at all levels. Building the top team is precisely what Mary Barra has done in restoring General Motors following its 2009 emergence from bankruptcy. That's what Alan Mulally did to lead Ford through the 2008-09 recession.

The playbook that Barra and Mulally each used fostered teamwork, promoted healthy collaboration and created cohesion around one team implementing one plan for the entire company's success.

Musk should stop worrying about beating the short sellers and focus entirely on rebuilding Tesla's depleted leadership ranks. Most importantly, he should recruit a partner with extensive automobile experience to run the business on a day-to-day business.

An ideal candidate would be Mark Fields, who was CEO of Ford from 2014 to 2017 and who has been in the auto business for 29 years. With his vast knowledge of the business and his proven leadership capabilities, Fields in turn can recruit top performers from auto companies all over the world to get Tesla's operations back on track.

In addition, Tesla needs a very strong CFO who can put the company's finances in order. That means stopping the cash drain and getting the company profitable. Doing so will require correcting Tesla's rampant operational problems, getting Model 3 production up and running and bringing down the cost of its vehicles.

Finally, the Tesla board needs to be upgraded to provide wisdom and insights to Musk and his team about the intricacies of the global automobile business. Tesla's current board consists of Musk, his brother, the former CFO of Tesla's Solar City acquisition, three venture capitalists, the COO of Telstra and James Murdoch, CEO of Twenty-First Century Fox. None of these board members has any experience in the automobile business.

Tesla should add two to three experienced executives who understand the business and can advise management as Tesla ramps up and prepares for the next generation of vehicles.

Elon Musk is often compared to Steve Jobs, an equally brilliant entrepreneur with the vision and drive to creative transformative products. Jobs was forced out by the Apple board in 1985 for his erratic behavior. While he was building Pixar, he learned a great deal about leadership from two extraordinary innovation leaders, Ed Catmull and John Lasseter. When he returned to Apple 12 years later, he teamed up with Tim Cook who helped him build the company and turned Jobs' vision into the world's most valuable company.

In the middle of his journey, Musk now finds himself a dark wood. Executive departures continue. The stock price gyrates. The media piles on. In these difficult times, Musk needs to transform himself, much as Steve Jobs did in the 1990s.

There are other examples of entrepreneurs teaming with superb business leaders to create great enterprises; most notably, Google's Larry Page and Sergey Brin recruited Eric Schmidt as CEO and Facebook's Mark Zuckerberg brought in Sheryl Sandberg as COO. In an earlier era, the teams of David Packard and Bill Hewlett of Hewlett-Packard and Intel's Gordon Moore, Bob Noyce and Andy Grove created the signature companies that pioneered Silicon Valley.

Only if Musk is prepared to recruit a partner to build Tesla's leadership team and strengthen his board will he be able to transform Tesla from a breakthrough entrepreneurial company to a rapidly growing automobile company with an enduring legacy.

Commentary by Bill George, a senior fellow at Harvard Business School, former Chairman & CEO of Medtronic, and the author of “Discover Your True North.” He has taught in Unilever education programs in the past decade. Follow him on Twitter
@Bill_George
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Ford is using drones to keep an eye on its UK factories — and save money

Drones are making Ford's factories safer and more efficient
11:53 AM ET Fri, 31 Aug 2018 | 01:05

There is a new sight buzzing around a Ford engine factory in London: drones.

The second-largest U.S. automaker is now using drones to perform key inspections in difficult-to-reach places around the Dagenham Engine Plant. The unconventional move saves Ford considerable time and money and brings several other advantages, executives say.

In the past, plant managers used to have to shut down the factory at least once a year to perform risky and time-consuming inspections on high-up structures, parts of the factory's roof and other hard-to-reach places. The drones allow the Michigan-based automaker to conduct safety inspections without shutting down production.

The drones also give Ford a more objective plant maintenance record, preventing arguments over the diagnosis and possible solutions to problems, said Pat Manning, a machine production manager for the EcoBlue diesel engine at the plant, where it's code named Panther.

“The video images are fantastic and are a great tool for us,” Manning said.

One of the most common inspections involves overhead structures known as gantries. These are long linear frames suspended near the roof and support a track that shuttles a robotic arm around the plant. The arms on these tracks are what pick up parts in one place and feed them into the machines along the factory floor.

Source: Ford
A drone inspecting a gantry at the Ford Dagenham plant.

There are around 200 gantries in this plant, and they need to be inspected to ensure they don't break down or break loose and fall onto the floor, equipment or people.

The plant has typically done inspections during a three-week shutdown in the summer. On each of the plant's four machine lines, a team of up to six people would roll in motorized lifts and build scaffolds to reach the gantries.

The factory had been looking for a way to make the process more efficient, and one worker joked they ought to mount a remote control car onto the track with a camera attached that could zip back and forth and take footage.

Then someone suggested a drone.

The factory worked with some local companies to develop a custom drone mounted with several cameras, including a thermal imaging camera that can sense heat, a wide-angle lens and a close-up lens. It can take video or still images.

The drone allows a team of two do what had taken almost two-dozen people to do, and the amount of time it takes to inspect a single 120-foot gantry was reduced from 12 hours to 12 minutes. The plant doesn't need to shut down production either, and it allows for more frequent inspections.

It also eliminates the risk of having to scale 150 feet to inspect the gantries.

The drones can also monitor machines and power cable temperatures as well as inspect robots, overhead conveyor belts, cranes, hoists and the roof for leaks.

The team is also exploring the possibility of using the drones for drain and sewer inspections as well as emergency lighting.

Source: Ford
A plant worker using a drone at the Ford Dagenham factory in London, England.

The video and still footage the cameras take have other advantages. They can be stored, allowing the plant to compare images over time and observe changes or patterns.

Electric Mercedes opens German assault on Tesla

STOCKHOLM/PARIS (Reuters) – Mercedes-Benz is set to unveil its much-anticipated electric SUV on Tuesday, marking the start of a German onslaught against Tesla’s (TSLA.O) dominance of the fast-growing market for premium battery cars. FILE PHOTO: A Tesla Model S electric car is seen at its dealership in Seoul, South Korea July 6, 2017. REUTERS/Kim Hong-Ji/File… Continue reading Electric Mercedes opens German assault on Tesla

Ford Cancels Plans to Import SUV Model From China in Wake of Tariffs

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Why Ford Is Canceling Plans to Import a China-Built Crossover Model

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In recruiting win, GM’s Cruise employees offered equity in Cruise

In what will be seen as a big recruiting and retention win for Cruise, employees will be offered equity in GM’s self-driving technology subsidiary rather than shares of GM. The securities offering was disclosed in a recent SEC filing for GM Cruise Holdings LLC. The filing, which also lists the initial officers of GM Cruise… Continue reading In recruiting win, GM’s Cruise employees offered equity in Cruise

It’s getting harder to find those zero-percent financing deals on new cars

Daniel Acker | Bloomberg | Getty Images
A General Motors dealership in La Salle, Illinois.

With inventories in a more healthy place and nationwide interest rates ticking up, a report from Edmunds shows that zero-percent finance deals accounted for the smallest portion of July auto sales in over 10 years.

The report shows these deals accounted for just 6.92 percent of new car deals in July. That's a significant drop off from last year's 11.34 percent, or 11.18 percent 5 years ago, representing the lowest proportion of deals since 2005.

“It's definitely much less pervasive than it's been in the past,” Jeremy Acevedo, Edmunds' manager of industry analysis, told CNBC. “We're seeing levels that are a little more than half of what they were last July.”

Automakers have a good inventory mix of in-demand vehicles that don't require heavy incentives to sell, Acevedo said. You can still get zero-percent deals on less desirable vehicles — sedans in particular — but the automakers aren't as weighed down with previous-model-year vehicles this year.

Additionally, zero-percent finance deals are becoming a less cost-effective way for automakers to drive deals. General Motors, which popularized the concept with their post-9/11 “Keep America Rolling” zero-percent financing, has been less aggressive with the practice this year.

“That's partly a function of rising interest rates, which makes it a little more expensive,” GM spokesman Jim Cain said.

It's still pretty widely used in the industry, but GM likes to keep a mix of different incentives in the industry, he said.

“The way we try to approach things is to make sure we have competitive lease deals, especially in markets like the Northeast and California where leasing is really possible,” Cain said. “And we have a simple and compelling message that's easy for our dealers to advertise and cuts through the clutter.”

For people looking to buy rather than lease, Cain says the company is focusing on direct discounts that make sense to the customer. Rather than differing interest rates for different terms and buyers, it's easier to effectively market a 10 percent discount.

“It's clear and compelling,” Cain said. “It's familiar, because that's how other retailers typically have their sales promotions.”

And while it's been a major part of the summer sell down for all three major American automakers since 2005, Acevedo isn't optimistic that zero-percent financing offers will be commonplace in the future.

“It doesn't look like APRs are going down any time soon,” he said. According to the report, the average annual percentage rate, or APR, in July was 5.74 percent, compared with 4.77 percent a year ago. Overall, interest rates are near their nine-year high.

Some automakers —Subaru, Mazda, Cadillac, and Lincoln were the ones Acevedo specifically noted — are making more interest-free deals than others. But if automakers can offload their 2018 inventories without having to offer zero-interest loans, Acevedo expects that to signal the end of widespread availability of these loans.

That, combined with ever-increasing APRs and epic term lengths, means Americans will likely continue to spend a rising proportion of their car budgets on financing alone. To Acevedo, that may spell long-term trouble for the automotive market.

“It definitely, to us, signals some caution lights to be aware of what's happening ahead,” he said.

Commercial Vehicles: Hanover trembles at its VW transporter factory

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