Tuesday, August 9, 2005

Ford merges sales operations

To save money, it will reduce support staff, unite Lincoln, Mercury, Ford marketing units.

By Eric Mayne / The Detroit News

About the cuts • Ford's 34 regional offices employ 30 to 50 people each, and serve as a liaison between the company and 4,445 dealers. • After combining its Ford, Lincoln and Mercury divisions, Ford will operate 11 dealer-support offices nationwide. • The cuts have been prompted by a drop in sales and U.S. market share, and a greater urgency to reduce operating costs because of mounting financial losses. Comment on this story Send this story to a friend Get Home Delivery

Ford Motor Co., in another cost-cutting move, is consolidating its Ford, Lincoln and Mercury marketing divisions, and reducing by two-thirds the number of field offices that support its 4,445 Ford and Lincoln Mercury dealerships nationwide.

The restructuring is designed to help the automaker lower operating costs and streamline advertising, inventory management, customer service and warranty repair. But there will be job losses.

"It will be seamless to the customer," Ford spokeswoman Sara Tatchio said. "Unfortunately, some involuntary layoffs will be needed."

Tatchio said the number of affected employees isn't known because Ford is still working out details of the restructuring.

But analysts expect at least 15 percent -- or 525 -- of the 3,500 employee throughout Ford's marketing, sales and service staff will be affected.

The restructuring, announced Monday in a companywide e-mail and revealed to dealers through a satellite TV broadcast, marks the end of an era for two venerable Ford operations. The Ford and Lincoln Mercury marketing divisions have operated autonomously for decades.

Ford is accelerating cost reductions in response to mounting financial losses and falling sales and market share.

The automaker's share of the North American market has fallen below 18 percent from 26.4 percent in 1995. The company's second-quarter profits dropped 19 percent, and its North American auto operations swung to a $1.21 billion pretax loss.

The automaker is also reviewing its corporate staff operations -- information technology, legal, human resources and public affairs -- for possible downsizing.

Under the changes announced Monday, Darryl Hazel will become vice president of marketing and Al Giombetti will become vice president of sales. Hazel was formerly head of the Ford division, and Giombetti led Lincoln Mercury.

Ford said Cisco Codina will remain vice president of customer service.

Ford and Lincoln Mercury are also consolidating their 17 field operations to create 11 dealer-support offices nationwide.

Ford's customer service field organization will face similar cuts and consolidation.

Consolidating the Ford and Lincoln Mercury brands could make sales, marketing and service representatives less accountable, warned Jim Sanfilippo of AMCI Corp., an auto industry consulting firm.

"There's an argument that says that it's still a people business," Sanfilippo said. "Sales is a ground war. You need troops."

Nissan Motor Co. and Toyota Motor Corp. have separate support organizations for their brands.

But Sanfilippo says Ford dealers are unique.

"They're a big, well-managed enterprise," he said. "That's the signature of the Ford dealer network. How do you think these Lincoln Mercury guys did so well in CSI? They've got nothing."

Despite a dearth of new cars --a drought that ends this year with the debut of the 2006 Lincoln Zephyr -- Lincoln dealers topped the most recent J.D. Power survey of customer satisfaction.

The study measures the satisfaction levels of customers who visited dealerships in the first three years of vehicle ownership.

Lincoln finished ahead of Cadillac, Saturn and Lexus to top the survey.

Ford maintains its dealerships will enjoy the same level of service that helped them earn top scores in independent studies such as J.D. Power and Associates' customer service index.

"We're going to reach customers in smarter, more focused ways than ever before while being extremely efficient with resources," says Steve Lyons, Ford group vice president, North America Marketing, Sales and Service. "This new organization will help us develop a single-minded concentration on reaching our customers with the strongest product lineup in our history."

Since spring, the automaker has used buyouts and early retirement packages to trim 1,100 white-collar positions while cutting 10 percent of its contract employees. Ford also plans to trim another 5 percent -- or 1,750 -- of 35,000 white-collar workers in its North American automotive operations by Oct. 1.

The restructuring represents an acceleration of Ford's turnaround without compromising performance, executives said.

"Today's marketplace is fragmented into ever smaller niche groups than in the past," says Hazel. "Our new marketing organization will focus on reaching individual customers with increasing relevance and excitement."

While sales regions will be consolidated, Ford will maintain a presence in every major market, Tatchio said. But, in some cases, that presence will be limited.

For example, Pittsburgh's operations will be moved to Detroit. But a small contingent of personnel will remain in Pittsburgh, Tatchio said.

You can reach Eric Mayne at (313) 222-2443 or emayne@detnews.com.