Tuesday, October 30, 2001
Ford dumps CEO
Nasser replaced by Ford, Jr.
The Associated Press
DETROIT — Jacques Nasser, who as president and chief executive of Ford Motor Co. earned the moniker “Jac the Knife” for his prodigious cost-cutting, himself was cut loose and replaced by chairman William Clay Ford Jr., a company source told The Associated Press.
The move, reported Monday, puts a Ford family member in charge of the automaker's day-to-day management for the first time since 1979, when Henry Ford II resigned.
Nasser's departure, as well as other management changes, were to be announced Tuesday, said the source, who spoke on condition of anonymity. The shake-up will include the elevation of North American group vice president Nick Scheele to chief operating officer, the source said.
Scheele will be succeeded by Jim Padilla, group vice president for manufacturing and quality.
In a year in which Ford was plagued by slumping sales, questions about vehicle quality and the ongoing Firestone tire crisis, Nasser's fate had been the subject of much speculation.
When Nasser, 53, became CEO in January 1999, Ford was poised to overtake General Motors Corp. as the top automaker in the world.
But 18 months later, Ford's momentum was shaken by the news that people were dying in accidents when the treads separated from Firestone tires, most of which were installed as original equipment on Ford Explorer sport utility vehicles.
In some cases, the vehicles rolled over after the tread separations.
Now, Ford's market share is down — slipping during the first nine months of 2001 to 22.6 percent from 22.8 percent a year ago.
Through September, sales of Ford vehicles were down 11 percent from the first nine months of 2000, a record sales year for the industry. By the third quarter of 2001, Ford's losses dipped to $692 million, a reversal from the same quarter a year earlier, when it earned $888 million.
Looking for ways to save money, Ford announced in August it would cut 4,000 to 5,000 salaried positions by the end of 2001. Not wanting to appear hardhearted during a slowing economy, Ford said the separations were voluntary.
Employees targeted for the chopping block were offered buyouts or early retirement packages. The company hoped enough would take them for it to make its head count reduction targets.
Chief financial officer Martin Inglis promised there were more restructuring moves to come.
The first real sign that Nasser's job was on the line came in July, when, during a major management shake-up, the man known as “Mr. Fixit,” Scheele, was brought in to take over Ford's North American operations.
Scheele had headed Ford's European business and is credited with turning around its floundering Jaguar unit. Scheele also was viewed as a closer ally of the Ford chairman than Nasser.
Two weeks after Scheele's appointment, the automaker announced the creation of the Office of the Chairman and CEO, which required Nasser to report more regularly to Ford Jr.
While some industry analysts believed this was the chairman's way of putting Nasser on a shorter leash, the company said Nasser and Ford, 44, put forth the idea when the board of directors asked the two executives to find a way to tighten communications.
Nasser was known as a pugnacious fighter, and during the debate over the safety of Ford Explorers and Firestone tires, he was the executive out front, pleading the automaker's case.
In August 2000, Bridgetone/Firestone Inc. recalled 6.5 million of the tires, but the safety of Ford's most popular SUV was called into question.
Nasser was left facing Congressional investigators and the driving public in defending the Explorer's safety.
His mantra throughout: “It's a tire problem, not a vehicle problem.”
No matter, Ford became the target of hundreds of lawsuits costing the automaker millions of dollars to settle.
By May 2001, an icy enmity grew between Ford and Bridgestone/Firestone.
When Nasser became convinced the tire maker was producing an inferior product, he launched a $3 billion program to replace the remaining 13 million tires not part of Bridgestone/Firestone's original recall.
The Nashville, Tenn.-based company reacted by defending its tires, and severed its 100-year old relationship with Ford.
The replacement program was viewed as a public relations coup for Nasser and Ford, but the $3 billion after-tax cost blew a hole in the automaker's second quarter earnings, putting the balance sheet in the red by $752 million.
Further erosion of the automaker's — and Nasser's — standing came with the release of two influential industry reports showing Ford was losing ground in productivity and quality.
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