The crowd rolls forward, like a wave in slow motion, security guards eyeing the crushing throng cautiously. Occasionally they pull someone out of line to check an overstuffed bag, but there’s little else they can do. It’s the first press day at the North American International Auto Show, and already nerves are frayed as reporters, photographers, and Web bloggers jostle each other for the best vantage point inside Cobo Arena.
Suddenly, a command is whispered and the security guards spring into action. They link arms as the doors to the big hall slam shut. “What gives?” a local TV reporter cries out plaintively. “No more room,” grunts a guard, his determined stare making it clear there’ll be no second opinion. The blow-dried anchorman, along with hundreds of other late arrivals, race for the Ford booth, where a big-screen TV has been set up to handle the overflow.
With somewhere north of 8,000 journalists and thousands more PR executives and other hangers-on registered for the 2008 auto show, Detroit’s is one of the most heavily attended media events in the traveling auto show circus. Still, it’s rare when any single product preview has to turn the crowds away. But Ford’s opening news conference is more than just a chance to stare at the latest sheet metal. It also provides an opportunity to check out the new kid on the automaker’s block, the guy it seems like everyone in the industry is talking about — and the man who could help make or break the ailing automaker.
As the last stragglers take their seats and the lights dim, music begins to blare and a stream of pyrotechnics is ignited. Cobo Arena has played host to many a superstar over the years and, in some ways, Jim Farley fits the mold. Sure, he’s wearing a neatly creased and well-tailored suit, but his shaggy mop of hair is tossed and tousled, hanging down over his eyes, which crinkle into a grin as he steps onto the stage. Indeed, his boyish face looks more like that of a rock star than a bespoke-suited executive. But Farley won’t be playing any instrument this afternoon — nor will he be telling jokes, like his oversized cousin, the late comedian Chris Farley. But he will be working the crowd.
Those looking for deep insight might come away a bit disappointed. “It’s hard to imagine a better opportunity,” Farley opines, as the new Flex “people mover” rolls onto the stage, before announcing a new line of more fuel-efficient power trains — “Ford’s populist solution to sustainability.” But if Farley is ready to stick to someone else’s script on-stage, he’s going to follow his own message when he’s talking face-to-face. And it doesn’t take long to realize that what Farley has to say isn’t the sort of happy-speak that has traditionally echoed out of the Glass House, Ford’s monolithic headquarters in Dearborn.
“It’s one thing to get an opportunity for yourself; it’s another to have an opportunity to make a difference,” says Farley, a day after his public debut as Ford’s newest senior executive. He’s leaning back on a couch in one of the private rooms on the upper level of Ford’s huge auto show stand, watching from above as a Japanese competitor crawls all over the new Flex armed with a tape measure and notepad.
Farley is wearing another executive power suit, but it’s offset by a decidedly retro digital watch. And his long brown hair still has a windblown look. Over the course of a gloomy January morning, Farley touches on a surprisingly wide range of subjects, from his little-known roots in Detroit, to the painful, personal tragedy that nearly scuttled his move back from California — and, of course, his dramatic vision for a company that’s been in the process of bleeding itself dry.
Born in 1962 in Buenos Aires, the son of a senior banking executive, Farley and his family moved quite frequently before college. He settled in comfortably at Georgetown University in Washington, D.C., earning a bachelor’s degree, before heading across the country, to UCLA, where he earned an MBA. He was rewarded with a slew of offers; Chevrolet and Ford were among his potential employers. But Farley viewed the automotive world rather apprehensively. It’s not that he doesn’t like cars. Quite the opposite. Jim Farley is a serious gearhead who takes pride in getting his fingernails dirty working on his private collection, which includes a classic ’35 Ford five-window hot rod. If anything, Farley says with a smile, “I was scared about going into the auto business because I thought it would ruin my interest in cars.”
The young grad briefly tried working at the classic car restoration shop in suburban Los Angeles run by legendary American Formula One racing champ Phil Hill. But while it provided an opportunity to work on some of the world’s rarest automotive collectibles, the gig with Hill was more hobby than career, so Farley finally took a job with IBM Corp. It lasted just two years. He might have been worried about the numbing qualities of life as an auto executive, but an offer from Toyota — which, in 1990, was just beginning its explosive rise up the U.S. and global sales charts — was “just too compelling.”
It helped to be given a position as a product planner for the then-new Lexus division. To some, Toyota’s assault on the luxury market seemed little more than folly. After all, the Japanese were then best-known for building high-quality, high-mileage cars targeted at the low to middle segments of the market. Toyota, in particular, was as plain vanilla as — if even more reliable than — a Maytag washer. But by offering a surprising array of features and room — along with a vaguely Euro-like design — at an unexpectedly affordable price, the first-generation Lexus LS400 sedan made some surprising inroads, triggering fear and panic among the Europeans who had come to define the luxury car segment. Farley’s job was to help craft the next wave of products needed to keep Lexus’ momentum going.
Over the coming years, Farley would cycle through a series of jobs, often accepting unlikely offers that to some seemed a step off the normal fast-track career path. As Toyota began pushing into the light-truck and nascent crossover segments, with products like the Tacoma pickup and RAV4, he took on a marketing assignment.
Then, in 1995, he “flipped over to Europe” to help the automaker set up its new headquarters there. Up until then, Toyota had been little more than a continental afterthought — even the Koreans were outperforming the vaunted Japanese maker. Although it’s the world’s second-largest market, Europe is divided up into an assortment of national fiefdoms, and each was trying to dominate the new venture. “They needed someone who was agnostic,” recalls Farley, “so they took an American.” Under Farley, Toyota took some critical steps, launching its first mini-car, the Yaris, which proved a stunning success. It introduced a European version of the Corolla, Toyota’s most important global model. And then it took the luxury fight right to the back yard of the big boys, with the introduction of the Lexus IS.
Farley was having the time of his life. He was barely 38 and would have been just fine letting the three-year assignment stretch on. But his reputation as a go-to guy won him another one of those proverbial, can’t-refuse job offers. For all its mounting successes, Toyota had a dark and dangerous secret. “They were doing a great job drawing in the baby boomers,” notes Dan Gorrell, a Los Angeles-based automotive analyst, “but they were having a real hard time attracting anyone younger.” It was the same sort of problem that had crippled some of the Big Three nameplates, like Buick and Oldsmobile, who couldn’t draw beyond their core audience. And as the World War II generation began dying off, so did sales of many heretofore flagship models. Toyota strategists knew their success would be short-lived if they couldn’t crack the code with skeptical Gen-Xers and the Millennials.
But the Japanese maker had a secret weapon. “We’re going to have to take a lot of risk,” Farley said during a conversation in early 2002. He was back from Europe and running Toyota’s new Scion division. The logic behind the “brand-within-a-brand” was simple: Produce a trio of small, quirky, low-cost products underscoring the latest, youthful trends, and put an emphasis on customization. In sharp contrast to its strategy with Lexus, there’d be no new sales network. Scion was specifically designed to attract young buyers who normally steered clear of Toyota showrooms. The tactic wasn’t entirely new. In fact, GM had tried to pull it off with Geo, a sub-brand of Chevrolet, a decade earlier. But GM was slow to move and ran into a variety of product problems. Quality ran well below industry average, and dealers didn’t seem all that thrilled about these new and demanding customers. Toyota learned from its rival’s mistakes, and today Scion is accomplishing precisely the sort of brand revitalization it had hoped for.
“My impression of Jim is that he was never one to stay in the mold, but to break the mold and do things a different way, which had a tremendous impact on the success of Scion,” says Tim Andree, a former Toyota executive who’s now CEO of Dentsu Advertising, the Japanese-owned mega-firm that handles Toyota’s corporate account.
After his two-year stint, Farley was moved back to marketing before getting his next big shot, this time running the entire Lexus operation. In Toyota’s path to glory, it was a golden spot to land in. Farley seemed destined for greater things. Even though the senior management ranks were thick with talent, his youth was an advantage — if only he’d sit tight and keep on top of his game. But then the phone rang.
It was Alan Mulally. The former second-in-command at Boeing had been lured to Michigan by Ford family heir and outgoing CEO William Clay Ford Jr. in September 2006, and he quickly made some unsettling assessments. There was a time, back in the 1960s and ’70s, when the Dearborn automaker was deep with talent. So deep, in fact, that it routinely spilled off top managers who fell off the fast track and wound up at the automaker’s emerging competitors. At one point, in the mid-1980s, more than half the top U.S. managers of Japanese imports — not to mention the “Gang of Ford,” who followed Lee Iacocca to Chrysler — had once called the Glass House home.
By the time Mulally arrived, says one recently retired senior executive, “We were no longer neck-deep, but barely knee-deep in talent.” The pool had been drained by a series of ill-advised strategies, starting with former Chairman Alex Trotman’s abortive attempt to go global, called Ford 2000. His successor, Jac Nasser, was a man of grand vision and a large checkbook, spending billions on everything from auto recycling to new brands — while largely starving Ford’s hungry core nameplate.
That senior executive, requesting anonymity, likened the internal corporate culture to something “almost feudal,” where the politically savvy often overcame those with talent, firmly entrenching themselves in power and prestige, even if the company suffered in the process. Truly great executives, like Ford’s legendary sales, service, and marketing chief Bob Rewey, could achieve miracles. But others, like Rewey’s most recent successor, Steve Lyons, more often paralyzed the system. It meant agonizingly long waits for decisions that were as likely to reflect individual whims as sound business logic.
With Ford hemorrhaging market share and bleeding red ink, Mulally knew he didn’t have long to act. One of his first steps was to effectively mortgage the company. That meant pledging Ford’s physical assets to raise the cash it needed to keep paying its bills. He ordered further painful cuts and began talking with the UAW about desperately needed concessions. Senior management went through a series of shake-ups as Mulally looked for close lieutenants who might put Ford’s future on at least an equal par with their own careers. But there was one obvious hole in the lean executive ranks: somebody who could take marketing to a truly new level.
“I followed Toyota very closely when I was at Boeing,” recalls Mulally. “I became aware of [Farley] when he started doing Scion.” At Ford, the young exec’s name came up again, this time in conversations with Chairman Bill Ford Jr. Mulally picked up the phone.
He received an unexpectedly warm reception from a man many colleagues thought of as the archetypal corporate Toyota man. But then again, as Farley points out, he has a lot of Ford in his DNA. His grandfather, Emmet Tracy, was one of the first employees of company founder Henry Ford. “I can visualize him walking into the factory with his lunch pail in his hand, one of the nameless, faceless folks who helped churn out Model T’s by the millions,” says Farley, leaning close, as he recalls the worn face and hands of his grandfather. “He owed everything to Ford Motor Co.” Later, Tracy opened a Lincoln-Mercury dealership on the Hill, in Grosse Pointe. Eventually, he ran a supplier operation, Alma Piston Co., where Farley would work during his summers off from school.
Talks between Mulally and Farley were well underway when tragedy struck. After years of wanting children, the young Toyota executive’s wife delivered twins, prematurely. For a brief while, it looked like both would make it, then their conditions took a bitter turn. One died, then the other. Farley put the discussions with Ford on hold. The only thing that mattered, he told Ford’s CEO, was his wife. “I was willing to take the time,” says Mulally. “I wanted be very respectful of Jim and his personal life. I wasn’t panicked. I could be patient, and that helped.” He made another call to California later in the year.
When Mulally called again, Farley was ready to move. It was, however, a “gut-wrenching” decision, he says. “Toyota was my life. These were all my friends.” But he saw Ford as an opportunity to do something significant for “a company that can create icons,” like the Mustang and F-Series pickups.
In his new position, Farley has immense power to create icons of his own. In an industry where long and fancy titles often bestow more prestige than deserved, Farley’s business card actually underscores his importance. He’s officially the group vice president of marketing and communications, but he’s not just going to be approving ads and working on public-relations strategies. It helps to understand Mulally’s own, grand vision. “Henry Ford created an independent network of companies,” the CEO explains, which functionally operated as independent businesses. Going forward, the goal is to closely integrate these Fords of Europe, of Australia, of Thailand and, yes, of North and South America, into a singular “world of Ford.” The Verve, Ford’s answer to the pint-sized Yaris, is one example. The first “global Ford” since the Contour/Mondeo/Mystique fiasco, it’s meant to redefine Ford, belatedly, for the 21st century.
Farley’s duties are, he says, “a little fluid,” and he’ll place his fingers in virtually every area of the restructured Ford organization. At Toyota, he was known for his skills in translating customer needs into creative marketing. At Ford, he’ll use that same sort of input to help steer future products, like the next-generation Focus, which is being developed as part of a joint U.S./European exercise. Significantly, Farley’s portfolio will be global, giving him immense opportunities to force change — but also plenty of occasions to trip up.
That would be all the more likely in the traditional Ford system, where his assignment would, by nature, require the new Group VP to step on a lot of toes. When it comes to product, for example, Farley will be operating up close and personal with Ford’s global product development czar, Derrick Kuzak. Perhaps more significant is the relationship-in-process Farley is forging with Ford’s president of the Americas, Mark Fields. In a telling move, Mulally has the new hire report directly to the CEO’s office — not through Fields, who has long been seen as his likely successor.
“It hasn’t been easy for Mark, or for Jim Farley, either,” reveals a very senior source, a former top Ford executive who remains a confidante to most of the company’s top management team. But with Mulally working as both coach and referee, insiders suggest the tension has largely been set aside as the company focuses on the troubles ahead.
And there are plenty of problems to keep everyone busy. The automaker sharply narrowed its losses last year, but the numbers were still $2.7 billion in the hole. Part of that reflects restructuring costs, but it certainly didn’t help that the automaker’s sales and market share have yet to bottom out. Despite optimistic forecasts, Ford’s share of the U.S. retail market dipped nearly a full point in 2007, to 14.2 percent.
A significant amount of work was already underway when Farley arrived in Dearborn late last year. The automaker’s new contract with the UAW, for one thing, will slash about $1,000 off the cost of producing the typical North American vehicle and further increase factory floor flexibility in the years to come.
But there are core decisions to be made, especially as Ford sells off the high-line luxury brands that were supposed to anchor its global future. Aston Martin went last year, while Jaguar and Land Rover were poised to be sold to emerging Indian automaker Tata Motors. Under Nasser, Ford gave serious thought to scrapping two of its domestic brands, Lincoln and Mercury, the latter particularly starved for product and anything close to a definable identity.
The good news is that Lincoln is in the midst of a brand blitz, with new products like the MKZ sedan and MKX sport-utility/crossover receiving solid reviews and strong sales. An even more upscale crossover, the MKT, was one of the hits of the 2008 Detroit auto show.
As for Mercury, Farley hints that he’s thinking Scion. No, don’t expect a boxy xB or Japanese-style tC coupe. But the days when Mercury made money by simply being a rebadged version of the Ford division have come to an end. The troubled brand needs a distinct identity, and what emerges will likely be hip and youthful, with an emphasis on creative styling and features, not the basic econoboxes Mercury might have churned out in the past.
Farley’s return to his familial roots has taken many folks by surprise, including Bob Thibodeau, the latest member of his family to run a Ford dealership, in Centerline. Thibodeau notes that the 31 Metro Detroit Ford dealers have seen their collective sales tumble by half in recent years, reflecting product and marketing problems at the corporate level. “I hope we’re going to start seeing a more consistent strategy,” says the well-known dealer, who continues with praise for Farley, after several encouraging meetings. He’s particularly impressed with the breakthrough decision to allocate a large chunk of Ford’s ad dollars for regional, rather than national, usage.
How you view Farley’s move depends on your personal position. “I think Toyota really misses him,” says Jim Thompson, who handles the franchise in Doylestown, Penn. But, he says, Toyota’s loss is Ford’s gain. With Farley, “Ford seems much more in tune with the marketplace,” suggests Thompson, owner of Thompson Toyota and Thompson Scion. “What’s [been] missing from most of the domestic manufacturers, and really most manufacturers, is the people concept. He gets it.”
So does Farley miss Toyota? He continues to stay in touch with old friends, even catching up for a quick bite with those who came in for the January auto show. But there isn’t much time to look back. Considering Ford’s weakened balance sheet and declining sales — and the promises for a turnaround made by his boss, Alan Mulally — Farley needs to work his magic — and fast. “I’ve never worked so hard,” he says, drawing a deep breath, “or second-guessed myself more, though in a positive way. Every decision has to be done right now. That’s where we are.”
Slipping back into the couch on the second floor of the Ford display, Farley says he’s optimistic about Ford’s future. But it’s not his style to sound like a Pollyana. Thanks to the new UAW contract, Ford’s costs are coming into line with its competitors. And the new, global product-development system should yield better models sooner, rather than later. Now comes the biggest challenge of all: getting that message out to consumers.
“How to convince people to give us a shot — that’s what got me here,” Farley says, his dark eyes suddenly burning like coals. “And that — that’s what keeps me up at night.”