After Recalls, Ford to Slow Pace Of Its New-Product Launches
                    December 1, 2000

                    By NORIHIKO SHIROUZU
                    Staff Reporter of THE WALL STREET JOURNAL

                    DETROIT -- Ford Motor Co. plans to slow the pace of new-product
                    launches and take other steps to stop a rash of recalls and quality
                    problems that have plagued some of its hottest new models.

                    The actions come amid a chorus of complaints from dealers like Jerry
                    Korum, a Ford dealer near Tacoma, Wash. Mr. Korum expresses
                    frustration that recalls are "piling up" on the Escape, a heavily promoted
                    new compact sport-utility vehicle. The Escape had its fifth recall last
                    month since its launch in August. In addition, the strong selling Focus
                    compact car has been hit by four recalls since late 1999, and Ford keeps
                    delaying the launch of a new, much-anticipated Explorer sport-utility
                    vehicle, apparently for quality issues.

                    "By God, can't they launch cars without having these things recalled?"
                    Mr. Korum says.

                    Ford Chief Executive Jacques Nasser says the No. 2 auto maker is
                    embracing tough new "Six Sigma" quality standards. Meanwhile, Ford
                    dealers across the U.S. are stepping up criticism of the auto maker's
                    management amid a slew of recent safety recalls and "owner
                    notifications" for defective parts.

                    Last month, the national council of Ford division dealers gathered here
                    for a regular meeting and made avoiding future recalls the "No. 1
                    priority" for the coming year. "We've seen an unprecedented number of
                    recalls," says Jerry Reynolds, chairman of the dealer council. He says the
                    dealers fear the recalls may cost them customer loyalty and favorable
                    pricing. "We want to make sure Ford is doing all they can to prevent
                    future recalls."

                    Ford, Dearborn, Mich., says overall safety recalls in terms of affected
                    vehicles, when the impact of the massive Firestone tire recall is
                    excluded, are down 23% this year. But it concedes "owner notifications"
                    for less-critical nonsafety recalls are up substantially in the past two
                    years. Martin Inglis, Ford vice president in charge of the Ford brand,
                    says the chief cause is the "attitude" change taking place at Ford as it
                    tries to be more customer-driven. True to its rhetoric, he says Ford is
                    trying to move faster to fix quality problems, rather than let them fester
                    for years.

                    "Absolutely no question or hesitation like: Is this an issue for image?
                    When we see an issue, we just go do it," Mr. Inglis says.

                    Still, the issue looms large in the wake of the Firestone recall. As Ford
                    tries to hold on to young consumers it has won with hot models like the
                    Focus and the Escape, quality problems pose a major threat. Ford's
                    management has made the problem a top priority, and has decided the
                    company needs to slow down, at least slightly, the pace of new-product
                    launches to avoid overtaxing its engineers and suppliers.

                    "We have to be very realistic about what is the capacity of the product
                    development and manufacturing groups to get their jobs done, and not
                    be spread so thin," says Robert L. Rewey, group vice president for
                    global marketing and North America, Ford's top marketing executive.

                    The wide quality gap between Ford and its European and Japanese rivals
                    that existed more than a decade ago or so has narrowed substantially.
                    But according to a "problem impact" study by Strategic Vision Inc. that
                    measures the impact of defects on the consumer, Ford's quality
                    problems are still three times more disturbing to consumers than
                    Lexus, the industry leading brand. One reason for that, according to
                    Strategic Vision's analyst Alexander Edwards, is Ford's sheer volume.
                    "Because they are producing and launching more and more vehicles, the
                    chances of developing problems increase greatly."

                    That translates into problems for customers. In Huntington Beach,
                    Calif., a Ford Focus car that Sean Boss, 20 years old, bought earlier this
                    year came with a leaky battery, a faulty speedometer and a gas gauge
                    that registered zero no matter how fast he drove or how full his gas
                    tank was. Mr. Boss says he still holds faith in Ford but says his trust is
                    wavering. "That rear-wheel recall [in which] Ford warned rear wheels
                    may fall off ... that one really scared me," he says.

                    On Yahoo! Inc.'s Internet fan club site for the hot new Ford Escape
                    SUV, hundreds of excited Escape owners and wannabes have posted
                    more than 10,000 messages on its bulletin board since April. But the
                    excitement has turned a bit pale lately because of the recalls. "Are we all
                    buying a lemon?" asks one Escape fan club member in a recent message
                    signed "Help! Nervous in St. Louis."

                    The way quality problems emerge on Ford vehicles has changed over
                    time. Mr. Korum, the Washington state dealer, says that where he does
                    less and less warranty repair, recalls and owner notifications have picked
                    up the slack. The dealer chief Mr. Reynolds says Ford cars are "seeing
                    more abnormal parts failures than anything else." Other dealers suspect
                    the massive cost cutting at suppliers Mr. Nasser has been orchestrating
                    may be forcing them to cut corners.

                    Ford executives deny suppliers are cutting corners. Mr. Inglis blames
                    the large number of defects on the "stress" it has come under.
                    Companies are "going flat out" in the red-hot U.S. market, he says. "It
                    means there are less opportunities to recover if there is a problem." The
                    large number also reflects ever-growing sales volume and numerous
                    new models.

                    Mr. Inglis says Ford has various remedies in place. One weapon is Six
                    Sigma, a complicated statistical approach which has seen a lot of
                    success at General Electric Co. and Motorola Inc. Louise Goeser, Ford
                    vice president in charge of the program, says Six Sigma already has
                    begun to bear fruit. She points to an 18% decline in warranty repair
                    costs per 1,000 vehicles this year from 1999.

                    Ford also has been making reviews at each milestone in the
                    product-development process ever more stringent -- an action that Mr.
                    Inglis says has caused the delay in the new Explorer launch. But the
                    company is stressing its efforts to make launches recall-free. While Ford
                    used to approve trial production of a new model with 80% of the parts
                    that will eventually go on the car, Ford is now requiring 95%, Mr. Inglis
                    says. "If I don't hit those metrics, I'd defer the launch."

                    Moreover, the company has also begun experimenting with systems
                    that have helped its Japanese rivals improve quality. In one program,
                    Mr. Inglis says Ford is sending its own engineers to suppliers' factory
                    floors "a la Toyota."

                    "I don't mind copying Toyota," Mr. Inglis says. The Ford engineers
                    provide more technical assistance and find problems early. The company
                    also now taps its blue-collar workers in a systematic manner for quality
                    issues they see on the assembly line. "Amazingly, the person who
                    physically operates on the station seems to know more about his
                    operations than almost anybody else," Mr. Inglis says.

                    Write to Norihiko Shirouzu at