Ford Slimmed Way Down and Styled Up

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For the moment, Detroit's perennial No. 2 is enjoying a turn at being undisputed No. 1. In terms of performance and prestige, Ford is on a roll. While the automaker (1985 sales: $52.8 billion) is only about half the size of General Motors, its projected 1986 profit of $3.1 billion is expected to top GM's for the first time since 1924, probably by a margin of $350 million or so. "Ford is the shining star of the automobile industry now," says Jack Kirnan, an expert on the field for the Kidder, Peabody investment firm. The popular Ford Taurus and Mercury Sable have emerged as the pace cars of U.S. automotive design, thanks to their distinctive curves. On the financial side, Ford has slashed its excess automaking capacity and boosted worker productivity.

Ford's stunning resurgence is largely the product of its 1980-82 trauma, during which the company lost $3.3 billion. Ford's dire situation inspired its leaders to make the kind of long-shot gambles that few automakers would risk under normal circumstances. The decision to cut back dramatically the company's factory capacity has succeeded in lowering Ford's fixed expenses so that its North American operations now make a profit after selling just 2.1 million vehicles a year, 30% fewer than necessary in 1980. Ford has not opened a single new U.S. plant since 1980 but has refitted old ones with automated equipment. The reduced capacity means that Ford's inventory may run short during a boom, but it ensures that the company will not be awash in excess autos during a bust.

The most visible legacy of Ford's hard times is its aerodynamic Taurus and Sable autos. At the turn of the decade, Ford's cars, like the boxy Fairmont, were literally so square that the company decided it would have to do more than just try to catch up with the European styles that most automakers were copying. Ford chose to jump way ahead, taking the risk that it might come up with another Edsel. Instead, Ford's roundish, so-called jelly- bean designs have enticed car buyers who had abandoned domestic makes for more voguish foreign nameplates. First came the restyled 1983 Thunderbird and Cougar coupes and the new 1984 Ford Tempo and Mercury Topaz compacts. When the Taurus (base price: $10,650) and Sable rolled out last December, they became instantly trendy among an important target group: young professionals and growing families. Ford expects to sell about 325,000 of the cars during 1986, an impressive first-year performance. Says Ford Chairman Donald Petersen: "Style attracts. It draws you or me in to take a look. Then the other important ingredients come through."

Quality is the main ingredient Petersen has in mind. While all the Big Three automakers have boosted the dependability of their cars, Ford has perhaps made the biggest issue of it. Known for turning out some inferior vehicles during its troubled years, Ford says it has increased the dependability of its autos 50% since 1980 by tightening its standards for parts suppliers and getting employees involved in decision making, among other techniques. Reliability will continue to be an important goal in Detroit, since the U.S. auto industry's quality levels still lag behind Japan's. According to the California consulting firm J.D. Power & Associates, the Big Three's cars are now 75% as reliable as Japanese cars, up from 50% in 1980.