In the wake of last week's revelation that FoMoCo ain't out of the woods yet, the blue oval is in full-on cost-cutting mode. Detroit News reports that Ford VP Jim Farley has announced a 10-12 percent cut in its U.S. salaried workforce to go into effect by August. Saying that Ford is struggling to cope with "a structural change to our economy," Farley told employees at a company "town hall" meeting that the approximately 2k layoffs would be involuntary firings rather than voluntary buyout offers. But Farley isn't losing sleep over the firings, as he sees Ford's problems as being caused by external economic forces over which he has no control. "I would expect other car companies to make similar announcements," Farley told employees when announcing the cuts. "They have the same issues that we do — even Toyota." Even Toyota, eh? Meanwhile, FoMoCo is also trying to tart up its troubled Volvo division by throwing consultants and suppliers under the bus. Automotive News [sub] reports that Volvo has announced that it will pay consultants and suppliers ten percent less than the current contracted rate for services. Proving that shit always runs downhill to the supplier, Volvo spokesfolks blame weak U.S. sales (which they expected) and weak European sales (which they didn't), saying "We're looking into how we can turn the business around." What, so soon? Look for this to simultaneously increase speculation of a Volvo sale (why not screw the suppliers if you've already written the brand off?) and decrease the likelihood of said sale (same reason).
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At least Ford is reacting quickly to sudden changes in market conditions. For those of you who think they should have seen it coming, they did and soon (not soon enough) will have a whole new lineup of smaller cars. Remember that gas has gone up $1.00 in about 1 month – a huge increase that drastically changed the market. Ford immediately responded by cutting production of trucks, increasing production of cars and cutting payroll. The old Ford wouldn’t have reacted so quickly.
I’ll bet they wish they hadn’t increased production of the F150s in the 2nd quarter to cover the units they will lose during the model changeover! Those trucks are still arriving at the dealers (got a whole truck full of inventory today: 4 F150s, 1 Focus, 1 Fusion, 1 Grand Marquis).
Volvo has a serious problem, one it shares with Acura and Saab: nothing it makes has a raison d’etre because everyone else has something better, or what you do have that’s worth buying is woefully overpriced
You could buy a C30, but the Mini is more interesting to look at and more fun to drive.
You could buy an S40/V50, but they’re not particularly reliable, safe or comfortable–especially not next to the GLI/GTI/A3. There’s also that pesky Mazda3 just below them.
The S60/V70/C70 and S80 are also-rans
The XC90’s market is drying up.
Volvo (and Saab, and Acura) needs to make a choice: either try harder to meet Mercedes and Audi on their own terms (good luck with that) and abandon their core buyers, or drop the pretense of being a luxury brand and step back down to making “nice, safe, efficient cars” that aren’t completely unaffordable, nor potentially glitchy.
I started a response, but Psarhjinian nailed it.
As mentioned in an earlier editorial, safety is no longer a market differentiator.
Subaru is the biggest thorn in Volvo’s side. They are the purveyor of safe (and affordable) wagons which was pretty much the only thing people bought from Volvo. Now they’re stuck. The sooner Ford can unload Volvo the better.
Volvo has a good plan to win back the safety advantage. It will take a while, but in the long term, I have hope for them yet.
The incredibly durable Volvos bought, sold, resold, and resold again, by hippies and granola munchers were all RWD. The things kept going until they rusted off their frames.
Volvo should make all its cars RWD wagons. It should dump its suvs. It should offer only 4cyl engines.
Volvo should get back to basics. Simplify, maaaaannn!!
“We’re looking into how we can turn the business around.”
Volvo has made a number of strategic errors, including having no North American production even though the US has long been Volvo’s #1 market. The switch to fashion oriented designs with short (for Volvo) product life cycles and me-too design and feature sets has not served the brand well. Why buy a Volvo FWD/AWD vehicle when you can do as well with Acura, Lexus, Infinity or Audi? Modern Volvos do not have the same kind of built-like-a-tank quality the venerable 240 did. People bought 240s as a counter-culture purchase, but Volvo is a mainstream wannabe vehicle now. So sad.
“Volvo has a good plan to win back the safety advantage.”
That isn’t going to work. For decades Volvo owned Safety in the minds of the buying public, but that mind-share is lost and there is no way to get it back. Honda, for example, is now in the middle of a long term safety engineering priority push. The Ford Taurus (thanks in part to Volvo) gives up nothing in safety compared to an S60. Thirty years ago Volvo had the niche to itself, but now everyone is playing.
“step back down to making “nice, safe, efficient cars” that aren’t completely unaffordable, nor potentially glitchy.”
I agree. Volvo used to stand for efficient, rugged cars which were intentionally not fashionable. There is still no more efficient form for a sedan than the simple 240 sedan nor is there a better layout for a wagon than the 240 wagon. If I owned Volvo I would do the New Bettle thing, but on a 240. Rear wheel drive, rugged as heck, simple driveline, simple controls and best in the world visibility. Make it a few inches wider and bring the electricals up to modern standards. Fix the few annoying problems like self-destructing door pockets and impossible to replace A/C blowers. Heck, they could probably start with the Ford Mustang parts bin for a driveline.
limmin:
Why should Volvo dump the XC90 when it’s their top seller in the US? I don’t claim to have the answers to Volvo’s problems, but dropping the XC90 isn’t it.
Of course, making a heavier, thirstier V70/XC70 isn’t it either. I for one will be holding on to my 2006 XC70 as long as possible.
I agree with the assessment that Volvo should throw everything they currently build under the bus and start from basics.
What worked in the past? The ever-popular and super-strong, safe and reliable, yet simple, 240.
Use a cast alloy torque-tube rear drive solid axle with trailing arms and coil springs. It’d be very light, super-simple (therefore reliable), and would have all of one permanently lubricated constant velocity joint. Use the current 2.0 litre turbocharged five cylinder Volvo engine, add a Honda IMA type hybrid assist between the engine and transmission and do the simple rear drive system. Make it a real Volvo, sell it as a sedan for $24,000 and a station wagon for $27,000 with upgrades adding no more than $2000 to the cost. (US and Canadian pricing). Unimaginative as it sounds, call the cars the Volvo 244h and 245h (2=2nd generation, 4 = four cylinder, 4=4 door or 5=5 door = wagon, h=hybrid).
Then manufacture it in Sweden, and at a disused ex-Ford plant in the states.
As for the Belgian plant, use it to produce a sportier, aerodynamic, cut-down version of the 244h and 245h, with 1.8 litre Volvo four cylinder engine, added turbo and IMA type simple hybrid system, with a more aerodynamic 4 door “coupe” plus hatchback body, and call it the B1800 (as an honorific to the once famed sporty P1800).
Obviously add diesel versions for Europe.
Then Ford should cut the company loose once it is profitable to concentrate on the core Ford brand. Let Volvo be Volvo, otherwise kill it off.
Volvo needs to go back to its roots, and independence.
I’d sort of always hoped Volvo and Saab could put aside their differences (starting with their less than perfect overlords jettisoning them) and produce a solid, uniquely Scandinavian line-up. If taken back to their respective roots, there’s very little in the way of direct interbrand model equivalents.
Seriously: other than both being weird and efficiently packaged, did a 240 wagon and 900S hatch have in common? And wouldn’t you just love to see Volvo and Saab finally take the gloves off and start fighting again, rather than playing second-fiddle to the likes of Cadillac?
Ford should just give Volvo away to anyone that will take them. They haven’t got the time or money to work on that problem. Ford’s doing the right things but they still face a huge uphill battle.
Hmmm…actually, Volvo has provided quite a bit of value to Ford in terms of platforms. The question is what has Ford done for Volvo? Much as I like the brand and own two, I’ll admit that I am a small part of the market. Volvo NA marketing is terrible, and the product line up from Volvo is either solid but stale (s60, xc90) or has misteps — the s80 and v70/xc70 are larger, heavier cars than what they replaced but don’t offer a significant increase in interior room or that much more luxury. Not really good enough in a hyper competitive market. I have high hopes for the xc60 and what it promises for the new s60, but time will tell.
What Volvo needs to do in the US is increase its mileage — it had a real advantage with its 5 cylinder turbo charged mills (and still does — my s60 will get 30mpg+ if I do the speed limit). But the new s80/v70 are not so efficient. More broadly, Volvo could easily translate better fuel economy to a holistic green approach to car manufacture and living (be the green brand — safe for the human, safe for the environment). The time is right for such a luxury alternative. Volvo started down this path a few years ago, but has not not pursued it very well. Subaru NA is currently pursuing that path very well, to their credit.
Ford clearly doens’t know what to do with Volvo, so the sooner a sale the better. I’m just not sure on the buyer….
…VP Jim Farley has announced a 10-12 percent cut in its U.S. salaried workforce to go into effect by August…
Anyone willing to bet money that engineering, the one department that should not take the hit, be the majority of those let go? The managers/supervisors are kissing each other’s backside to hold onto their job until retirement time. The lowly engineer will probably be the ones that need to bring their own Vasaline. It’s working at Delphi and GM, should work fine at Ford.
We own two Volvos: a ’92 960 wagon nad a ’90 740GL sedan. Both are solid, dependable RWD cars which perform well and are fairly fuel-efficient. Volvo SHOULD return to its roots and make wagons and sedans with RWD and either a 4 or 6 cylinder in-line engine. As for safety, as has been stated many times in various TTAC columns, every car maker has to comply with safety mandates, so that is no longer Volvo’s claim to fame. As much as I am partial to Volvo because of our two “bricks,” I don’t like any of the new FWD stuff enough to consider trading either of our two for a new one, no matter how much I may like the styling or anything else about them. (Incidentally, in John Horner’s commentary, he states “Honda, for example, is now in the middle of a long term safety engineering priority push.” There have been reports recently of Honda Accords involved in accidents in which the cars have gone off the road for no apparent reason, and a couple of them have resulted in the car splitting in two on impact. The operators have been killed, and the cars had not been operated at excessive speeds for the road and/or conditions (about 70 mph in a 65 zone for one.) Anyone else hear of anything like this?)
At least Ford is reacting quickly to sudden changes in market conditions. For those of you who think they should have seen it coming, they did and soon (not soon enough) will have a whole new lineup of smaller cars. Remember that gas has gone up $1.00 in about 1 month – a huge increase that drastically changed the market. Ford immediately responded by cutting production of trucks, increasing production of cars and cutting payroll. The old Ford wouldn’t have reacted so quickly.
Sorry, but I’m not buying it. They are not reacting quickly. If they were reacting quickly then surely on September 12, 2001 there would have been plans for small cars and turbodiesel powerplants for the Focus and Ranger.
No, things are most certainly not changing rapidly enough & these issues (and a bunch more) were sent to upper management from early 2000 through 2007. There exists a total lack of vision that will hamstring (by incessantly following the lead of Toyota, Honda, etc.) any “revelations” from the guys in charge.
I’ll bet they wish they hadn’t increased production of the F150s in the 2nd quarter to cover the units they will lose during the model changeover! Those trucks are still arriving at the dealers (got a whole truck full of inventory today: 4 F150s, 1 Focus, 1 Fusion, 1 Grand Marquis).
Better yet, I bet they wish they had a single body-in-white for the Focus with turbodiesel as an option and using that same basic powerplant to power the Ranger – which they probably wish they had developed as well as they’ve developed the F150… Then there is the no small amount of cash thrown away on the Contour/Mondeo; unbelievable. The new Mercury Milan/Ford what’s-its-name SHOULD have been the current Mondeo and the Mazda 6 should have been based off of the Mondeo platform thereby reducing the cost of producing the vehicle. But what do us auto engineers (especially the ones who are car enthusiasts) know? Apparently not much to the “gold collar crowd”.
It’s too little, too late.
The price of a barrel of oil is NOT going to subside at all; and the price is merely the EFFECT not the CAUSE… and I don’t think more than 1% have a clue.
I’m afraid “the chickens have come home to roost”. And they are very upset.
The terrible thing is that once the infrastructure for manufacturing/production is gone the nation is in critical condition. We’re approaching that point now.