Ford Motor Company is overhauling its quality control leadership as it grapples with a persistent issue of recalls and aims to curtail escalating warranty costs. The automaker confirmed on Wednesday that it will appoint a new head of quality, shifting responsibilities from Jim Baumbick.
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Baumbick, who assumed the quality leadership role in late 2022, will now spearhead Ford’s entire vehicle programs team. This expanded role encompasses managing costs and timelines for both electric vehicles (EVs) and traditional gasoline-powered vehicles. Previously, the EV programs group reported through Doug Field, a former executive at Apple and Tesla, who continues to oversee Ford’s advanced development of future EVs.
Streamlining Operations for Enhanced Quality
This strategic shift, communicated internally to some Ford employees last week and slated to take effect early next year, aims to enhance collaboration and efficiency. A Ford spokesperson stated that these changes are designed to facilitate the delivery of “exciting vehicles and software with the highest levels of quality for our customers.”
Since assuming the CEO position in October 2020, Jim Farley has prioritized addressing Ford’s quality concerns. The company has implemented revised production practices to improve error detection and allocated more personnel to identify potential safety issues. Despite these efforts, Ford has led the industry in the number of recalls since 2021.
Addressing Execution Challenges
Last week, Farley acknowledged the progress made in addressing quality deficits over the past three years, stating that Ford now has the necessary framework in place to improve quality for both customers and the business. However, he also highlighted “execution” as a key concern for the upcoming year.
2024 has presented significant quality challenges for the Dearborn, Michigan-based automaker. Notably, Ford agreed to a civil penalty of up to $165 million following a government investigation that revealed the company’s failure to promptly recall vehicles equipped with faulty rearview cameras. Michael Brooks, executive director of the Center for Auto Safety, emphasized the significance of this action, calling it the “most significant action of the year” from the federal safety agency.
Warranty Costs and Financial Performance
Furthermore, warranty costs have impacted Ford’s financial performance this year. During the second-quarter results review, executives reported an $800 million increase in warranty expenses compared to the same period the previous year, primarily attributed to issues with vehicles launched in 2021 or earlier. Ford’s stock performance reflects these challenges, with shares declining 17% this year, contrasting with General Motors’ 43% gain and Stellantis’ 40% decline.
Ongoing Scrutiny and Recall Numbers
Ford remains under a consent order with the National Highway Traffic Safety Administration (NHTSA) for at least three years. This order mandates a comprehensive review of all recalls filed in the past three years, with the possibility of issuing new recalls if necessary. As of Wednesday, Ford had issued 62 recalls in 2024, trailing only Stellantis’ 67 recalls, while GM reported 33 recalls.
In conclusion, Ford’s leadership restructuring underscores the company’s commitment to tackling its quality control challenges. The appointment of a new quality chief and the reorganization of responsibilities signal a renewed focus on improving product quality and mitigating the financial impact of recalls and warranty costs. The effectiveness of these changes will be crucial for Ford’s future success and its ability to regain consumer trust.
