Josh Halliburton joined Ford in January as the new executive director of quality to improve Ford’s increasingly shaky quality record. To say that Ford’s quality needs an improvement is an understatement.
The Wall Street Journal reported that Ford set aside more than $4 billion for warranty costs in 2021, a 76% increase from the previous five years, with a 17% increase in total warranty expenses from 2016 to 2021. Within the first seven months of 2022, Ford became the most recalled auto manufacturer in the U.S. It had 46 separate recalls on 6.8 million vehicles. The next most recalled automaker, Tesla, came in at 2.26 million vehicles. According to the Lemon Law Index, Ford sold one lemon vehicle per every 148 vehicles sold in the U.S.
A Problem with Ford’s Culture
Halliburton identified the main problem: Ford tried to make too many changes in design and engineering, and far too close to a new-vehicle launch. He said that though workers were eager to fix problems as they propped up, they were not “empowered” to flag them earlier in the process.
“It wasn’t a top priority,” Halliburton told the Wall Street Journal. “Everyone wants to make sure they can hit the targets we are aiming to achieve. If the goal was to launch on time, we were often focused on getting to launch versus prioritizing quality.”
This problem was most apparent when Ford sold more than 2 million Ford Focus and Ford Fiesta cars with the infamously faulty DPS6 “PowerShift” transmission. Describing the transmission as a ‘mechanical catastrophe,’ Ford engineers had told Detroit Free Press: “We’d raise our hands and be told, ‘Don’t be naysayers.’ We got strange comments. It seemed the ship had sailed. After that, if you ask questions, you’re accused of mutiny, so you put your head down and make it work. Good people tried to make it work. But you can’t violate the laws of physics.”
The Prevalence of Ford Lemons
Ford faced multiple class action lawsuits, multidistrict litigation cases, and even a fraud investigation from the Department of Justice. Despite settling many cases, Ford faced a class action liability of $4 billion. However, the Ford PowerShift settlements did not cover all affected 2012–2016 Ford Focus and 2011–2016 Fiesta drivers. The DPS6 transmission problems are still found in 2017–2018 Ford Focus and 2017–2019 Ford Fiesta cars.
Ford also faced multiple lawsuits for its alleged fraud in its sale of Ford F-Series trucks with Power Stroke diesel engines, which often broke down and lost power. Knight Law Group represented many consumers with these faulty Ford pickup trucks. During these cases, five jury trials resulted in a series of Ford verdicts with award amounts anywhere between two hundred thousand and 8.1 million dollars. Now, newer Ford F-150 trucks are experiencing recurring problems with their Ford 10-speed transmissions.
Older cars and prominent Ford trucks were not the only Ford vehicles to experience the consequences of Ford’s poor quality. The Auto Lemon Law Index reports the story of Lawrence and Bonnie Shanahan, lessees of a new 2020 Ford Edge SUV with defects that caused a crash.
The Ford Edge SUV was at 3,415 miles when the backup camera failed at a critical moment. Mr. Shanahan was backing the SUV out of a driveway when the camera failed, and he backed into a metal bar protruding from a nearby truck. Ford refused to pay for the damage to the vehicle. The Shanahans later received a recall notice for the faulty backup cameras. Though the dealership performed a repair on the Ford SUV, the problem resurfaced, alongside other electrical issues. Ford refused to offer a refund or replacement, stonewalling until the evening before a trial.
A Change at Ford
Why the sudden change? The increasing warranty and recall costs poses a difficulty to its goal; Ford wants to knock off $3 billion in annual costs by 2026. By decreasing these costs, Ford can devote funds to ease into the electric vehicle market as a challenge to Tesla.
Halliburton’s plan to turn Ford into a “quality leader” includes installing video cameras to catch manufacturing flaws, increasing monitoring of social media to find consumer complaint and pushing workers to report design and production problems earlier in the process. Halliburton said that workers who report problems early should be rewarded, marking a shift away from the alleged culture at the time of the DSP6 transmission scandal.
“We are aligning specific objectives to the directly responsible individuals for the aspects of quality they are in control of,” he told Wall Street Journal. “Thus making it much more clear how each person directly fits into our quality goals.”