It's been a year since Joe Hinrichs took over as head of Ford Motor Co.'s Americas division, the latest step in a journey many think could eventually lead to the CEO's office.
Hinrichs, 46, got the job running Ford's North and South American businesses after a three-year stint as head of its Asia Pacific division. In Asia, he presided over Ford's most ambitious growth plan in 50 years.
He says his experience with Asia's prickly governments, nascent supplier network and volatile markets is helping him in South America, where new vehicles like the Ranger pickup and EcoSport SUV have helped Ford eke out a small profit this year despite inflation and instability.
Meanwhile, North America has enjoyed record profits and market share gains thanks to strong sellers like the F-Series pickup and Ford Escape SUV. Hinrichs has been quietly preparing for a big product rollout in 2014. Ford plans to introduce 16 new vehicles in the U.S., including the new Mustang sports car and Lincoln MKC small crossover. A new F-150 pickup is also in the works, but details are under wraps.
Hinrichs sat down with The Associated Press Monday to talk about his first year in the Americas and what's ahead in 2014. On Wednesday, Ford said pretax profit could decline next year, including in North America, partly because of the cost of the big vehicle launch.
Here are some excerpts from the interview with Hinrichs:
SLOWING SALES PACE: Sales of cars and trucks have risen by 1 million a year over the past four years, and should end this year around 15.5 million. Hinrichs expects that red-hot pace of growth to slow next year — a development that could actually help Ford.
Carmakers usually have to shut down plants when they change over to a new vehicle. That lost production is more detrimental when sales are booming.
"In a launch year, it's actually not bad if the industry's not growing as fast," Hinrichs says.
Industrywide, Hinrichs says, it's easier for automakers and suppliers to plan and produce enough parts when sales are steady. But there is a downside: Inventory levels have risen in the second half of this year, he says, and overproduction could bring about costly price wars.
QUALITY CHECKS: Ford and Lincoln were near the bottom of Consumer Reports' annual reliability rankings and J.D. Power's quality survey this year. Owners complained about glitches in the MyFordTouch touch-screen dashboard and lower-than-expected fuel economy on the new C-Max hybrid. The Escape was recently recalled for the seventh time, including multiple recalls related to fuel leaks from the 1.6-liter EcoBoost engine.
Hinrichs says Ford now better understands how hybrids perform in government fuel economy tests. As for the Escape, he says customers understand that things can go wrong with new technology, and will forgive Ford as long as the company fixes things quickly.
But he is taking steps so future vehicle launches will go more smoothly. Ford hired more engineers last year to work directly with suppliers to head off quality and capacity problems. Hinrichs also instituted more frequent meetings with the teams in charge of various vehicles.
"The most important thing you can do for a new model launch is making sure all the milestones leading up to that launch are done with integrity and are done on time, because the way a product comes to birth, everything has to happen sequentially," he said.
MARKET SHIFTS: A rapid shift away from midsize cars in the U.S. took Ford by surprise.
Earlier this year, the company added 1,400 new workers to its Flat Rock, Mich., assembly plant to make Fusion sedans in the U.S. for the first time. But in December, Ford idled that shift for a week to cut back on growing inventory.
Hinrichs said Fusion sales are still growing and gaining share in the midsize car segment, but the segment itself shrank in the last half of this year. Lower gas prices encouraged buyers to choose larger SUVs and luxury cars.
"We saw our share growth coming, but we didn't necessarily see as dramatic a change in the segment as a percent of the industry," Hinrichs said.
LEADERSHIP CHANGES: Hinrichs replaced Mark Fields as Ford's president of the Americas. Fields is now chief operating officer and will likely become CEO when current chief Alan Mulally steps down. Mulally is currently planning to stay through the end of 2014; Hinrichs and others won't comment on rumors that Mulally is being courted by Microsoft and could leave sooner.
Hinrichs says Fields — not Mulally — now runs the executive team's weekly meetings, but Mulally still participates. The meetings became legendary in the industry for helping Ford sort out its issues and getting warring executives to work together.
"The meetings themselves have been seamless. The members, the participants, the discussions," Hinrichs said. "This is ingrained in our culture now, how we run the business."