Ford’s Boneham Talks About Launching Small Car in India

Image: Raju Patil for Forbes India

Michael Boneham, President and managing director, Ford India

Name: Michael Boneham
Designation: President and managing director, Ford India. Prior to this role, Boneham was the executive director for operations. He has over 20 years of experience in the auto industry.
What he has done: Took charge of Ford India’s small car project, the Figo, from scratch and has been responsible for its launch.
How has it paid off: In the first 100 days of the Ford Figo’s launch, the company has received 25,000 bookings. None of the company’s earlier products like the Fiesta, Ikon and Fusion were able to generate such high volumes.
What next: Taking the learnings of the small car project to Ford’s global operations and exploring export markets for the Figo.

I came to India as the operations executive director with product engineering, purchasing and manufacturing. This was a planned approach in Ford Motor Company, to prepare for the new small car launch and the expansion of capacity.

I got a bit of a shock when I came in because in two and half years, we had to take a facility that’s running at a 30,000 units to a position where it could launch Figo (the small car). Next, at the time of launching Figo, be in a position where the capacity had been expanded to 200,000 and then, in the third stage, be ready for a tripling of our volumes. That is a huge, huge differential. We needed to be able to work on how we set up the plant to deliver Figo, deliver the new engine plant and deliver the capacity expansion in vehicle operations, all at the same time.

And that was a bit of a shock-and-awe plan because you needed to be working on three different dimensions; not just on a new product, not just on the expansion of operations, but hiring new people, getting the skill level that we needed for people to work at a much higher capacity, and expanding our dealer base. Then, I moved into the managing director’s (MD) role and also had to do the external business facing stuff like growth of the numbers of dealers, increase the number of service and sales outlets and also get ready for the launch from a marketing perspective. So it was a multi dimensional challenge.

I think we put the right people in the right jobs to start of with. That was critical. So when I moved into the MD’s role in 2008 we had Sandip Sanyal come into the executive directors’ role. I knew that he had the capability from a purchasing perspective and the relationship with the supplier base that was critical for significant growth. We also didn’t have a marketing and sales guy. So we had to bring in Nigel Wark who had thirty years of experience in marketing and sales in the group.

We were moving into a segment where we had never been and the cost management of the Figo was a significant challenge. It meant value engineering, localisation and negotiation with suppliers to increase economies of scale.

A significant cost in the car is the engine, for instance. We have traditionally looked at import of engines from Europe. So we said that we want to assemble engines and machine components here but we also want to localise a significant part of the engine to get the cost base down. So the engineering, design and the product development had to find suppliers here in India that we have never done business with and get them to the level of quality and delivery that we see as acceptable. This was a whole new world for us.

The power-train sourcing and localisation was a challenge because we were dealing with Ford Europe, a new supplier base and engineers who were saying, ‘Hey! I had to engineer the design based out of Europe and now you are telling me you want to build it in India’. And it was a significant challenge to make sure that we got everyone on board. And with the engine we are at 65 percent localisation, you know that the car is 85 percent [local] so we were looking at almost 15-20 percent savings compared to Europe.

Also, there is no doubt that the Indian consumer is much more driven by cost of ownership and value versus just the pure purchase price of the product. So they are thinking about things like service, cost and availability of components. Because Ford is a global company, people have an impression that all our parts would be coming from overseas and that would make getting them very expensive. So we had to do a lot of education programmes — and we still have to do it — on the fact that we are 85 percent localised on this vehicle.  To me, marketing and sales was a big challenge because my background has been in manufacturing.

On a personal front, the adjustment is that I am away from my family. That’s the difficult side of business. My boys are in school in Sydney and I am here and my wife spends time in between and that’s not an easy situation. But in terms of the Indian culture and the experience here, I have to say it has been fantastic. You know the learning for me is that India is like Europe in one country. I didn’t realise that when I came. The difference in food, lifestyle, language and culture here in India is just as dramatic as like going from the UK to Germany. So understanding the diversity of India was a big ‘aha!’ for me.  

(As told to Ashish K. Mishra)