Ford CEO uses Japanese management tool to tackle $5 billion issue
Over the past 18 months, TheStreet has closely covered Ford's persistent quality control issues and the progress it has made. Last year, Ford blew away the record for most recalls in a year, surpassing rival GM's more than decade-old record by the summer of 2025. Ford CEO Jim Farley and his ...
Overview
Over the past 18 months, TheStreet has closely covered Ford's persistent quality control issues and the progress it has made.
Last year, Ford blew away the record for most recalls in a year, surpassing rival GM's more than decade-old record by the summer of 2025.
Ford CEO Jim Farley and his lieutenants have spoken about quality control on earnings calls and done interviews about what they are doing to improve the quality of their vehicles.
But in all the interviews and quotes from the company and Farley, I had never heard the term "Gembas."
Farley mentioned Gembas during his recent interview with the Detroit News, calling them "one of the first things I did as a CEO." He credits them with helping turn Ford's quality fortunes around, so it's worth exploring what they are.
Ford CEO uses "Gemba" walks to reboot manufacturing quality
Ford's quality control issues have been known to the company for years. In 2023, Ford said it spent $4.8 billion fixing customer vehicles.
So CEO Jim Farley is taking a more hands-on approach, visiting over a dozen plants in just the past year. Farley is using a Japanese tool he learned while working for Toyota in the '80s, and it's called a "Gemba."
In Japanese, Gemba means "actual place," according to 4 Industry. In the business context, it is a staple of a lean management philosophy that beckons leaders to the factory floor to observe processes, engage with employees, and discover opportunities for improvement.
"When we decided to build a new plant, it was a common expectation at Toyota, even if you were a Westerner, to spend time in the plant," Farley said in his interview with Detroit News. "I watched very senior people at Toyota in Japan go to the line, find problems, go to the operator who is dealing with the problem, and then try to problem-solve to help the team."
Farley says that when he became CEO of Ford, the company was 25th in initial quality. But he is using the lessons he learned about "servant leadership" from his Toyota days to gradually turn that around. Now, he is fine-tuning his Gembas to address more specific issues.
"For the last seven years, I've refined my plant visits, my Gembas," Farley said.
"At first, I spent a lot of time in skip levels, meeting with the local union leadership, trying to understand whether people felt safe at work, and, more generally, whether quality was more important than output, or whether making production was more important than quality. As years have gone by, as we've made more and more changes, I first started to ask our engineers in the plant, our supply chain people in the plant, kind of more structural, organization, design and cultural issues."
But Farley is a veteran of the auto industry, and he says that in his 40 years in the business, "I watched Ford fall in love and fall out of love with quality like four times."
So how can Farley ensure that this time around is different, and that the current emphasis on quality won't be forgotten and thrown away in short order?
Details
"What I'm looking for is: are my teammates tied to some greater responsibility than just winning awards? Are they trying to do this for our customers? Are they trying to do this for the Ford family? And when they talk about creating quality around the process, adherence to the process, improving the process, and in between those two things is a problem-solving culture," Farley said.
JD Power ranks Ford first in initial quality
While Ford again leads all automakers in recalls so far this year, according to Datahub, analysts at JD Power report that the company was the top pick in its 2026 U.S. Initial Quality Study.
JD Power uses a scale of problems per 100 vehicles. The fewer problems per 100, the better the vehicle quality.
The average number of reported PP100 improved in 2026 to 175 from 192 a year ago. It was the best year-over-year improvement since 1997 and the fourth-best performance in the study’s 40-year history.
Among mass-market brands, Ford ranked the highest with a score of 152 PP100. Nissan was second with a 156 score, and General Motors’ brand Buick came in third at 162.
Ford’s ubiquitous F-150 led in its pickup category, while the Ford Mustang and Ford Super Duty also ranked highest in their respective categories.
Ford CEO Jim Farley commented on the recognition and the work Ford has been putting in to improve its quality.
“Oh boy, this is a big day for Ford,” Farley said in an interview with Yahoo Finance. “We’ve worked really hard for four years to be an overnight success story. It’s been an incredible journey over the last several years. We have completely transformed all of our plants and our quality operating system.”
“You go into any of our plants in the U.S., you’ll see our workers completely obsessed with all the data. Every torque wrench is measured. We look at every defect and understand why it happened,” he said.
Ford details plan to turn around its quality-control troubles
Ford set a record last year for the most recalls in a single year, but the issue runs deeper than that.
A recent study by iSeeCars.com, analyzing 31 years of recall history, found that Ford is the least proactive car brand in issuing recalls. Fewer than 30% of the cars recalled over the last three decades were due to a problem Ford found on its own.
More Auto:
- Mercedes wants AMG to become a much bigger profit machine by 2030
- Popular Ford model faces yet another recall
- Tesla faces lawsuit from family of victim killed in Texas home crash
By 2023, the company reached a breaking point when Ford said it spent $4.8 billion fixing customer vehicles. In 2024, the company said it was initiating a new quality assurance program that incorporates “testing vehicles to failure,” running them “at extremely high mileage” in order to find potential problems before customers do.
The company said at the time that it would take up to 18 months to see the benefits of that new process. “It makes our quarters lumpy, and it’s challenging, but it will reduce warranty (costs) over time,” Farley said at the time.
During a recent call, Chief Operating Officer Kumar Galhorta identified four areas the company is focusing on now:
- Seamless launch execution
- Minimal defects
- Greater reliability
- Time
“We are not satisfied with the current level of recalls or the number of vehicles impacted. We are working to reduce the cost of these recalls,” said Galhorta during the company’s second-quarter earnings call last year.
Galhorta went on to say that the majority of its recalls are “tied to vehicles engineered several years ago before we made all the robust process changes across our industrial system.”
Related: Alleged Ford cookie thief responds after losing $200,000 a year job
Source
Originally published at www.thestreet.com.
