As one of North America’s largest automakers, Ford Motor Co. is faced with titanic money management challenges. The numbers speak for themselves. There are roughly 6,800 Ford/Lincoln dealerships across North America (NA). This works out to roughly 45,000 technicians, 10,000 service advisors and 10,000 cashiers. Ford also introduces a new car every 90 to 120 days. Finally, one-third of Ford’s NA dealers are located 100 miles or more from the company’s 50 training centers. When all three elements are combined, the result is a formula for runaway training costs. Not the sort of math any CFO likes to do.

Fortunately, the people at Ford’s Dearborn, MI, headquarters know how to crunch numbers. Back in the early 1990s, the automobile manufacturer was in the process of introducing multiple new products simultaneously, and it was impossible to deliver the magnitude of training required using conventional methods.

By company accounts, it would have taken hundreds of trainers to disseminate the information they needed to get out in order to materialize sales at the dealerships. Ford began examining its internal communications network, as well as what one of its rivals, Chrysler, GM, was using in an effort to find that competitive edge. What was found was a regular one-way business television system that would not meet the growing training demands.

This is why, in 1995, they decided to move the training programs out of the current system and onto a satellite-delivered platform called the Fordstar Dealers Communications Network (Fordstar). The One Touch-powered distance learning network at Ford provides training in more than 112 courses, broadcasting more than 70 hours of instruction per day to its dealerships. The concept was that interactive audio/video classes in sales, management and technical training would be originated at Ford’s headquarters, then beamed to classrooms in each of the company’s 6,800 dealerships. In these classrooms, local employees would be able to interact electronically with teachers, acquiring an educational experience as good as in-person training, but at a fraction of the cost. As part of an outsourcing agreement, Convergent Media Systems provides uplink management and encryption database management to support the Fordstar dealer network.

Because the system is primarily used for training, Ford understands the competitive value of this real-time communications tool that it gives its trainers for executing and obtaining both corporate communications and market research. For example, corporate marketing polls dealers on which features to bundle in upcoming products. Ford executives also use the network to conduct two-way discussions with thousands of employees simultaneously, facilitating greater communications and understanding throughout the organization.

Ford made this a reality by investing $100 million and only three years to bring Fordstar up to steam. In addition, the dealers spent a few thousand apiece to buy a TV and VCR from the head office, financed by Ford through a 60-month, interest-free term. As a result of this effort, Ford was able to transfer 92 percent of its training from traditional classrooms to a Fordstar-based distance learning platform.

The One Touch Network: The First year

Like the numbers, the payoff also speaks for itself. Even with this $100 million expense, Fordstar soon generated a 35 percent return on investment (ROI) when compared to traditional learning, a process which includes classroom training, travel, employee expenses and lost productivity when they are off the job. “Fordstar training is dramatically less expensive than on-site seminars on a cost/student basis,” says Paige Johnson, Ford’s global marketing communications manager.

In the first year of the network being installed in less than half of the company’s dealership locations (2,000), almost twice as many participants were trained (18,142) than in the entire previous year. By 1996, more than 10 times as many dealership employees were trained (124,510), as compared to just two years prior in the traditional classrooms. In 1997, Ford’s training went into overdrive, reaching 405,980 students, more than two-thirds of all dealership service personnel with training on the Fordstar network. Since then, training totals have continued to climb, while average training time for dealers and staff was cut from 31 days to nine with no decline in test scores.

Meanwhile, Fordstar’s ability to support extra channels allows Ford to add more courses, which results in a better-trained staff. This, in turn, leads to fewer warranty claims, more effective sales efforts and increased customer service satisfaction, which translates into more repeat business.

The More Fordstar Does, The More Fordstar Saves

When Fordstar launched in 1995, the service only had one TV channel. Since then, the service was expanded twice. The first expansion grew the network from eight channels to 15. Likewise, all of the channels are transmitted in digital form—a cost-saver that allows multiple channels to be carried on a single satellite transponder.

In expanding to 15 channels, Fordstar was able to realize further savings. “We were on three different satellites when we started, because none of those available at the time had a large enough footprint to do the job,” says Fordstar Manager Mark Gruskin. “However, once we were able to get space on SES Americom’s AMC 4, the problem was solved. The result was that we effectively reduced our operating costs by consolidating onto one satellite, while at the same time increasing the number of digital channels we were offering.

The savings did not stop here. In an effort to convince dealers to sign onto Fordstar, Ford piggybacked a flat-fee data network on the platform, one through which all dealer/headquarter interactions are carried. The dealers loved this change. No longer were they charged per-usage fees for landlines. The result was that dealers received better communications with the head office, while being able to keep these costs at a preset, predictable level.

And today? Mindful of the advantages of high-speed Internet access, “Fordstar Next Generation” is now rolling out satellite-based Web access to 300 “geographically remote” dealerships. (These are dealerships outside of the high-speed links offered by urban telephone and cable TV systems.) “We’re using Hughes’ Direcway data platform to supply this service,” Gruskin says. “We’ve also launched something called ‘Project Choice,’ which helps dealers decide what kind of high-speed platforms are available to them locally. It’s up to them what they choose. However, in an age where 70 percent of consumers now research cars on the Web, relying on dial-up access just isn’t good enough anymore.”

Fordstar In The Black

Reduced education costs, better-trained dealership staff and more repeat customers: could the news about Fordstar get any better? Yes. Even with the expense of running a 15-channel satellite network, “Fordstar doesn’t cost us anything,” says Gruskin. “Its costs are completely covered by dealer fees. They’re willing to pay for it, because of how much Fordstar is doing to improve their own profits.”

In fact, Fordstar is a definite “win-win” for Ford and its dealers. “By piggybacking data onto Fordstar, we’ve reduced our overall costs while dramatically increasing dealership training. This has led to higher customer satisfaction,” Gruskin says. “Meanwhile, our dealers have also won by reducing their data communications costs, improving customer satisfaction and increasing their sales.” All this, and a 35 percent ROI as well. Clearly, when it comes to saving money, choosing satellite delivery has been one of Ford’s smartest investments.

James Careless is a contributing editor to Satellite Business Solutions. James’ main interests are business and satellites, and how the two can work together.