Ford's Mtgs. Spend Drives New Conf. Center

In the midst of its first companywide meetings centralization initiative, which officials hope will slash $20 million of corporate meetings spending in 2002, Ford Motor Co. next month will open a new conference center at its Dearborn, Mich., headquarters site. The center will complement its two company-owned local hotels with the function space necessary to hold a sizable portion of its offsite meetings on campus.

Ford spent about $20 million converting an old automobile display area into the new conference center, which does not have sleeping rooms but features extensive conference space and ballrooms, said director of travel and events Bob Magnus.

The new conference center is the latest development in a comprehensive meetings and events management initiative that began in April, corralling some of Ford's largely unmanaged meeting and group spending, which Magnus estimated at about $100 million annually. Under the terms of the new program, Ford's internal meeting sponsors must register through Magnus' department via a meetings page on the corporate intranet travel site the specifications—dates, proposed suppliers and proposed costs—of all meetings of more than 10 attendees that require at least 50 room nights or more. Magnus' department then will handle all sourcing, negotiations and contracts, he said.

"We can monitor compliance with rules and regulations and steer them to preferred locations for deals," Magnus said.

Ford's transient travel program, with its $110 million of U.S. booked air volume, has been managed closely by Magnus for several years, but until April, meeting expenditures and planning largely had been unmanaged.

"We have to educate past the use of incentive houses or marketing companies for meetings," Magnus said. "We now offer corporate resources for planning programs. My vision five years ago was of one person handling travel management, and we've pushed for travel consolidation and meeting and conference consolidation."

Key to the development of the meetings program was an internal reorganization at Ford that moved the travel department from purchasing to the corporate chief of staff, to whom Magnus now reports, cutting through several layers of senior management to expedite the program's growth.

One benefit of a centralized meeting program, Magnus said, will be the ease of post-event payment reconciliation. Magnus places a great deal of importance on single forms of meeting payment for billing purposes. He said Ford hopes to develop single-meeting payment systems, with a credit card number created for and assigned to a single event, with its expiration date shortly after each conference concludes. Also, in the wake of the dozens of meetings scrapped after the Sept. 11 attacks, Magnus will consider the development of a standardized Ford meeting contract that offers more protection from cancellation penalties, a process made easier by centralized meeting processes.

Similar to many companies that have introduced measures to rein in unmanaged meeting programs, Ford's internal sponsors were somewhat less than thrilled about the changes.

"There wasn't a revolt, but there has been some reluctance," Magnus said. "But we published the changes two or three times, and when we sat down with them and explained we were not there to tell them what to do but instead how to better manage their spending, everyone agreed that we were headed in the right direction. We're not dropping customer service, and we're not saying they can't use particular suppliers."

Magnus stressed that his department had no great desire to refuse requests to hold meetings at specific properties, but reserved the right to make changes in that area, particularly considering the development of new Ford conference space.

Ford owns two hotels in Dearborn—a Hyatt and a smaller inn—but needed more space, so the company commissioned a study of the savings an on-property conference center could realize. "We put a lot of heads together and realized, with the volume that we do, that we could hold a meeting here for 33 percent less cost than we do outside," Magnus said. "It gives us something we can control. We will get some events that have good reasons for not being able to fit, but our first priority is to fill it."

Outside of the 40-hour work week, the center will be open to the public, potentially generating further revenue. Though several other companies have tried to build their own conference centers in the past, with varying degrees of success, Magnus believes Ford holds enough meetings to keep the center busy and cost efficient, and the absence of sleeping rooms will make it easier to see a return on that investment. Although the center was in the conversion process months before Sept. 11, some employees may feel more secure at a location closer to home, considering the scores of travelers stranded in the days following the terrorist attacks.

Magnus had hoped to realize $28 million in savings because of the new program in 2002, but scaled that number back after Sept. 11, presuming decreasing meetings and other cuts naturally would hold spending down. Between reduced air and hotel expenditures, from formerly external events now held at the conference center, and better management of meeting spend, however, Magnus is targeting up to $140 million in aggregate savings by the end of 2006.