January 13, 2008. Reuters. "Ford Chairman Bill Ford on Sunday said the automaker's plan to return its North American operations to profitability in 2009 is 'progressing very well.'" May 23, 2008. Automotive News [sub]. "Ford Motor Co. said today it will cut North American production and retreated from earlier profit outlooks, saying it expects only 'to be about break-even' before taxes in 2009." About? What's that, give or take a couple hundred million? Anyway, Ford's slicing North American production by 15 percent in the second quarter, down 20k units to 690k vehicles. And you can bet that the majority (if not all) of those not-produced vehicles will be high-profit trucks and SUVs. A statement from CEO Big Al Mulally just about said as much. "The challenge affecting the entire industry is the accelerating shift in consumer demand away from large trucks and SUVs to smaller cars and crossovers — combined with a steep rise in commodity prices and the weak U.S. economy." FoMoCo's "how low can you go" ain't done yet. The Blue Oval Boyz are dropping third quarter production by 15 to 20 percent and fourth-quarter production another two to eight percent. Or, come to think of it, more.
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Reading and understanding history is always a good idea if you plan to survive the future.
Apparently, this lesson is lost on Detroit 2.801 executive ranks.
It’s not even ancient history. I’m talking about the 1973 oil crisis and the 1979 oil crisis.
Only this time, it seems like the sea-change may end up being permanent, finally.
Getting complacent about offering a full range of cars with equal quality, only selling larger vehicles by benefit of their particular attributes instead of offering small vehicles as an afterthought (with obvious distate) has placed Detroit Inc into the toilet bowl AGAIN, for the 3rd time in 35 years.
Unfortunately, it may be a case of “3 strikes, yer out!” For all of them. Though, I think Ford might have somewhat of a better chance of surviving than GM, I think Chrysler is a dead company walking. Stumbling. Staggering. About to go Tango Uniform.
Ford Canada announced today they would be asking for overtime at there Oakville Ontario plant, to make more Cross-overs there
Another indication that most, if not all, of the cuts are going to be in Ford’s truck and SUV production comes from an AP article on the same topic:
As recently as 2004, trucks and SUVs accounted for 70 percent of Ford’s sales volume, according to George Pipas, Ford’s top U.S. sales analyst. That has reversed completely: Retail sales of trucks and SUVs accounted for just over 30 percent of sales in April, he said.
Maybe Ford would be profitable if they would stop making useless vehicles (Flexible, F-100…)
How can you determine if a vehicle is useless when it is not even on the market yet? Your opinion of a vehicle, like the Flex, does not make it useless to other consumers.
Ford did announce they were cutting back production of trucks and SUVs and focusing on the small and midsize cars and CUVs.
2009 and the elusive 2010 will see more “useful” products such as the revised Fusion, Taurus, and Escape. And new models such as the Flex, Fiesta, and Explorer(?)…and the associated badge-engineered Mercurys/Lincolns/Mazdas.
While cancelling the slow sellers such as the Taurus X and your beloved (yet useless to many) Crown Victoria.
Of course they’ll take a profit hit since they won’t be selling vehicles with such a high margin. It’s going to happen, but breaking even is better than losing money and it’s still a step in the right direction.
Yes I like my car…but beloved? Whatever…believe what you want. But Ford has YET to come out and say that the CV/GM/TC are on the chopping block. Personally, I cannot wait for the day that they do announce that the Panthers are going away. Then there is absolutely ZERO reason for me to even consider a car or truck that Ford is trying to peddle.
As for the Flexible…yes it is completely useless. Ford already has a very capable, better looking, and cheaper station wagon on the market. It is called the Taurus X. The ONLY reason the Taurus X is not selling is because Ford choose not to advertise it. Had they done that…they would be selling TONS of them.
But, rather than spend a few dollars on advertising the damn thing, Ford though it made more sense to copy the Scion xB, lengthen it, and name it a stupid name…oh and call it a ‘minivan replacement’…while forgetting that all of the real minivans have TONS more space in them.
I knew this would happen! How did I know? Because Mark Fields announced it in his “way forward” plan. A plan that has been so successful, they called Alan Mulally in to turn Ford around!
I admit Ford is in the best shape to get out of this quagmire (not “Family Guy”. Giggedy giggedy!) but that doesn’t mean it WILL avoid bankrupcty.
“How can you determine if a vehicle is useless when it is not even on the market yet? Your opinion of a vehicle, like the Flex, does not make it useless to other consumers.”
Simple, something can be utterly useless, yet popular. Look at the “pet rock”. No pragmatic use, whatsoever, but it sold by the millions.
Same with cars, in UK line ups, many manufacturers have a medium to full size SUV’s and in the same line up, they have a people carrier/crossover which has just a practical use as the SUV but is loads cheaper and more fuel efficient. No need for the SUV, especially in a dying market segement and if anybody wanted a PROPER 4×4 (i.e lived in the countryside) they wouldn’t use anything other than a Land Rover.
Another case in point is the sale of pick up trucks in the UK. Utterly pointless, when the sell Transit vans which do the job just as well and is cheaper. Much cheaper!
RF – Your context suggests that Bill Ford was being subversive in January when in fact the reality is that things have just changed very drastically since then – faster than most in the industry predicted. Even Toyota the supposed God of everything has scaled back heavily on truck production and now has almost an entire plant of excess capacity in their system.
On their Q1 earnings call, Ford still thought things were ok… I’m willing to put good money on this being the worst month for trucks since the 70s. My prediction is a cool 35-37% decline in F-series sales.
Ford does have cars in the works to help it out, but they (and most everyone) thought they had a little more time to make the switch. 2009 is, in fact, the year we start to see significant changes in Ford’s lineup towards fuel-efficiency that should resonate better going forward.
Finally, if everyone actually reads the release, ALL of the cuts are to SUVs and trucks. They are actually working on adding car and CUV production through the back half of the year – it just won’t be enough to offset the truck declines.
Sub-15 million industry sales this year? It’s possible…
I actually give Mullaly a lot of credit for changing production schedules mid year and changing forecasts based on changing market conditions. This is something that would never have happened at Ford or GM 5-10 years ago. I was a big time skeptic but I actually think Mullaly is doing the right things. However, switching from a company that lost money on every car it sold to a company supported almost entirely by car sales that make, at best, 1/10th the profit they used to get from trucks in less than 2 product cycles is one hell of a challenge.
KP – The original Way Forward plan is basically the one being followed by Mulally. However, the key pieces of it were aligning global units including manufacturing, engineering and purchasing – much of which was being fought against via internal politics.
Mulally’s contribution – his real contribution – has been four things: getting Ford’s funding early so that they have cash to run on (and more than enough at that), shedding non-core assets (Jag, LR, Aston, Volvo?) to get the Ford brand healthy, hiring Farley, and breaking up internal politics so that transformations could go forward.
There is no doubt in my mind that Ford would not be in as good of shape as they are if Mulally had not shown up to help the company fix itself *internally.*
Just a perspective.
The announcement is bad news for Ford, but I like the fact that they are cutting production instead of simply building more of them and slapping more money on the hood. If Ford has to shrink to become more profitable, so be it. At the very least making an announcement like this shows that somebody has a sense of accountability in Dearborn, no?
The F100 IS a bad idea unless ford is being coy and using it to replace the fat F150. Any body with sense at ford would take the truck formerly known as the best selling compact truck in the world and refine it and its mileage potential. And do it 6 years ago. Oops, cant do it, can they? Oh wells, another squandered opportunity.
@P71_CV: It was firmly “tounge in cheek” when I said bleoved…sorry. They’re ending production, and are not available unless for fleet sales. I think that would point to the Panther’s demise.
First, I’ll state that I don’t really see a need for either big-box wagon…but I’d rather see these than more Explorers and Expeditions not being used to their capabilities. I think the Explorer is a great vehicle and one of the best 7-seat vehicles on the market too.
Ford is cancelling the Taurus X, the Flex does seem to be a better packaged vehicle and a bit different than the Flex. Yes, they both have similiar underpinnings and seat 7…but are different vehicles. Everything you listed as to why the Flex will fail is SUBJECTIVE. Just because you wouldn’t buy one doesn’t mean that Ford should not sell it. I honestly don’t see why you’re getting all bent out of shape over this.
Polarizing style and comments is what made the 86 Taurus sell. Ford could have kept with the Fairmont, as it was a 5/6-seat sedan.
@ Katie- if it sells like hotcakes, that doesn’t mean it’s useless to Ford. It’s making money.
I personally think that Ford, and others, should scale down the number of models they offer. And I would like to see less of these “segment-buster” vehicles. They aren’t busting any segments like the minivan did, and really not offering anything incredibly new or game-changing. Every manufacture is getting too bloated with so many vehicles that do essentially the same thing.
I think Ford would have the easiest job of trimming it’s lineup if it chose too, and the least amount of vehicles to dump. Also trim the truck packaging and offerings.
Sell a wagon version of the Focus and Fusion.
My idea:
Fiesta
Focus
Fusion
Mustang
Taurus >will 2010 redo make it a more popular vehicle?
Taurus X >Flex
Escape
Edge
Explorer >will 2010 redo with unibody render it “useless” as a 7-seater or will it make the Flex even more “useless”?
Expedition
Ranger
F-series
F-series SD
E-series >Transit ?
Transit Connect
That’s just how I see it.
You’ll have a few more vehicles than Honda. I do feel Honda knows how to cover the market quite well…nothing they sell (save the Ridgeline) does poorly. However, they don’t offer to the commercial and fleet crowd like Ford does and don’t offer a utility van or trucks.
I have no doubt that Ford will be able to escape bankrupcy, even if it is reneging on its promise to make a profit by 2009.
But I don’t think Ford can escape future bankrupcies and other disasters. Its corporate culture and ways of thinking just aren’t where they need to be on a long term plan.
In order to protect Ford from future problems, Mulally would have to change the thinking that goes into Ford products, making them more reliable, getting rid of the Ford family’s influence, and hiring workers on a merit basis. The question is whether he can stay in the driver’s seat longer at Ford than past executives have, so that his influence can affect Ford for the long term.
Long term, Ford is going up against China and India, who are going to be making much cheaper vehicles at Ford’s current quality levels using cheaper labor. Toyota will also be going up against China and India. But Toyota has a reputation for reliability and quality while Ford doesn’t.
The Ford model lineup will be where it needs to be come around 2012, when the new Mustang, Ranger, F-100, Focus, Fiesta, and Mondeo (Fusion) go on sale. But if the corporate culture can’t keep up with the product line, Ford still won’t be able to survive against Tata, Toyota and Chery.