Ford Accelerates Transformation Plan With Small Car Offensive, Manufacturing Realignment

-- Ford adding new fuel-efficient small cars and crossovers to North American product lineup -- Six European small vehicles coming to North America from global B-car and C-car platforms -- Three large truck and SUV plants converting to small cars; retooling begins this December -- Ford, Lincoln and Mercury lineup to be almost completely upgraded by end of 2010 -- Ford plans to be the best or among the best in fuel economy with every new product in its segment -- Hybrid vehicle production and lineup to double in 2009 -- Capacity for North American four-cylinder engines to double by 2011 -- Ford, Lincoln and Mercury confirmed in company's North American brand portfolio

DEARBORN, Mich., July 24 /PRNewswire-FirstCall/ -- Ford Motor Company (NYSE: F) today announced a significant acceleration of its transformation plan with the addition of several new fuel-efficient small vehicles in North America and a realignment of its North American manufacturing.

The actions represent a considerable shift in Ford's North American product plans and investments toward smaller vehicles and fuel-efficient powertrains in both the near- and mid-term in line with rapid changes in customer buying preferences.

In addition to bringing six small vehicles to North America from the company's acclaimed European lineup, Ford is accelerating the introduction of fuel-efficient EcoBoost and all-new four-cylinder engines, boosting hybrid production and converting three existing truck and SUV plants for small car production, beginning this December.

"We continue to take fast and decisive action implementing our plan and responding to the rapidly changing business environment," said Ford President and CEO Alan Mulally. "Ford is moving aggressively using our global product strengths to introduce additional smaller vehicles in North America and to provide outstanding fuel economy with every new product."

Mulally said the company is more focused than ever on its transformation plan, which calls for:

-- Aggressively restructuring to operate profitably at the current demand and changing model mix

-- Accelerating the development of new products that customers want and value

-- Financing the plan and improving the balance sheet

-- Working together effectively as one team, leveraging Ford's global assets

"The progress we have made in working together to create a 'One Ford' global enterprise during the past two years gives us a unique competitive advantage in today's environment," Mulally said. "We are in a stronger position than ever to leverage Ford's global assets to address the North American business environment. We also are building on the past few years of progress in continuously improving our quality, reducing our cost structure and introducing strong new products."

Aggressively Restructuring

Ford will convert three existing North American truck and SUV plants for small car production, with the first conversion beginning this December.

The moves are in addition to Ford's announcements in May and June that it is reducing its North American production plans for large trucks and SUVs for the remainder of 2008, as well as increasing production of smaller cars and crossovers.

"We are transforming Ford's North American manufacturing operations into a lean, flexible system that is fully competitive with the best in the business," said Mark Fields, Ford president of The Americas. "We remain committed to matching our capacity with real consumer demand, and we are equipping nearly all of our assembly plants with flexible body shops, ensuring we can respond quickly to changing consumer tastes.

"In addition, we are adding four-cylinder engine capacity to meet the growing consumer demand, while expanding production of our new EcoBoost engines, six-speed transmissions and other fuel-saving technologies," Fields said.

Among the manufacturing realignment actions:

-- Michigan Truck Plant in Wayne, Mich., which currently builds the Ford Expedition and Lincoln Navigator full-size SUVs, will be converted beginning this December to production of small cars derived from Ford's global C-car platform in 2010.

-- Production of the Ford Expedition and Lincoln Navigator will be moved to the Kentucky Truck Plant in Louisville, Ky., early next year.

-- Cuautitlan Assembly Plant in Mexico, which currently produces F-Series pickups, will be converted to begin production of the new Fiesta small car for North America in early 2010.

-- Louisville (Ky.) Assembly Plant, which builds the Ford Explorer mid- size SUV, will be converted to produce small vehicles from Ford's global C-car platform beginning in 2011.

-- Twin Cities (Minn.) Assembly Plant -- which was scheduled to close in 2009 -- will continue production of the Ford Ranger through 2011 to meet consumer demand for the compact pickup.

-- As previously announced, Kansas City Assembly Plant this year will add a third crew to its small utility line for the Ford Escape, Escape Hybrid and Mercury Mariner and Mariner Hybrid.

In tandem with the realignments, Ford will continue to offer targeted hourly buyouts at its U.S. plants and facilities, working with the UAW to secure competitive employment levels. Ford also said it remains on track to reduce salaried-related costs by 15 percent in North America by Aug. 1.

Ford North America still expects to reduce annual operating costs by $5 billion by the end of 2008 -- at constant volume, mix and exchange, and excluding special items -- compared with 2005. In addition, the company said it plans to continue to reduce structural costs beyond 2008.

The company also confirmed Ford, Lincoln and Mercury will remain in its North American brand portfolio. Ford said it will work with its dealers to broaden and accelerate its dealer consolidations, which will result in a dealer network that reflects the changing industry size and model mix.

Ford also updated its current North American planning assumptions, which include:

-- U.S. economic recovery to begin by early 2010

-- U.S. industry sales to return to trend levels as the economy returns to health

-- Product mix changes are permanent, but some recovery will occur from the current share-of-industry for full-size pickups -- though not back to levels experienced previously -- as the economy and housing sector recover

    -- Oil prices to remain volatile and high
    -- No near-term relief from current level of commodity prices
    -- About 14 percent U.S. market share for Ford, Lincoln and Mercury brands

Accelerating New Products

Ford is adding several new North American products in the near- and mid- term, and shifting from a primary emphasis on large trucks and SUVs to smaller and more fuel-efficient vehicles. By the end of 2010, two-thirds of spending will be on cars and crossovers -- up from one-half today.

"We are accelerating the development of the new products customers want and value," Mulally said. "We sell some of the best vehicles in the world in our profitable European and Asian operations, and we will bring many of them to North America on top of our already aggressive product plans."

The new products include six European small vehicles to be introduced in North America by the end of 2012. Ford's acclaimed European products are set apart by their world-class driving dynamics, exciting design and outstanding quality.

"While we have no intention of giving up our longtime truck leadership, we are creating a new Ford in North America on a foundation of small, fuel-efficient cars and crossovers that will set new standards for quality, fuel economy, product features and refinement," Fields said.

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