Ford Loses $8.7 Billion in Q2, Confirms Plant Retoolings
As Autosavant reported would happen (and in the process, scooped the rest of the journalistic world by five weeks), Ford announced the details of its newest turnaround plan today, including the conversion of several truck plants that were otherwise slated for closure, and instead will be retooled for production of European-based small cars.
In the light of an $8.7 billion loss for the second quarter of the year (of which $8.0 billion was non-cash impairment charges to write off the value of troubled assets, such as the $5.3 billion write-down for the company’s North American operations that are part of the $8.0 billion charge), Ford CEO Alan Mulally provided a lot more detail about the plant retooling that Autosavant had previously reported.
The company will move production of the Expedition and Navigator from its Michigan Truck Plant in Wayne, Michigan to the Kentucky Truck Plant in Louisville early in 2009. The Michigan Truck Plant will then be retooled to produce C-segment small vehicles based on the platform shared with the European Focus. That accounts for one of the three plants.
The Louisville, Kentucky plant that currently builds the Ford Explorer (a former cash cow for the company that has seen its sales nearly collapse for the past few years) will also be converted to build more C-segment small cars beginning in 2011. The plant will be available then because the next Explorer is due in 2010 and will move to a new unibody architecture, so will be produced at a different plant, likely where the company’s other large crossovers are produced in Ontario.
The Cuautitlan, Mexico truck plant will produce the B-segment Fiesta small car for North American sales in early 2010. That plant currently builds F-series pickups.
Since Ford’s F-series truck sales have struggled this year, and the company has commensurately reduced production plans, Ford will only have three shifts at two plants building F-series trucks, which is quite a shift from years past, when multiple plants were running multiple shifts just to keep up with demand for the pickups back in the “good old days” of cheap gasoline.
Other product moves (or non-moves, as the case may be) that Ford announced this morning was confirmation that the Ranger pickup will soldier on for two more years than originally planned, until 2011. Its plant in the Minneapolis, Minnesota area that builds the small pickup had been slated for closure at the end of 2009, but concern about fuel prices – plus the fact that the Ranger is the only true compact, non-midsize pickup in the North American market – gave the Ranger a new lease on life. The company also restated plans to introduce a seven-passenger Lincoln crossover based on the Ford Flex in 2009, the Transit Connect small van in 2009. The European Focus will also finally hit the US market in 2010, shortly after the Fiesta small car makes its debut.
The changes will be difficult for Ford to implement, and the company’s financial results will probably look worse in the coming quarters before they start to look better, but the company is making all of the right moves to address the US market’s seismic shift of the past quarter. With these announced moves, Ford appears to have taken far more aggressive and decisive steps to fix its situation than GM or Chrysler have taken. It makes one wonder if GM or Chrysler will announce similar ideas in the coming months.