DEARBORN, Mich., July 24, 2008 – 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:
“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.”
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:
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:
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.
The Ford, Lincoln, Mercury line will be almost completely upgraded by the end of 2010, including:
With every new product, Ford expects to be the best or among the best for fuel economy. This is aided by one of the most extensive powertrain upgrades ever for Ford. By the end of 2010, nearly all of Ford’s North American engines will be upgraded or replaced. In addition, within two years, nearly all of Ford’s North American lineup will offer fuel-saving six-speed automatic transmissions.
The improvements build on several Ford fuel economy leaders today, such as:
Coming in 2009 are the first applications of Ford’s new EcoBoost engines. EcoBoost uses gasoline turbocharged direct-injection technology for up to 20 percent better fuel economy, up to 15 percent fewer CO2 emissions and superior driving performance versus larger-displacement engines.
EcoBoost V-6 engines will be introduced on several vehicles next year, beginning with the Lincoln MKS and Ford Taurus sedans, and Ford Flex crossover. Four-cylinder EcoBoost engines will debut in 2010 in both North America and Europe. Ford will offer EcoBoost on more than 80 percent of its North American lineup by the end of 2012.
Ford also plans to double capacity for North American four-cylinder engines to more than 1 million units by 2011, to meet the consumer trend toward downsized engines for fuel economy. The smaller engines will deliver significant fuel savings.
In addition, Ford plans to double its hybrid volume and offerings next year – and is looking to expand further going forward. Production of the all-new 2010 Ford Fusion Hybrid and Mercury Milan Hybrid begins in December – with fuel economy expected to top the Toyota Camry hybrid.
With these new models, the Ford Escape Hybrid – now in its fifth year of production – and the Mercury Mariner Hybrid, Ford will offer four hybrid vehicles. That will make Ford the largest domestic producer of full hybrid vehicles in North America, second only to Toyota in sales volume.
Ford also is introducing six-speeds with PowerShift that offers the fuel economy of a manual transmission and convenience of an automatic; start-stop engines that shut off when the vehicle stops; electric power steering; direct injection, and Twin Independent Variable Cam Timing engines. These technologies will be progressively introduced within the North American lineup by 2012.
Driving Ford’s product transformation is the company’s “One Ford” global product development vision, which will deliver more vehicles worldwide from fewer core platforms, further reduce costs and allow for the increased use of common parts and systems.
In the next five years, Ford will build more than 1 million vehicles a year worldwide off its global B-car platform and nearly 2 million units worldwide off its global C-car platform.
“Ford is investing most where consumer growth is taking place – and that’s in highly fuel-efficient global small cars,” said Derrick Kuzak, Ford group vice president of Global Product Development. “One of every four vehicles in the world today is a ‘C’ or Ford Focus-sized vehicle, and we expect the segment to grow more than 20 percent to 6 million units in North America and 25 million worldwide by 2012. We see similar strong growth in the B-segment, where the Fiesta competes.”
With Ford’s global product development plan, all of the company’s vehicles competing in global segments will be common in North America, Europe and Asia within five years. In addition to B- and C-sized small cars, the company’s Fusion- and Mondeo-sized C/D cars and utilities will be common globally. The same will be true for commercial vans.
Ford said it is uniquely positioned to take advantage of its scale, already acclaimed global products and the strength of the Ford brand around the world to respond to the current changing marketplace and to begin to grow profitably. The company said its success in growing market share and profits with smaller, more fuel-efficient vehicles in Europe is now the template around the world.
“We remain absolutely committed to creating an exciting, viable Ford going forward – and to transforming Ford into a lean global enterprise delivering profitable growth over the long term,” Mulally said. “We continue to make progress on every element of our transformation plan, and we are taking decisive steps in the near term to ensure our long-term success.”
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Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 229,000 employees and about 90 plants worldwide, the company’s core and affiliated automotive brands include Ford, Lincoln, Mercury, Volvo and Mazda. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford’s products, please visit www.ford.com.