Friday, December 5th, 2008
Ford proposal to U.S. Congress outlines strategy for viability.
In Ford’s proposal to the U.S. Congress, entitled “Ford Motor Company Business Plan”, Ford outlined its four-pillar plan to confront the critical issues facing the automotive industry. The plan is summarized as “One Ford – One Team – One Plan – One Goal.” The proposal also covers the current business environment and moves on to present Ford’s strategy to transform itself to better compete by developing safer, greener and even better quality vehicles. It also includes answers to specific questions posed by Speaker of the House Nancy Pelosi and Majority Leader Harry Reid.
The four key pillars addressed
Aggressive Restructuring,
New Product Development,
Financing and Improving the Balance Sheet, and
Working as a Team More Effectively. Ford notes, that while there is much work to be done, the Company did not wait until the current crisis to begin organizational change efforts, but had already begun a fundamental restructuring, from which early efforts had shown promise.
To read the complete Ford Motor Company Business Plan that was submitted to the Senate Banking Committee,
download the PDF here.
Tags: automotive industry, Ford Motor Company, Senate Banking Committee, U.S. Congress
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Friday, December 5th, 2008
Ford proposes strategies to operate profitably at the current demand and vehicle mix.
Ford’s organizational restructuring plan takes place across all operations, including manufacturing, supplier relationships, dealer relationships, consumer credit operations, and salaried and hourly personnel.
Ford addressed manufacturing concerns, noting that approximately 50 percent of future U.S. manufacturing capacity would be dedicated to producing more fuel-efficient small and medium-size vehicles. As well, nearly all U.S. assembly plants will have flexible body shops to respond quickly to consumer demands.
Ford is also strengthening its relationship with U.S.-based suppliers, with specific attention to women and minority suppliers.
To address an overcapacity of dealers, Ford intends to downsize and restructure in 130 metropolitan market areas. And dealers can continue to rely on the wholly- owned subsidiary, Ford Motor Credit Company for wholesale, retail and lease financing programs, together with capital and facility loan programs.
Ford will have reduced salaried personnel costs by 40 percent over the past three years, including a 10 percent reduction effective February 2009. There have been significant changes to Compensation and Benefit packages as well, such as eliminating merit increases and bonuses due to be paid in 2009.
When it comes to hourly personnel, Ford is working closely with the UAW to transform our total labor costs. Through these efforts, as well as capping costs on benefits, Ford will realize a total of $5.5 billion in annualized operating cost reductions from 2005 through 2008.
To read the section on restructuring,
click here.
Tags: automotive industry, Ford manufacturing, Senate Banking Committee, UAW
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Friday, December 5th, 2008
No element is more important to Ford’s plan than accelerating the production of new vehicle customers want and value.
Ford plans to achieve a better vehicle segment mix by recognizing the shift to smaller, more fuel-efficient vehicles, while still maintaining leadership in our areas of traditional strength. Highlights from the section of the plan that address new product development include:
- By increasing car and crossover segment mix from 48 percent to 60 percent in the next four years, Ford will have a balanced and complete portfolio of small, medium and large vehicles in the car, utility and truck segments.
- Ford will continue to build product excellence through leadership in fuel economy, innovation, quality, safety, and leading edge “comfort and convenience” technology. For example, by 2010 half of the Ford, Lincoln and Mercury light duty nameplates will qualify as “Advanced Technology Vehicles” under the Energy Independence and Security Act– increasing to 75 percent in 2011 and over 90 percent in 2014. In fact, Ford will achieve annual fuel savings of 2.5 billion gallons by 2012 model year.
- Ford has made immediate and significant improvements on a wide scale and accelerated electrification, including next generation hybrids and all-electric vehicles.
- On the heels of improving our engineering costs and facilities and tooling costs for a new vehicle by 60 percent and 40 percent, respectively, between 2005 and 2008, Ford continues to make substantial improvements in engineering and investment efficiency facilitated by leveraging the global assets of “One Ford” and a reduction in the number of vehicle platforms, engines, transmissions, and customer offered complexity.
- To ensure profitability of small cars, Ford plans to increase volume of Ford Focus sized vehicles to over 2 million units per year globally, and boost margins by improving revenues and costs.
To read the section on new product development,
click here.
Tags: Advanced Technology Vehicles, automotive industry, Ford Focus
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Friday, December 5th, 2008
Improving the balance sheet has been a continuous priority for Ford.
Ford’s plan was not simply a reaction to the current credit crisis, but rather a long-term objective that began several years ago, and has already delivered promising results. Here is a look at our ongoing efforts:
In December 2006, Ford raised $23.5 billion in liquidity, consisting of $18.5 billion of senior secured debt and credit facilities, and $5 billion of convertible debt. During the same year, Ford eliminated common stock dividends. In 2007 and 2008, we issued more than $5 billion in new equity.
Aston Martin, Jaguar, Land Rover and the majority of our investment in Mazda were sold.
In light of the frozen capital markets, Ford has embarked on aggressive plans to develop new funding products, filed an Industrial Loan Company application with the FDIC earlier this year and we are hopeful that a favorable response will soon be forthcoming.
To read the section on financing the plan and improving the balance sheet,
click here.
Tags: automotive industry, Industrial Loan Company
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Friday, December 5th, 2008
Ford combines a disciplined business plan process with an inclusive approach.
Openness, accountability, transparency and responsibility are driving factors behind the One Team approach. High performance teamwork is a vital performance criterion that will be monitored weekly, monthly and quarterly to ensure continuous improvement.
Ford is reaching out and listening to customers, dealers, employees, the UAW, suppliers, investors, communities, retirees and federal, state and local governments, as all of these parties are crucial to our future business success. Ford expects to reach profitability (operating profit before taxes – excluding special items) to be at or above breakeven for both Corporate and North American Automotive in 2011.
To read the section on working together effectively as one team,
click here.
Tags: accountability, automotive industry, One Team
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