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  • William Maley
    William Maley

    Ford's CEO Announces $14 Billion In Cuts, Investments Going To Trucks and EVs

    And you're getting cut, and you're getting cut


    Ford's CEO Jim Hackett has unveiled his plans for the company and there are a lot of cuts coming, along with shifts in various investments. 

    “I get up every day feeling like time can be wasted here if we don’t get moving. I feel a real sense of urgency,” Hackett told investors yesterday in New York.

    The cuts include a $10 billion cut in material outlays and a $4 billion cut in engineering costs over the next five years. Ford will also cut costs on internal combustion engines and redirect the funds to the development of EVs.

    One move that consumers will see is the reduction of possible vehicle configurations. For example, the current Escape has 2,302 configurations available. Ford will cut that down to 228 for the next-generation. The Fusion will see a dramatic reduction from 35,000 to just 96.

    "We really offered too many options," Hackett said.

    Speaking of cars, Ford will be moving $7 billion from the development of cars to trucks. This shift would mean fewer car nameplates, but the company wouldn't go into detail which ones would be cut. As we have reported in the rumorpile, the possible candidates for cuts include the C-Max, Fiesta, and Taurus.

    Other parts of Hackett's vision for Ford include,

    • Playing catchup by offering internet connectivity in all of their vehicles by 2019. 90 percent of Ford's global lineup will feature some sort of connectivity by 2020.
    • Building out more partnerships such as working with Lyft on deploying autonomous vehicles
    • Cutting down it takes to develop and produce a new vehicle

    “The mandate here is that Ford must compete. Companies never choose to die and yet many by not evolving are enabling that kind of fate. It’s clear that as a company we must then raise our gaze just high enough to ensure we’re not disrupted as the world changes,” said Hackett.

    Source: Automotive News (Subscription Required), Bloomberg, Ford, Reuters
    Press Release is on Page 2


    FORD’S FUTURE: EVOLVING TO BECOME MOST TRUSTED MOBILITY COMPANY, DESIGNING SMART VEHICLES FOR A SMART WORLD

    • Ford initiates aggressive “fitness” push, re-basing revenue growth assumptions and attacking costs, while redesigning company operations for long-term success
    • Capital will be allocated to regions, products and services with highest potential for growth and return; product shift calls for more trucks and SUVs, fewer passenger cars
    • Ford is accelerating work on smart, connected vehicles, including AVs and EVs and digital services to thrive in emerging transportation operating system

    NEW YORK, Oct. 3, 2017 – Ford Motor Company today is providing a strategic update to investors, detailing plans to leverage its unique product strengths, trusted brand and global scale to refocus and thrive in an evolving and disruptive period for the auto industry.

    The investor presentation follows a four-month deep dive into Ford’s strategy and business operations led by President and CEO Jim Hackett and Ford’s senior leadership team. Hackett said Ford will improve its operational fitness, refocus capital allocation and accelerate the introduction of smart vehicles and services.

    “Ford was built on the belief that freedom of movement drives human progress,” said Hackett, who became Ford president and CEO on May 22. “It’s a belief that has always fueled our passion to create great cars and trucks. And today, it drives our commitment to become the world’s most trusted mobility company, designing smart vehicles for a smart world that help people move more safely, confidently and freely.”

    The full slide deck of the presentation can be found here. Ford is reaffirming its 2017 full-year financial guidance and said its 2018 outlook will be provided in January.

    Reiterating its long-term goal of an 8 percent automotive operating margin, Ford says it will embrace the profound technological changes and new competition buffeting the industry. To deliver, the company is expanding its scope to include vehicles and services – all designed around human-centered experiences. The company will tap its strengths integrating hardware and software in complex devices, its proven ability to deliver scale and the trust tied to the Ford brand.

    Specifically, Ford is:

    • Accelerating the introduction of connected, smart vehicles and services customers want and value. By 2019, 100 percent of Ford’s new U.S. vehicles will be built with connectivity. The company has similarly aggressive plans for China and other markets, as 90 percent of Ford’s new global vehicles will feature connectivity by 2020.
    • Rapidly improving fitness to lower costs, release capital and finance growth. Ford is attacking costs, reducing automotive cost growth by 50 percent through 2022. As part of this, the company is targeting $10 billion in incremental material cost reductions. The team also is reducing engineering costs by $4 billion from planned levels over the next five years by increasing use of common parts across its full line of vehicles, reducing order complexity and building fewer prototypes.
    • Allocating capital where Ford can win the future. This starts with the company reallocating $7 billion of capital from cars to SUVs and trucks, including the Ranger and EcoSport in North America and the all-new Bronco globally. Ford also has plans to build the next-generation Focus for North America in China, saving capital investment and ongoing costs. Further, Ford is reducing internal combustion engine capital expenditures by one-third and redeploying that capital into electrification – on top of the previously announced $4.5 billion investment.
    • Embracing partnerships. Ford will continue to leverage partnerships, remain active in M&A and collaborate to accelerate R&D. The company recently announced it was exploring a strategic alliance with Mahindra Group as it transforms its business in India, and Zoyte with the intention of developing a new line of low-cost all-electric passenger vehicles in China. When it comes to autonomous vehicle development, the company recently announced a relationship with Lyft to work toward commercialization and a collaboration with Domino’s Pizza to research the customer experience of delivery services.
    • Expanding electric vehicle revenue opportunities. The company recently announced a dedicated electrification team within Ford, focused exclusively on creating an ecosystem of products and services for electric vehicles and the unique opportunities they provide. This builds on Ford’s earlier commitment to deliver 13 new electric vehicles in the next five years, including F-150 Hybrid, Mustang Hybrid, Transit Custom plug-in hybrid, an autonomous vehicle hybrid, Ford Police Responder Hybrid Sedan, and a fully electric small SUV.

    “When you’re a long-lived company that has had success over multiple decades the decision to change is not easy – culturally or operationally,” Hackett said. “Ultimately, though, we must accept the virtues that brought us success over the past century are really no guarantee of future success.” 

    Revamping product development, modernizing factories

    At the same time, Ford is redesigning its operations to better compete in this disruptive era.

    Hackett cites as a template the example of how the company reimagined the all-new 2015 F-150. Since then, the F-Series has gained market share and the average transaction price has increased 16 percent. It has improved fuel economy and increased capability for customers, thanks in part to a 700-pound weight reduction that helped make the F-150 the company’s most positive contributor to CAFE standards for model year 2018. Additionally, 90 percent of the manufacturing equipment can be reused for the next-generation F-150, reducing future capital requirements. Finally, the innovation on aluminum and light weighting will pay off across a range of Ford trucks and SUVs.

    Other priorities include:

    • Reducing orderable combinations of many nameplates, focusing on what customers value most. Already the team has identified a ten-fold reduction of orderable combinations in the next-generation Escape and is moving from approximately 35,000 combinations in the current generation of Fusion to 96 in the next generation.
    • Rethinking product development processes and incorporating new technology. In the next five years, Ford is aiming to reduce new vehicle development time by 20 percent, with new tools and fewer orderable combinations. Through the use of virtual assembly lines, the company has been able to reduce new model changeover time by 25 percent.
    • Redesigning the company’s factories of the future. Accelerating and scaling 3D printing, robotics, virtual reality tools and big data will improve logistics and enable a more efficient manufacturing footprint.

    “We believe Ford will achieve its competitive advantage by focusing deeply on our customers – whether they’re drivers, riders or cities – and that’s where we are playing to win,” Hackett said.

    Edited by William Maley


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    OUCH, but I can see this being needed in a changing world.

    I do question the cuts in configuration choices as I have seen that a properly setup assembly line should be able to allow customers to cherry pick the features they want. Grouping them into over priced packages is not always the best and by now most assembly lines should be like a lego set. Plug in play the features you want.

    Interesting times we are in. The next few years of auto shows should be very interesting.

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    Surprising that on the day we hear about GM investment in EV's and Hybrids we hear very little about Ford Team Edison. I would have thought Ford would want to show the world their focus on delivering ev's fast.

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    1 hour ago, dfelt said:

    Surprising that on the day we hear about GM investment in EV's and Hybrids we hear very little about Ford Team Edison. I would have thought Ford would want to show the world their focus on delivering ev's fast.

    https://www.wsj.com/articles/ford-to-spend-4-5-billion-in-electric-vehicle-development-1449785859

    That was 2015. I'm not sure where that stands today with a new CEO but it isn't like they aren't investing billions in EV technology. 

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    35 minutes ago, ccap41 said:

    https://www.wsj.com/articles/ford-to-spend-4-5-billion-in-electric-vehicle-development-1449785859

    That was 2015. I'm not sure where that stands today with a new CEO but it isn't like they aren't investing billions in EV technology. 

    Very true, they committed the dollar amount in 2015 to EV tech. But yesterday Ford announced their Team Edison and that it would be focused on the EV world along with Hybrids. I just wish Ford would come out and brag about it as they have some cool tech and I truly think they can produce a very competitive EV product.

    I was hoping they would come out and say we know some of our competition has gotten a jump on us for the EV initiative, Yet we at Ford believe we can not only catch up but surpass them and as such have assembled Team Edison to bring the brightest minds together to put in place a complete EV strategy and product plan that will cover the CUV craze, cars and Trucks to give our customers a Ford 1 experience that rivals everyone else.

    Just wishing for more positive vib from corporate Ford.

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    Bragging about is is a losing situation though. They would never live up to internet hype and you and I both know that, and that can be said for every company. 

    6 minutes ago, dfelt said:

    a complete EV strategy and product plan that will cover the CUV craze, cars and Trucks to give our customers a Ford 1 experience that rivals everyone else.

    Just wishing for more positive vib from corporate Ford.

    http://www.greencarreports.com/news/1108110_ford-plans-300-mile-electric-suv-hybrid-f-150-and-mustang-more-u-s-production-breaking

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    2 minutes ago, ccap41 said:

    Bragging about is is a losing situation though. They would never live up to internet hype and you and I both know that, and that can be said for every company. 

    http://www.greencarreports.com/news/1108110_ford-plans-300-mile-electric-suv-hybrid-f-150-and-mustang-more-u-s-production-breaking

    Yes I remember when that came out at the beginning of the year.

    I must have more faith than our own CEO's of Auto America as I feel they do need to talk it up and brag if you wish and then deliver. Too often I feel the CEO or other executives are too focused on just their own pocket book rather than the good solid growth of a company long term.

    Makes me feel that they do not totally believe in the company they are running.

    We all have failures in life, but we also have to continually challenge ourselves to do better and move the needle. Right now I feel ford is sitting on it's laurels more than other companies.

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    16 minutes ago, dfelt said:

    Too often I feel the CEO or other executives are too focused on just their own pocket book rather than the good solid growth of a company long term.

    Without a doubt.. and sadly.

     

    16 minutes ago, dfelt said:

    We all have failures in life, but we also have to continually challenge ourselves to do better and move the needle. Right now I feel ford is sitting on it's laurels more than other companies.

    I don't know about sitting on their laurels as much as I feel like they're holding something back from us. At this point they HAVE to have something good in the works.. GM with two very successful products( the products themselves, sales is another story that will eventually come) and Ford with a few so-so hybrids..? I sure hope they're working on something good. 

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    Seeing all the cars around Dearborn lately, I'd say you are right Dfelt!

    Ford is always quiet when it comes to this stuff.

    While I can't say much (sucks I can't), I will say this- There could be some truths being said around here....:)

    This whole EV is starting to excite me. 

    Though, let's hope there will be some gas stuff left.....

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    16 hours ago, dfelt said:

    Very true, they committed the dollar amount in 2015 to EV tech. But yesterday Ford announced their Team Edison and that it would be focused on the EV world along with Hybrids. I just wish Ford would come out and brag about it as they have some cool tech and I truly think they can produce a very competitive EV product.

    I was hoping they would come out and say we know some of our competition has gotten a jump on us for the EV initiative, Yet we at Ford believe we can not only catch up but surpass them and as such have assembled Team Edison to bring the brightest minds together to put in place a complete EV strategy and product plan that will cover the CUV craze, cars and Trucks to give our customers a Ford 1 experience that rivals everyone else.

    Just wishing for more positive vib from corporate Ford.

    Why brag over something that you are being forced to do through misguided government overreach... rather than consumer demand?  EVERY CAR MAKER WANTS TO ANSWER THE CUSTOMER'S WANTS.  IT IS HOW THEY MAKE MONEY AND SURVIVE... THEY SERVE THE PUBLIC'S WHIMS.  That is certainly nothing to brag about.  That is something to hang your head over.  To gnash your teeth over.  to wring your hands over... but never to brag.  What a ludicrous statement.

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    Sure, it would be great if CAFE were repealed, but neither Europe nor China are ditching displacement taxes or even tougher emissions requirements or electric mandates anytime soon.  The USA may be somewhat behind on this front, but automakers want to sell worldwide, which means that Beijing and Brussels have a lot to say about these issues.

    As for Ford itself, I would simply let their actions do the talking.  Besides, Ford does not have much in the way of PRODUCT in this area right now.

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    4 hours ago, ocnblu said:

    Why brag over something that you are being forced to do through misguided government overreach... rather than consumer demand?  EVERY CAR MAKER WANTS TO ANSWER THE CUSTOMER'S WANTS.  IT IS HOW THEY MAKE MONEY AND SURVIVE... THEY SERVE THE PUBLIC'S WHIMS.  That is certainly nothing to brag about.  That is something to hang your head over.  To gnash your teeth over.  to wring your hands over... but never to brag.  What a ludicrous statement.

    Ohhh my god, someone might plan for the future in this country....panties in the wringer much? Or perhaps sand in your private bits?

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    40 minutes ago, riviera74 said:

    Sure, it would be great if CAFE were repealed, but neither Europe nor China are ditching displacement taxes or even tougher emissions requirements or electric mandates anytime soon.  The USA may be somewhat behind on this front, but automakers want to sell worldwide, which means that Beijing and Brussels have a lot to say about these issues.

    As for Ford itself, I would simply let their actions do the talking.  Besides, Ford does not have much in the way of PRODUCT in this area right now.

    ...and this will be the end result, other countries will lead and the US will follow.

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    4 hours ago, ocnblu said:

    Why brag over something that you are being forced to do through misguided government overreach... rather than consumer demand?  EVERY CAR MAKER WANTS TO ANSWER THE CUSTOMER'S WANTS.  IT IS HOW THEY MAKE MONEY AND SURVIVE... THEY SERVE THE PUBLIC'S WHIMS.  That is certainly nothing to brag about.  That is something to hang your head over.  To gnash your teeth over.  to wring your hands over... but never to brag.  What a ludicrous statement.

    Thank you for proving how Ludicrous your own inability to see the future and new tech that can excite and invigorate others into the auto market.

    We would still be pre WWII level of Tech if the gov never did push the industries along. The science proves out the need to move beyond the Dino fueled auto's we have. Plus our health and the life of the planet will thank us.

    21 minutes ago, A Horse With No Name said:

    ...and this will be the end result, other countries will lead and the US will follow.

    So true and further leading us out of a leadership role and 1st world status as we move back into the stone age with his thinking.

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    I can see both sides here, and understand....

    Trust me Ocn, I understand where you're coming from-it's kinda crazy how they want to do it all at what seems at the same time. And while I love the techy future, I still love my gas engines. But as a country we are addressing concerns here...and now.

    - Whether we want to believe in global warming or not-it's time for a change either way. We knew it was coming...still, not easy to accept. This will also offer independence from the Middle East-no more crazy prices. And before someone adds about wall street just buying the utilitiy companies, there are many ways to get "charged"....wind, water, or solar. Hoping all I will need to do in my case is throw some solar panels on my garage(already have 220) and I can charge my car every day...

    -and as EV grows, defelt reminded me how we can still have fun (quite important to me-car needs a soul!) We just go from ol' gas and oil to plug and play..thinking it will still be fun, just in a different way.....:).

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    There will always be a lack of soul with an EV as they're silent and every single car guy loves the sound of exhaust whether it be loud and throaty or stock and hushed we still like those noises. 

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    33 minutes ago, ccap41 said:

    There will always be a lack of soul with an EV as they're silent and every single car guy loves the sound of exhaust whether it be loud and throaty or stock and hushed we still like those noises. 

    Have to disagree, so your saying this video of the Harley Davidson bike has no soul with this very cool pod racer sound it makes?

    Supposedly Nissan with the GT-R and Nismo edition of the Leaf will be customizing the sound of their Electric motor too.

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    Exhaust note is something i take little note of, other than I like it to be smooth and quiet and not compete w/ the surround sound audio...  though I do like a rumbly muscle car soundtrack once in a while. 

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    25 minutes ago, dfelt said:

    Have to disagree, so your saying this video of the Harley Davidson bike has no soul with this very cool pod racer sound it makes?

    Supposedly Nissan with the GT-R and Nismo edition of the Leaf will be customizing the sound of their Electric motor too.

    I didn't say "no soul" I said there will be a "lack of soul". And I don't really enjoy the sounds of that compared to an ICE. No thank you to those noises. 

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    8 minutes ago, ccap41 said:

    I didn't say "no soul" I said there will be a "lack of soul". And I don't really enjoy the sounds of that compared to an ICE. No thank you to those noises. 

    Got it, guess the Star Wars and Star Trek fan in me comes out when I drove this bike. Loved the sound, loved the acceleration, nothing can touch the gut punch instant torque of an EV. Just Awesome! :metal: 

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    1 hour ago, ccap41 said:

    There will always be a lack of soul with an EV as they're silent and every single car guy loves the sound of exhaust whether it be loud and throaty or stock and hushed we still like those noises. 

    Maybe we just need some fart cannon exhausts and some ricers to make it louder....:P

    But where there is a will there will be a way.....

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    2 minutes ago, daves87rs said:

    Maybe we just need some fart cannon exhausts and some ricers to make it louder....:P

    But where there is a will there will be a way.....

    :roflmao: 

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    6 hours ago, A Horse With No Name said:

    Ohhh my god, someone might plan for the future in this country....panties in the wringer much? Or perhaps sand in your private bits?

    And also @dfelt

    For the inner Star Wars/Trek fan in you

     

     

     

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