NEAL E. BOUDETTE
New York Times News Service,
DEARBORN, Mich. – Ford Motor Co. replaced its CEO a year ago and handed over the order to Jim Hackett. But it may be another year before the company begins to show clear signs of revival under the new boss.
On Wednesday, the automaker said it was accelerating efforts to cut costs and planned to make the focus, merger and other sedans for the North American market to change its fortunes domestically and abroad.
Ford said it would save $ 11.5 billion in sales, marketing, engineering and other costs between 2019 and 2022 Over the next few years, the company has already seen savings of $ 1
The company is also considering ending or selling deals with losses in Europe and South America, said chief financial officer Robert L. Shanks with reporters. Ford expects the measures to enable it to achieve a global profit margin of 8 percent by 2020, two years earlier than previously forecast.
"We are undergoing a profound change," said Shanks. "He acted decisively." However, he warned that the cost savings would only impact on the bottom line in the second half of 2019, when new sports utility vehicles arrive and drive the journey.
Ford was criticized by Wall Street analysts for offering few details about Hackett's strategy for the company. In a teleconference on Wednesday, the CEO said Ford will outline a complete turnaround plan for investors and analysts on September 26.
News of the turnaround plans came when Ford reported further signs of trouble in the first quarter of 2018.
Net income was $ 1.7 billion, up $ 100 million year-over-year. The profit rose by 3 cents to 43 cents per share. However, the company's profit margin fell to 5.2 percent from 6.4 percent in the previous year. Pre-tax profits fell from $ 2.5 billion to $ 2.2 billion. And in every region of the world, Ford reported either a profit decline or a loss.
In North America, Ford's largest and most important region, pre-tax profit was $ 1.9 billion, a decrease of $ 200 million from a year ago. The margin in North America fell from 8.9 percent to 7.8 percent.
Shanks said North American activities had been hampered by rising costs of key raw materials such as steel and aluminum.
Ford expects its planned cost reductions to revive its production of North American operations. The company expects North America's profit margin to rise to 10 percent by 2020, Shanks said. As further savings, Ford plans to reduce its investment to $ 29 billion between 2019 and 2022; So far, he was expected to spend $ 34 billion during that time.
The exit from the limousine business in the United States is a momentous change for Ford. A decade ago, the Focus compact and the Midsize Fusion sparked off stylish and fuel-efficient cars as gasoline prices rose.
But Americans are leaving limousines and choosing trucks and SUVs. Shanks said the business lines that lose money were mainly smaller vehicles. Within a few years Ford will offer only two cars in the US: the sports car Mustang and a new Focus variant in the form of an SUV, said Hackett. Two years ago, Fiat Chrysler sold its small and mid-range cars in Central and South America and thrived on truck and jeep sales.
Ford plans to introduce several new trucks and SUVs over the next three years. They will be available in both gasoline and battery powered versions.
"Ford recognizes that it can not be everything for everyone, and that could be fine on today's market," said Jessica Caldwell, senior analyst at Edmunds.com, a website with auto information. While SUVs and trucks are generating higher profits than cars, Ford is likely to lose market share by opting out of the car trade, she said.
Two years ago, Ford was one of the most profitable companies in the global auto industry, thanks to part of the robust sales of F-series pickup trucks with aluminum bodies. But since then, Ford has been slow to expand the new types of SUVs favored by American consumers, and it has cost more to crawl.
Last May, Ford's Executive Secretary Hackett, a former chief executive of the office at furniture maker Steelcase, had called Ford's Fords to run new autonomous vehicle businesses to get the company in shape. He has developed plans for the launch of several new SUVs and a range of electric vehicles, and so far has given few details about what financial goals he wanted to achieve and how.
Ford took steps on Wednesday to step up its activities in China, a major overseas market where sales have slowed. Instead of having two dealer networks selling separate lines of Ford vehicles, its China dealers will now sell all Ford products available in the country.