Carpocalypse: Ford mans up!

Jstas

Saw this on Jalopnik:

http://jalopnik.com/5100803/ford-expects-profitability-in-2011-battery-electric-van-by-2010-bev-sedan-for-2011

Ford's plan, from Ford, posted on Jalopnik:

FORD MOTOR COMPANY SUBMITS BUSINESS PLAN TO CONGRESS; PROFIT TARGET, ELECTRIC CAR STRATEGY AMONG NEW DETAILS

* Based on current business planning assumptions, Ford expects both its overall and its North American Automotive business pre-tax results to be breakeven or profitable in 2011

* Ford provided initial details of an accelerated vehicle electrification plan for a family of hybrids, plug-in hybrids and battery electric vehicles. The plan includes a Ford full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011

* Ford’s plan calls for an investment of approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years

* Ford said it will sell its corporate aircraft as part of its overall cash improvement plan

DEARBORN, Mich., Dec. 2. 2008 – Ford Motor Company this morning submitted to Congress its comprehensive business plan, which details the company’s plan to return to profitability and outlines a request for potential access to a temporary bridge loan in case the current economic crisis worsens or there is a bankruptcy of a major competitor.

In the plan, Ford said the transformation of its North American automotive business will continue to accelerate through aggressive restructuring actions and the introduction of more high-quality, safe and fuel-efficient vehicles – including a broader range of hybrid-electric vehicles and the introduction of advanced plug-in hybrids and full electric vehicles.

Ford is asking for access to up to $9 billion in bridge financing, but reiterated that it hopes to complete its transformation without accessing the loan should Congress agree to make the funds available.

Despite the serious global economic downturn, Ford said it does not anticipate a liquidity crisis in 2009 – barring a bankruptcy by one of its domestic competitors or a more severe economic downturn that would further cripple automotive sales and create additional cash challenges.

“For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company,” said Ford President and CEO Alan Mulally, who will testify before Congress this week.

In the plan submitted to Congress, Ford reiterated that its One Ford transformation plan remains fully in place, anchored by four key priorities:

* Aggressively restructure to operate profitably at the current demand and changing model mix;
* Accelerate development of new products our customers want and value;
* Finance our plan and improve our balance sheet; and
* Work together effectively as one team, leveraging our global assets.

“Ford is committed to building a sustainable future for the benefit of all Americans,” Mulally said. “We believe Ford is on the right path to achieve this vision.

“We appreciate the valid concerns raised by Congress about the future viability of the industry,” he added. “We hope that our submission today helps instill confidence in Ford’s commitment to change, including our accountability and shared sacrifice during this difficult economic period.”

Ford’s submission to Congress included new details about Ford’s future plans and forecasts, including:

* Based on current business planning assumptions – including U.S. industry sales for 2009, 2010 and 2011 of 12.5 million units, 14.5 million units and 15.5 million units, respectively – Ford expects both its overall and its North American automotive business pre-tax results to be breakeven or profitable in 2011, excluding any special items.
* As part of a continuing focus on building the Ford brand, the company said it is exploring strategic options for Volvo Car Corporation, including the possible sale of the Sweden-based premium automaker. The strategic review is in line with a broad range of actions Ford is taking to strengthen its balance sheet and ensure it has the resources to fund its plan. Since 2007, Ford has sold Aston Martin, Jaguar, Land Rover and the majority of its stake in Mazda.
* Ford’s plan calls for an investment of approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years.
* Half of the Ford, Lincoln and Mercury light-duty nameplates by 2010 will qualify as “Advanced Technology Vehicles” under the U.S. Energy Independence and Security Act – increasing to 75 percent in 2011 and more than 90 percent in 2014. Ford said it has included these projects in its application to the Department of Energy for loans under that Act and hopes to receive $5 billion in direct loans by 2011 to support Ford’s investment in advanced technologies and products.
* From its largest light duty trucks to its smallest cars, Ford will improve the fuel economy of its fleet an average of 14 percent for 2009 models, 26 percent for 2012 models and 36 percent for 2015 models – compared with the fuel economy of its 2005 fleet. Overall, Ford expects to achieve cumulative gasoline fuel savings from advanced technology vehicles of 16 billion gallons from 2005 to 2015.
* Next month at the North American International Auto Show in Detroit, Ford will discuss in detail the company’s accelerated vehicle electrification plan, which includes bringing to market by 2012 a family of hybrids, plug-in hybrids and battery electric vehicles. The work will include partnering with battery and powertrain systems suppliers to deliver a full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011. Ford said it will develop these vehicles in a manner that enables it to reduce costs and ultimately make BEVs more affordable for consumers.
* The 2007 UAW-Ford negotiations resulted in significant progress being made in reducing the company’s total labor cost. Given the present economic crisis and its impact upon the automotive industry, however, Ford is presently engaged in discussions with the UAW with the objective to further reduce its cost structure and eliminate the remaining labor cost gap that exists between Ford and the transplants.
* As previously was announced, Ford plans two additional plant closures this quarter and four additional plant closures between 2009 and 2011. The company also has announced its intent to close or sell what will be four remaining ACH plants. The company said it will continue to aggressively match manufacturing capacity to real demand.
* Ford will continue to work to reduce its dealer and supplier base to increase efficiency and promote mutual profitability. By year end, Ford estimates it will have 3,790 U.S. dealers, a reduction of 606 dealers overall – or 14 percent from year-end 2005 – including a reduction of 16 percent in large markets. In addition, Ford has been able to reduce the number of production suppliers eligible for major sourcing from 3,400 in 2004 to approximately 1,600 today, a reduction of 53 percent. Ford eventually plans to further reduce the number of suppliers eligible for major sourcing to 750.
* Ford also confirmed today that it has decided to sell its five corporate aircraft. In addition, Ford CEO Mulally announced that, should Ford need to access funds from a potential government bridge loan, he would work for a salary of $1 a year – as a sign of his confidence in the company’s transformation plan and future.

Ford also reiterated that it is canceling all bonuses to be paid in 2009 for all management employees worldwide and foregoing bonuses for all employees in North America. The company also will not pay merit increases for North America salaried employees in 2009.

Ford said it is moving fully ahead with plans it announced this summer to leverage the company’s global product strengths and bring more smaller, fuel-efficient vehicles to the U.S. The plan includes delivering best-in-class or among the best fuel economy with every new vehicle introduced. Ford also is introducing industry-leading, fuel-saving EcoBoost engines and doubling the number and volume of hybrid vehicles.

This product acceleration will result in a balanced product portfolio with a complete family of small, medium and large cars, utilities and trucks. Ford said it is increasing its investment in cars and crossovers from approximately 60 percent in 2007 to 80 percent of its total product investment in 2010.

“Ford has a comprehensive transformation plan that will ensure our future viability – as evidenced by our profitability in the first quarter of 2008,” Mulally said. “While we clearly still have much more work to do, I am more convinced than ever that we have the right plan that will create a viable Ford going forward and position us for profitable growth.”

Jstas

Strong words, strong actions but honestly not really out of reach. More like quite attainable in the time frame specified. I knew Ford was doing better than the other two but I didn't know they were doing that good. Somebody over there seems to be doing something right if they are that confident in their numbers.

Somehow though, it might not work. If bumbling GM fails, Ford is gonna hurt, bad. It might send them right over the edge again. But if Ford is asking for $9 billion as a "just in case" safety net. But they have plans to dump $14 billion of their own money in to their U.S. operations. Basically, what that means is that Ford doesn't think they need the money but want the access to be able to protect themselves and their suppliers because they have zero confidence in GM or Chrysler.



This is going to be interesting. Very interesting.


Oh and Alan Mulally is driving a Ford Escape Hybrid to Washington the next week in lieu of plane travel.

treitz3

Valiant effort in my eyes but no talk of losing the unions? Bad move man. They can not be competitive with a legacy cost of $1500 some-odd dollars per car, period.

Lose the unions! Then present us with that plan. That's my plan. Gee, here I am talking like it's my money. Silly me.......

Joe08867

Out of the big three Ford is the only one that looks like it gives a crap about the company. I hope they do meet there goals.

Joe08867

Treitz careful with the union talk. That is a big can of worms.

If anything they should salary cap like other unions do. Legacy will still be there unless the company folds.

PhantomOG

This economy is hurting me too. I need to run to Congress so I can "man up" and ask for a measly few hundred thousand dollars. Should be easy, its minuscule compared to 9 billion.

ND13

Don't forget, Chrysler and GMAC(both home and auto) are owned by Cerebus(sp?)...not an automotive-based business. Hopefully, an automobile manufacturer, of U.S. origin, will buy them. If it has to be a foriegn owner, I hope they aren't from China, which was speculated a few months ago.

Ricardo

treitz3 wrote: »

Lose the unions!

Plus 1,000,000,000,000,000,000,000,000

With the union's weight no plan will succeed long term.

treitz3

There was once a time in history when unions were good for the workers. Laws have been put into place to now protect workers all across America. From my angle, from where I sit, from my point of view the unions are a huge part of what has brought those companies and more down. Sorry if it opens a can of worms. That's where I stand.

Stupid **** union rules that say an employee of a company that hires you, pays your paycheck, gives you the fruits of your labor........blah, blah, blah.......when that company asks you to change out a light bulb at your workstation but you can't because it's the union's position that it does not fall within "your job description"? If you worked for me, your **** would hit the sidewalk faster than you could say "Maybe I should reconsider"!

THAT kind of mentality has got to go. $65K a year for changing tires? You realize how much it would cost you to change a tire at Jiffy Lube if they had a union? Come on man, this has got to stop, and I'm sorry if you do not agree. I still stand firm with my opinion.

ND13

I'm definitely not pro-union, but I don't want someone building my car that's disgruntled, PERIOD!!!

Are they over-paid, in MOST cases, yes. Are they unskilled, in MOST cases, NO. $65k/yr is the low end of the scale. It's not the $65k/yr workers that are actually doing their job that's the problem...it's the $100k+/yr workers that sit on their ****, push a broom, or get paid triple time, to just BE THERE, during the holidays/re-tooling, when the plant is shut down that's the problem.

There was a time when unions were necessary....Henry Ford would have kept paying his workers squat if it weren't for unions. Most of his workers couldn't even afford to buy what they were building. Corruption and greed ruined the unions. They screwed themselves.

Ricardo

ND13 wrote: »

I'm definitely not pro-union, but I don't want someone building my car that's disgruntled, PERIOD!!!

I don't think there's only those two extremes; Honda and Toyota build cars in the U.S. without having these sick unions, and their cars are built with quality, and I'm pretty sure workers are happy.

AsSiMiLaTeD

I agree with the sentiment on the unions, but don't know if that's the only answer.

I think alot of it has to do with the quality of the products they produce, that's all it really boils down to for me. Given my trouble with American cars, I'm hesitant to buy another one in the near future. Now maybe my perception is all wrong, but as a buyer what else do I have to go on other than my personal experience and studies like those done by JDPowers?

Why not just build a better product and charge me a little more for it? Really, it seems to have worked for Toyota, why not give that a shot? I wouldn't mind paying an extra couple grand for a vehicle if I knew it meant I was getting better quality. I'd say that alot of people agree with me, that's essentially what we're doing when we buy a Toyota and looking at the sales it looks like that's what alot of people buy.

As a buyer I don't care so much about unions and all that, I just want a quality product, however you make it, and I don't even mind paying a little more for it.

It's great to see FORD put forth a plan, and I do agree that they're in the best position of the big 3. I hope they can pull it together, and really hope the same for the other two companies as well - I'd hate to see any of them go under. What would be even better is to see them really improve their quality (or if they've improved it convince me as a buyer)...I'd love to own another American car someday.

ND13

I'm not saying they aren't. There just has to be a middle-ground. $65k/yr is not a lot of money. If you live in the south, where the cost of living is lower(in most areas) that may be enough to live comfortably on, but not where I live. That's just enough to get by on. The majority of the foreign manufacturer's plants are in or being built in the south(there are a few north of Kentucky), for good reason. Yes, one could say...the Big 3 need to build plants down south then, but that may or may not be economically feasible at this time. The union workers need to realize they MUST take a 15-20% pay cut. That would put them more inline with the foreign-owned plant workers.

The unions taking concessions is not the only answer, by any means, but a big step in the right direction.

I don't care who you are, a $60+ million/yr salary is ridiculous. That's not to mention the bonuses that these CEOs make. Noone is worth that, PERIOD!!! Especially if the company is bleeding red.

Ford was down 31% in November...Toyota was down 34% in November. Nissan was down over 30% in October. I don't have any numbers for GM, Honda or Chrysler at this time, but I'd venture to say they were down significantly also. It's not just the domestics that are struggling, the foreign companies just have deeper pockets at this time and they smell blood and are going to do everything they can to reduce the playing field.

Just a question?? Do the governments of Japan, Germany, or Korea give our automobile manufacturers the same sweet-heart deals that our federal and state governments give their auto makers? Just mentioning those three nations, because that's where the mass majority of the foreign cars are from.

Here's Octobers numbers:

Sales results released yesterday confirmed October was another month of dismal vehicle sales in the U.S. market. Of the top players, General Motors fared worst, seeing sales plunge 45.4% from the same month a year earlier. Chrysler was down 34.9%, while Ford was down 29.2%. Of the import "big three," Nissan dropped 33% year-over-year, while Honda was down 25.2% and Toyota saw sales drop just 23%, no doubt saved by zero . The total light vehicle sales drop across the board comes out to just under 32%, which explains why crazy ideas like a GM/Chrysler merger are suddenly making sense. Sort of.

ND13

November:

General Motors’ November U.S. sales plunged 41 percent, while Ford’s dropped 31 percent, crushing hopes that the industrywide drop in vehicle demand might be easing as Detroit’s automakers prepare to state their second case for a federal bailout.

Their overseas rivals posted abysmal results Tuesday as well. Toyota’s November U.S. sales tumbled 34 percent, and Honda’s fell 32 percent.

It seems to have little to do with perceived quality.

Jstas

PhantomOG wrote: »

This economy is hurting me too. I need to run to Congress so I can "man up" and ask for a measly few hundred thousand dollars. Should be easy, its minuscule compared to 9 billion.

The "man up" reference was in the fact that Ford actually has a real, viable plan for it's future and gives a good idea of what it is planning to do with any bailout money it might get. It shows that they understand the situation they are in and they have already been taking steps, long before Carpocalypse, to get this problem fixed. GM and Chrysler should have been doing the same.

I'm glad to see that one of the three actually has something of substance rather than stammering, excuses, blank expressions and empty promises.

Jstas

ND13 wrote: »

Just a question?? Do the governments of Japan, Germany, or Korea give our automobile manufacturers the same sweet-heart deals that our federal and state governments give their auto makers? Just mentioning those three nations, because that's where the mass majority of the foreign cars are from.

Actually, yeah. VW, Land Rover and Jaguar have already petition Germany and the United Kingdom for government funding assistance to prevent collapse under current economic conditions. The Korean companies have a pretty large stake of them actually owned by their government and Toyota is petitioning Japan because of the strength of the yen and drop of demand is driving up costs for them and cutting in to profit margins. Also, last month, Toyota which has shown double digit growth for the past 7 financial quarters same double digit losses last quarter. This is all around, not just the U.S. And honestly, given the way the other governments with much more socialistic leanings handle these kinds of things, the U.S. automakers get the short end of the stick comparatively.

seeclear

AsSiMiLaTeD wrote: »

As a buyer I don't care so much about unions and all that, I just want a quality product, however you make it, and I don't even mind paying a little more for it.

Ah, but there is the rub. When your production (employee salary and benefits) cost is 1.5x that of your competition (the Japanese automakers), you can't make it for just "a little" more. You can't spend more on quality raw materials. You can't spend enough on R&D to design a competitive product. The unions seem like a parasite with their hands around the throat of the very host they need for survival, and they don't realize that if they don't loosen their grip, when the companies go down, they will suffer as well.

My brother-in-law works for Honda in Ohio, and loves his job, loves his company. Not union. He calls unions the "bastion of the lazy man." And he previously worked in union shops (not automotive), so he has seen both sides of the coin.

ND13

John,

You're misunderstanding the ?. Do their governments give U.S. automakers the same incentives and tax breaks that we give to their auto makers? Which even allow U.S. auto makers to have pants in the country? I'm sure their are a few that do, but at what cost? I'm not aware of any U.S. plants in Japan or Korea. I know there has to be some in Europe and Australia.

In other words, fair trade.

Jstas

ND13 wrote: »

John,

You're misunderstanding the ?. Do their governments give U.S. automakers the same incentives and tax breaks that we give to their auto makers? Which even allow U.S. auto makers to have pants in the country? I'm sure their are a few that do, but at what cost? I'm not aware of any U.S. plants in Japan or Korea. I know there has to be some in Europe and Australia.

In other words, fair trade.

Oh, I got ya now.

That would be an emphatic no. None that I know of at least.

The only exceptions would be like Ford of Europe, Ford of Asia and Ford of Australia or Holden, Vauxhall, Opel and such. They are all part of Ford or GM but have complete design, engineering and production facilities in those countries. They essentially have to operate as a European, Asian or Australian company to gain any tax or tariff benefit and/or incentive.

Also, our automotive exports to other countries get taxed out the wazoo by those countries. A $49K Corvette in the U.S. is almost double the cost in Europe. due to the import tariff/tax situation. A base model Corvette starts at $49,415 MSRP plus the usual taxes and such. Right now, you can probably get it cheaper than that. Go to Europe and the same car costs 66,850 EURO and that doesn't include the destination charges, fees, registration and taxes they tack on. When that is all said and done, it comes close to the 75K EURO mark. Add to that the fact that the EURO is stronger than the dollar right now and enjoys a favorable exchange rate and the Corvette actually costs close to $90K U.S. in Europe. It's still cheap, especially for the performance you get out of it, but the pricing disparity is literally about an 85% increase over what you can roll one off the lot for in the U.S.

That right there is the biggest reason that Ford and GM both have redundant operations and facilities and completely separate model lines in other countries.

ND13

That's what I figured. Fair trade my ****. I'd have to guess that if our auto makers got the same treatment in all the other nations as we give their auto makers, that would help the U.S. auto makers bottom line tremendously.

Joe08867

I think they just need to evaluate how much they pay everyone Union or not. ND13 is right. The salaries that the big guys at GM, Chrysler and Ford are way more then they can actually accomplish. I believe in incentives but Jesus 30-60 million. It's out of control just like the guys that run the oil companies.

Greed has devalued the Dollar and all its equivalents to nothing. We need to start living like they do in Star Trek. Live Long and Prosper.

At least they are holding back there multi million dollar bonuses for a year.

dorokusai

Unions are a dinosaur idea. A union would have zero benefit in my field of work and I'm glad they don't exist here.

hoosier21

These numbers blow me away.

If, and I am only taking the numbers I have seen and heard.

IF domestic mfg have $1,500.00 ( heard $2,000.00) additional costs in union labor (pay above non union wages) and pension plan costs, PER VEHICLE, more than import mfg. costs per unit

In the text above from FORD ALONE, projected sales of 12.5 million units

That is

At $ 1,500.00 times 12.5 million units = $18,750,000,000.00
At $ 2,000.00 times 12.5 million units = $25,000,000,000.00

WOW just WOW - that is just Ford alone!

Jstas

Here is a story on GM's plan:

http://jalopnik.com/5101056/gm-sends-congress-plan-for-12-to-18-billion-ask-seeks-alternatives-for-saturn-brand

I would have done something with it like I did with the Ford plan but GM's is a mess. Is it a good idea? Seems so but while some are calling it ambitious, I don't think it's ambitious enough. It also reads like a Business Administration major's freshman project. If GM does get the bailout, I think it will be on the merits of Ford and Chrysler.

But at this point, Ford wants $9 billion and GM wants $12 billion but up to $18 billion "in case the market gets worse" and out of $25 billion in earmarked funds, that leaves anywhere from $4 billion to -$2 billion for Chrysler.

Good job guys, way to use that fuzzy math! I always knew 2+2=5!

PhantomOG

Fritz Henderson, president and chief operating officer of General Motors Corp., took to the TV airwaves to stress that bankruptcy isn't a viable option on the eve of a new set of congressional hearings on the auto bailout. He told NBC's "Today" that choosing the bankruptcy route would further erode consumer confidence in the automaker and "we want them to be confident in their ability to buy our cars and trucks."

I just don't get how that's a valid argument against bankruptcy. Were people afraid to fly on airlines that went bankrupt? No. Do people not shop at stores that declare bankruptcy? No.

Consumer confidence? He must mean the current "lack" of consumer confidence. The buy American die-hards will buy Big3 vehicles with or without bankruptcy and people who believe imports are more reliable will continue to do so even without a bankruptcy.

ohskigod

Phantom,


its the warranty that is the issue. A warranty from a bankrupt company would certainly be suspect. since a new car is most people's second to top highest investment, many people take that warranty very seriously

Phasearray

I wonder if this is true
http://mjperry.blogspot.com/2007/07/uaw-pricing-themselves-out-of-market.html..

ND13

Looks to be a little high, but not by much.

bigaudiofanatic

Don't care let them go under dont give them cent for anything

treitz3

Well, either we pay for their survival or we pay for their funeral. The funeral seems to be more expensive.

Since you are a taxpayer [I hope], are you willing to help pay for the millions of folks that will be out of a job because of not giving them a cent? Not to mention the hundreds of companies, employees and families that depend on such operations that will possibly become bankrupt as a result?

treitz3

Now do you care?