Ford Will Retool US Factories for Switch to European Models

By Brendan Moore

06.13.2008

It was reported by several publications a few days ago that Ford was considering taking one of their shuttered or soon-to-be shuttered SUV or truck assembly plants and investing a large sum of money in retooling the plant for production of one of their European models. Such a move is unusual among automakers; renovation of a plant generally occurs when a new model or a new generation of an existing model is going to be introduced, but these are unusual times for automakers currently. The market has turned 180 degrees in the past few months due to upward-spiraling gas prices, with SUV and pickup sales plummeting like a fat guy jumping off a bridge, and consumers clamoring ever so loudly for small, fuel-efficient cars.

Ford has been rocked pretty hard by this change in consumer preferences and has not been reticent about saying that they believe the US market has irrecoverably changed towards fuel economy. Desperate times call for desperate measures, and Alan Mulally is not one given to indecision.

Our sources at Ford say that Mr. Mulally has already made the decision to convert at least three truck/SUV production facilities in North America as soon as possible to produce Ford models currently sold in Europe, where Ford is renowned for its small cars. The timeline Mulally prefers, according to insiders, is “yesterday”. He has made up his mind and is pushing forward.

Not only that, but the decision has also already been reached to make the new F-100, a smaller, lighter version of the upcoming 2009 F-150 that uses less fuel, at the Michigan Truck Plant in Wayne where they currently produce Ford Expeditions and Lincoln Navigators. Production dates have now been moved up considerably for the F-100. And, the Louisville Assembly Plant which now makes Ford Explorers and Mercury Mountaineers will be converted to a unibody facilty which will produce either the Fusion or the Focus as well as possibly some Focus derivatives.

But, back to the plants making the European models – what will they be making once they’re retooled? One sure bet is the Ford Transit van, a longtime European mainstay. Don’t be surprised to see the US production plans for the Ford Transit Connect get pushed way up as well.

Sources at Ford tell us that another plan being considered is to keep making the first-generation Ford Focus currently sold here in the States, and also make the second-generation Ford Focus currently sold in the rest of the world and sell the two alongside each other in the US for a while before moving to the second-generation Focus exclusively. The original plan was to wait until the next-generation (third-generation) Focus was released in 2011 or 2012 to accomplish the synchronization of the Ford Focus on a global basis, but it appears that plan has succumbed to defenestration at Dearborn.

Implicit in that plan is the fact that Ford intends to offer more variations of the second-generation Focus for sale in the US. Variations of the Focus platform will be produced and sold in the US; derivatives like the C-Max and a compact SUV will probably be sold here, and so will the Focus Coupe, a true pocket-rocket of a car.

The European model that may not make it over here in terms of production, and therefore sale, is the excellent Ford Mondeo. Product planners are having a tough time figuring out where it would fit, price-wise, and even though Mulally is fan of the car, its price point may be problematic.

But all of these models together, plus the sub-compact Fiesta that will be built in Mexico in 2009, give Ford a formidable line-up of fuel-efficient cars to sell in the next few years.

The retooling to be undertaken is cataclysmic and will cost a lot of money. Obviously this is money that Ford desperately needs to marshal at this point in their turnaround efforts, but Mulally and most of the senior executives now believe that if they don’t spend the money they have on the retooling right now, there will be no company to spend it on later. They are literally betting the rest of the company’s future in the next 12 months. Our sources say there is no more discussion at this point as to whether or not they should do it; the discussion now is simply just how it will be done.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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23 Comments

  1. If this is true, it is a very ballsy move. It’s beginning to look more and more like Ford, among the domestics, really gets it, and it’s all because of Mulally, who wasn’t even in the auto business before.

  2. This is one benefit of the dollars’ value dropping. There has been much more interest in US manufacturing in the past few months.

  3. “plummeting like a fat guy jumping off a bridge” – that’s pretty good.

  4. Ford’s not gonna look so smart when gas goes back down again in the next year. I predict gas at $2.50 a year from now, You heard it here first.

  5. Gas may go down in price, but the CAFE fuel economy standards are going up regardless, so all manufacturers are going to have to stop producing the gas guzzlers anyway.

    If gas prices do go down and people want the large SUVs again, they just won’t be able to buy them because they won’t exist. Consumer choice is going away becasue Congress devised a stupid law.

  6. sorry wizard, gas will not plummet down almost 2 bucks in the next year. gas almost always stays high when it moves up in price. it might come back down to 3.60 or so a gallon.

    people like to say there is no reason for the jump in price, but there is, its called china and india and in the future their consumption will only increase. but the optimist in me hopes your right and not me

  7. The problem with other Ford CEO’s is that they knew a great deal about cars and squat about business.

    Mulally is a CEO who knows a great deal about business and knew squat about cars, however Mulally knew whether you are selling a car or an mp3 player, the fundamentals of making a successful business are exactly the same.

  8. One, I hope it is true. Two, I hope it’s the right move because if it isn’t, Ford is gonna pay big-time. Although I guess they can always add more shifts to the truck and SUV plants they have left if demand for those vehicles bounces back somewhat. No matter what happens, they’re not ever going to need as much production capacity for trucks and SUV’s as they’ve had in the past. So I guess it will be okay, even if gasoline goes down a little bit. And if it keeps going up, Mullally will look like a genius.

  9. I just don’t believe it. It’s too much money to re-do plants like that, and then what if gasoline goes lower again? Plus, this only makes sense if the cars made here were sold here and in other places where the weak dollar makes them cheap to build compared to what ehy sell for in those countries. Are you trying to tell me that Ford is going to export American-produced cars to other countries? I just don’t believe it. Too risky. I think Ford has a pretty good plan now, they don’t need to change horses in the middle of the stream. This is a bad idea. The only cars Ford needs more of is the current Focus and the current Fusion and those are not going be exported anywhere because they’re not the kind of cars Europeans want. Build more of them in the former truck plants, not the European models.

  10. Sell the current Focus as price leader “City” Focus like VW does with it’s old platforms worldwide. Cheap on a fully amortized and paid for platform, and you can de-content the hell out of it for a bargain trim level that gets great fuel mileage within the bargain City model. Sell the Gen2 model as the new Focus, and sell the many spinoffs of this platform (hatch, coupe, etc.)

    Now that’s a good plan! Maybe that’s what’s in store.

  11. Don’t forget that Ford also has the ability to sell seperate cars or models under the Mercury brand.

  12. The European Focus is 10x better than the one Ford sells now. When it arrives, it’s already going to have a fan base due to its popularity in the WRC and other motorsports.

  13. This has been tried before with the Ford Contour and you can see how successful that was for Ford.

    NOT.

    If this is true, then you start writing Ford’s obituary in the business pages right now.

  14. European fords are superior to domestic fords in every way possible. It would be the best decision the firm could ever make, reguardless of petrol prices, weak dollar, et.all.

  15. Oil touched $140 a barrel today so Alan Mulally may look like a genius sooner than you thought.

  16. americans may want to buy small cars now, but they don’t want to buy small Euro-weenie cars and that’s why this plan would fail if anyone at Ford North America was stupid enough to buy into it

  17. Well it’s either shutter the plants or retool for something. The Fed has devalued the dollar to the point where VW is opening a US plant (instead of another in Mxico), so building here and shipping to Europe is not really out of the question.

    Anonymous is right though about the Contour. It was a very good car. My Contour Sport was bar none the best FWD car I’ve ever owned. How much of it’s demise was due to it being too European in styling is hard to gauge though, since the sales guys always pushed HARD to sell customers the Taurus instead (more profit)

    Regardless, Ford will be selling a LOT more unibody viehicles than frame on body in the near and medium future, so retooling several plants to build unibody cars is a good move.

    The real question though is this, can Ford convince Americans to buy their cars at a profitable price point. At some point, every model is going to have to sink or swim on its own.

  18. I love my Contour SVT mucho, but there is no denying that it was a sales failure. All of these people that constantly clamor for the great Fords from Europe seem to be blind to the fact that Ford needs millions of Americans to buy those cars, they can’t just bring them over because it’s the right thing to do and they’re great cars. That’s not enough, people have to buy them. Americans have shown unwillingness to buy a good Ford, they seem to really want to spend their money on a not so good Ford. If this is true, I hope Ford is rewarded in the market for giving Americans a much better car to buy at a slightly higher price. That would be a beautiful thing all round.

  19. It’s going to be very difficult, but I don’t see where Ford has much of a choice. They need to do something different soon or die.

  20. The oil wizard had to take my “Basic Oil Forecasting 110” class twice to pass, and even then, he just barely got the 3 credit hours, and it was part of the core curriculum required for the oil wizard major here at wizard university.

    Don’t listen to him. Here’s my prediction: $5 a gallon a year from now, unless a hurricane shuts down the Gulf refineries this summer and then it’s $6 a gallon for 6 weeks and then back down to $4 gallon before it starts the slow climb to $5 a gallon a year from now.

  21. “plummeting like a fat guy off a bridge” isn’t pretty good or funny; it doesn’t even make sense. Fat guys and skinny guys plummet at the same rate off a bridge …

  22. I think the writer was more interested in the metaphor being evocative as opposed to being correct from a physics persepctive

  23. From the New York Times 7/22/08:

    The struggling automaker, reacting to what it sees as a rapid and permanent shift in consumer tastes brought on by high gas prices, plans to unveil its new direction on Thursday, when it will report quarterly earnings.

    Among the changes, Ford is expected to announce that it will convert three of its North American assembly plants from trucks to cars, according to people familiar with the plans.

    And as part of the huge bet it is placing on the direction of the troubled American auto industry, Ford will realign factories to manufacture more fuel-efficient engines and produce six of its next European car models for the United States market.

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