Ford Close to Retooling Announcement

By Brendan Moore

07.20.2008

When we ran a piece on June 13th about Ford retooling their existing plants in the U.S. in order to produce their small European models based on the chatter we were hearing from our sources at Ford, other sites linked to our article. But, the headers to those links on those sites generally contained wording along the lines of “wild rumors”. Fair enough. There was nothing else to go on except what had been whispered to us, and it’s not like we’re Automotive News or The Wall Street Journal, you know.

So yesterday, The Wall Street Journal reported that Ford is going to spend the money to retool some plants in the U.S. in order to produce their European models here. From the WSJ:

“Ford Motor Co. is preparing plans to retool some U.S. plants to produce small passenger cars that the company has been making and selling mainly in Europe, people familiar with the matter said.

The move, parts of which could be announced Thursday as part of Ford’s second-quarter earnings report, is aimed at helping the company increase production of fuel-efficient cars in North America in response to this year’s rise in gasoline prices, these people said.”

It looks like this make-or-break strategic move has taken a giant leap towards actual implementation. I think it’s the right thing to do, but the decision is very risky. It’s not cheap to retool whole factories and America’s appetite for real European mass-market cars (as opposed to European luxury cars) is still just a guess. Not only will vast sums of money and human energy have to be spent retooling, but if the market shifts back to larger vehicles, then Ford will have wiped out that production capacity.

Ford says that they will not comment on the speculation in advance of their second-quarter results due on Thursday of this week.

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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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6 Comments

  1. This is interesting, and this is great news. I just moved back from Europe after 8 years and Ford makes some great cars over there. I hope we get them all.

  2. but if the market shifts back to larger vehicles

    Let’s see. Ford gets bashed for not offering some of its European cars in North America. Now, they announce (maybe) that they will build the Euro cars here, and they get criticized here. What’s a company to do?

    FWIW, should the NA market go back to larger cars and trucks (and this is highly unlikely at least within the next year or so) Ford has plenty of excess capacity to re-accommodate the need.

    Plus, it’s highly likely that all (or most) Ford plants will go to flexible tooling that will allow the plants to build a wide variety of vehicles. They already have been talking about this kind of capability for some time now, even before oil prices went through the roof.

  3. BEST NEWS I’VE HEARD IN YEARRS!!!!

  4. Like you, I agree with their decision too, but Ford has been punished big-time for selling their European cars here in the States before. I hope everything’s changed enough so that it’s not the case this time around.

  5. Looked at the New York Times article and it looks like three plants will be converted, which is a lot of car production. Man, I can’t wait to be able to buy a Focus ST.

  6. 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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