Ford Loses $8.7 Billion in Q2, Confirms Plant Retoolings

By Chris Haak

07.24.2008

As Autosavant previously reported would happen (and in the process, scooped the rest of the journalistic world by five whole weeks), Ford announced the details of its newest turnaround plan today, including the conversion of several truck plants that were otherwise slated for closure, and instead will be retooled for production of European-based small cars.

In the light of an $8.7 billion loss for the second quarter of the year (of which $8.0 billion was non-cash impairment charges to write off the value of troubled assets, such as the $5.3 billion write-down for the company’s North American operations that are part of the $8.0 billion charge), Ford CEO Alan Mulally provided a lot more detail about the plant retooling that Autosavant had previously reported.

The company will move production of the Expedition and Navigator from its Michigan Truck Plant in Wayne, Michigan to the Kentucky Truck Plant in Louisville early in 2009. The Michigan Truck Plant will then be retooled to produce C-segment small vehicles based on the platform shared with the European Focus. That accounts for one of the three plants.

The Louisville, Kentucky plant that currently builds the Ford Explorer (a former cash cow for the company that has seen its sales nearly collapse for the past few years) will also be converted to build more C-segment small cars beginning in 2011. The plant will be available then because the next Explorer is due in 2010 and will move to a new unibody architecture, so will be produced at a different plant, likely where the company’s other large crossovers are produced in Ontario.

The Cuautitlan, Mexico truck plant will produce the B-segment Fiesta small car for North American sales in early 2010. That plant currently builds F-series pickups.

Since Ford’s F-series truck sales have struggled this year, and the company has commensurately reduced production plans, Ford will only have three shifts at two plants building F-series trucks, which is quite a shift from years past, when multiple plants were running multiple shifts just to keep up with demand for the pickups back in the “good old days” of cheap gasoline.

Other product moves (or non-moves, as the case may be) that Ford announced this morning was confirmation that the Ranger pickup will soldier on for two more years than originally planned, until 2011. Its plant in the Minneapolis, Minnesota area that builds the small pickup had been slated for closure at the end of 2009, but concern about fuel prices – plus the fact that the Ranger is the only true compact, non-midsize pickup in the North American market – gave the Ranger a new lease on life. The company also restated plans to introduce a seven-passenger Lincoln crossover based on the Ford Flex in 2009, the Transit Connect small van in 2009. The European Focus will also finally hit the US market in 2010, shortly after the Fiesta small car makes its debut.

The changes will be difficult for Ford to implement, and the company’s financial results will probably look worse in the coming quarters before they start to look better, but the company is making all of the right moves to address the US market’s seismic shift of the past quarter. With these announced moves, Ford appears to have taken far more aggressive and decisive steps to fix its situation than GM or Chrysler have taken. It makes one wonder if GM or Chrysler will announce similar ideas in the coming months.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

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5 Comments

  1. Things have been tough for Ford, but these are the kinds of changes that are required for long-term success, and it demonstrates the kind of leadership Mulally and the other executives have brought to the old Ford Kingdom. As a Ford guy, I’m excited for the products that are being discussed for the future, like the Euro Focus. I sure wish the Mondeo would make it’s way over here, maybe as a Milan, since it seems that the Fusion will continue to be based on the Mazda6.

  2. Luke……even the brand spanking new Euro Mondeo is based on a platform shared with the Mazda6….same as the current Euro Focus shares its platform with the Mazda3.

    See? The US does have Euro Fords. It’s just that they all called Mazda’s.

  3. Mulally is tough and giving Ford the right medicine. Hopefully it won’t kill the patient before the cure takes hold.

  4. Some things that most people didn't notice in the press release ( http://www.blueovalnews.com/index.php?categoryid=12&p2_articleid=683 ) that I thought were cool:

    1. Better fuel economy then Honda and Toyota is their goal.
    2. Hybrid Fusion and Milan officially announced.
    3. Mercury small car. Will this be a rebadged Focus?
    4. They reference a European small vehicle which they call "whitespace". What does that mean?
    5. PowerShift – what is this. Is this dual-clutch?

    Finally, I hope moving the Euro models here does not ruin their gains in reliability as that is the final deciding factor in most purchases right after looks and fuel economy.

  5. Its a pity it has taken a major financial meltdown for Ford(and the other US carmakers) to realise that small and efficient is the only way forward. The rot started when the first VW hit US shores.No one believed small would survive. Then the Japanese introduced their cars to the US market.Still the big three ignored the signs. As a long time Ford man (owner, not worker), I too have sort of had my head in the sand. Big is not always best. But I still want old Fords. At least I can fix them myself, asthey are relatively straight forward. Now what with fuel infection and all the electronic stuff, I am leery of even looking under the hood.
    I hope Ford survives this battle and lives on a lot longer. Preferably in a position to take advantage of the new mrket that will exist.

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