Midcycle updates grow more extensive, more expensive

[silvrsvt]

 

Globally, not just in the US. Ford is 6th in total Sales, the only NON luxury automakers with less volume than Ford is FCA, Honda and PSA. Globally it appears as if Ford is being pushed into being a 2nd tier Automaker, and no longer competitive With VW, Toyota and GM, as they use their volume to push their costs down.

 

And out of those three, 2 of them have serious problems..VW is going to be taking it in the shorts for a long time because of its Diesel fiasco and GM is GM...for all the cars they sell they should be burying Ford (at least in NA), but guess what, they aren't. Toyota might be the best off among the three, but they have their own set of issues.

[fordmantpw]

As an investor, I would prefer fewer sales and higher margins to higher sales and lower margins. You know, profit/unit, which is much more important.

[rmc523]

Ford's major issue internationally is turning all of those divisions into profit earners, we've seen the first part,

stemming losses and controlling the cost of manufacturing but clearly, the only way to do that is to sell new

products that people want to buy in significant volumes, improve the desirability of those vehicles.

 

We don't know what those products will be because so much of the global strategy hinges on Ford Europe's next generation

products. For people like me who live in that rest of the world, it always feels like our products are governed by what Europeans

want and not exactly intuitave to the needs of BRIC ir even Asia pacific - this needs to change and hopefully we have more input

into the next generation of vehicles and the types we get.

 

Listening to the broader global market has to be priority one for Ford, understand buyer needs and build what they want,

it has to be a more integrated serious plan for growth and not what Europe wants to graciously bequeath to ROW markets.

 

 

 

If North America can yield profits of $10 billion, then ROW should be able to earn half of that, say $5 Billion.

Stop telling us that Ford sells millions of vehicles in the ROW at a loss or no profit - that has to stop, period.

Set targets and work towards achieving them.

I think you also have to look at Ford's moves in context of their situation. In 2008, they had 18 million platforms underpinning what were largely the same cars around the world. Given the situation they were in at the time, the only way the company could survive (well without bankruptcy) was to make a substantial change by merging all the global vehicles into a few core platforms, with ultimately little regional variation as you pointed out. It worked, it has turned the company around, but as you also mentioned, the "cookie cutter", one size fits all approach doesn't always end up being the best in each region and you can end up compromising in some areas.

That was the first step. Now you'll see the next step - a move to a modular platform/scaleable architecture.

 

I think what you'll see going forward is the use of a modular platform that not only allows for the different traditional sizes (compact, midsize, etc) around the world, but also allows for *some* regional "customization" to meet specific needs for certain segments, and/or you'll see certain markets have unique products - but ones that fit onto the core modular platform. For example, we've discussed plenty how the subcompact crossover market is growing and the debate of whether they should have the EcoSport here. I could see that being a case where we get a regional product that is somewhat larger than the EcoSport (which has to be that size for certain markets), but still sits on the same platform as global EcoSport.

Edited January 21, 2016 by rmc523

[Edstock]

"With VW, Toyota and GM, as they use their volume to push their costs down." — EVERY volume manufacturer does this, as much as they can.

[jpd80]

Exactly ED, it's not like Ford has no scales of economy in its global operations..

In the past five years, Ford has done a wonderful job of rescuing itself and now needs to strike out for profit.

Edited January 21, 2016 by jpd80

[Biker16]

Except for F150, Fusion and maybe Escape, there are no other vehicles that need to be built in two plants.

Your insistence on this imperative of Flex manufacturing is for the most part baseless in relation to actual sales.

 

The rise of Escape volume to maxing out LAP is a relatively recent development due in part to sharing with MKC.

 

 

Good post, I wanted to add if Ford is going to ever fully utilize its global foot print we/you/them have to understand that products like the escape are already built at multiple sites they just aren't being in the US.

 

The escape for example is being built in Tue US, china and Europe. Larger players don't have problem moving products from different markets to meet demand, Ford is only now beginning to do this with the escape, transit connect, and mustang, but there is a long way to go. To rightsize global production and reduce duplication.

 

Does The escape need 3 assembly plants?

[akirby]

It can be hard to do that if you don't plan for it at the beginning. They're doing it with Mustang and Edge from NA now so obviously that's part of their strategy going forward.

 

If they're not doing it for Escape then that means there are other factors that make it either unfeasible or not a priority.

[Biker16]

It can be hard to do that if you don't plan for it at the beginning. They're doing it with Mustang and Edge from NA now so obviously that's part of their strategy going forward.

 

If they're not doing it for Escape then that means there are other factors that make it either unfeasible or not a priority.

That is the difference between me and you, you believe ford always does the right thing for the right reasons, I remain skeptical of ford because historically ford like all companies can make mistakes.

[akirby]

That is the difference between me and you, you believe ford always does the right thing for the right reasons, I remain skeptical of ford because historically ford like all companies can make mistakes.

 

Not exactly. I do believe that Ford - since Mulally joined - has changed their management model for the better and they're making much better decisions than they used to.

 

Remember when FoE was allowed to do their own thing?

Remember when Ford would keep selling cars even though they were losing $3K on each one?

Remember when they built great Concept cars that could never be built?

 

They occasionally make mistakes like the dry clutch powershift DCT. Or they miss the mark with MKT, MKS, etc. Or they miss a prediction on where the market is going.

 

But let's look at your example.

 

Ford obviously knows how to build and export vehicles to other countries and they've shown they're willing to do it.

Ford is all into cost savings - that was the main driver for Focus, Escape and Fusion platform consolidations.

 

When you build a business case like this you have to look at the cost versus the savings.

 

Is there cost to build LHD and RHD models in the same factory with different drivetrains? (maybe, maybe not but you have to account for it either way)

ICan you shut it down and sell it or do you need the capacity down the road? Are there tax implications? Personnel implications?

 

Can the remaining plants handle the expected capacity for the next 10 years?

 

Maybe it's cheaper to do such a changeover when the new platform arrives.

 

 

Your problem is you think it's a simple black and white answer that Ford is simply ignoring and I'm trying to point out that it's an extremely complicated answer that has dozens if not hundreds of factors to consider - most of which we don't know and can't know.

 

I know that the people making these decisions at Ford have all that information therefore if they choose not to do something it's because there aren't any savings, there aren't enough savings or it doesn't fit into their long term strategy.

 

And since those folks managed a $10B profit last year I tend to believe they know what they're doing with their business more than we do.

[fuzzymoomoo]

 

Not exactly. I do believe that Ford - since Mulally joined - has changed their management model for the better and they're making much better decisions than they used to.

 

Remember when FoE was allowed to do their own thing?

Remember when Ford would keep selling cars even though they were losing $3K on each one?

Remember when they built great Concept cars that could never be built?

 

They occasionally make mistakes like the dry clutch powershift DCT. Or they miss the mark with MKT, MKS, etc. Or they miss a prediction on where the market is going.

 

But let's look at your example.

 

Ford obviously knows how to build and export vehicles to other countries and they've shown they're willing to do it.

Ford is all into cost savings - that was the main driver for Focus, Escape and Fusion platform consolidations.

 

When you build a business case like this you have to look at the cost versus the savings.

 

Is there cost to build LHD and RHD models in the same factory with different drivetrains? (maybe, maybe not but you have to account for it either way)

ICan you shut it down and sell it or do you need the capacity down the road? Are there tax implications? Personnel implications?

 

Can the remaining plants handle the expected capacity for the next 10 years?

 

Maybe it's cheaper to do such a changeover when the new platform arrives.

 

 

Your problem is you think it's a simple black and white answer that Ford is simply ignoring and I'm trying to point out that it's an extremely complicated answer that has dozens if not hundreds of factors to consider - most of which we don't know and can't know.

 

I know that the people making these decisions at Ford have all that information therefore if they choose not to do something it's because there aren't any savings, there aren't enough savings or it doesn't fit into their long term strategy.

 

And since those folks managed a $10B profit last year I tend to believe they know what they're doing with their business more than we do.

quit making excuses for this company!

[jpd80]

I understand what you're saying, I'm sure that ford is leaving sales on the table at the moment due to tight inventory

and compensating for that with higher ATPs/ lower incentives. I just feel that things in the last 18 month have become

a bit too tight ...... and probably not producing quite enough to be in the zone for right sizing to true market demand...

 

Some get anxious at the thought of a second Ranger plant, I don't and think it would be a good way to ease pressure

at LAP, take them back to 2 x 10 hr shifts and add a duplicate plant elsewhere maybe Cuautitlan?

 

You can see the opposing forces at work here, the company wants to expand enough to increase those profitable sales

while the accountants want plants worked within an inch of their life, somewhere there has to be balance where a lot of

good things come together - the desire of many is for Ford to remain profitable but also grow, both goals are possible

Edited January 22, 2016 by jpd80

[Biker16]

I understand what you're saying, I'm sure that ford is leaving sales on the table at the moment due to tight inventory

and compensating for that with higher ATPs/ lower incentives. I just feel that things in the last 18 month have become

a bit too tight ...... and probably not producing quite enough to be in the zone for right sizing to true market demand...

 

Some get anxious at the thought of a second Ranger plant, I don't and think it would be a good way to ease pressure

at LAP, take them back to 2 x 10 hr shifts and add a duplicate plant elsewhere maybe Cuautitlan?

 

You can see the opposing forces at work here, the company wants to expand enough to increase those profitable sales

while the accountants want plants worked within an inch of their life, somewhere there has to be balance where a lot of

good things come together - the desire of many is for Ford to remain profitable but also grow, both goals are possible

 

if you were smart, you would move the Transit Connect to the US freeing up capacity in Spain and Replace that production With Escapes for the US market. That way you are not adding 4th escape plant, and keep up utilization in Spain after the TC leaves.

[grbeck]

"With VW, Toyota and GM, as they use their volume to push their costs down." — EVERY volume manufacturer does this, as much as they can.

I think most companies figured that one out around 1915 or so...

[akirby]

 

if you were smart, you would move the Transit Connect to the US freeing up capacity in Spain and Replace that production With Escapes for the US market. That way you are not adding 4th escape plant, and keep up utilization in Spain after the TC leaves.

 

 

It's hilarious that you think you know the best business decision when you don't have any of the information that Ford has about plant costs, utilization, market trends and future product strategy.

[RichardJensen]

That is the difference between me and you, you believe ford always does the right thing for the right reasons, I remain skeptical of ford because historically ford like all companies can make mistakes.

 

The Biker rule: Every decision is the wrong decision because sometimes it is.

Edited January 26, 2016 by RichardJensen

[RichardJensen]

What's funny is that when you apply the Biker rule to Biker's own posts, you come to the conclusion that all of his posts are wrong because some of them are.

Edited January 26, 2016 by RichardJensen

[silvrsvt]

 

if you were smart, you would move the Transit Connect to the US freeing up capacity in Spain and Replace that production With Escapes for the US market. That way you are not adding 4th escape plant, and keep up utilization in Spain after the TC leaves.

So what about chicken tax laws? How profitable will it be vs. making them in the US?

[Biker16]

So what about chicken tax laws? How profitable will it be vs. making them in the US?

The escape isn't a truck, so the tariff doesn't apply.

[Biker16]

 

 

It's hilarious that you think you know the best business decision when you don't have any of the information that Ford has about plant costs, utilization, market trends and future product strategy.

I know aren't I clever? Edited January 27, 2016 by Biker16

[jpd80]

 

if you were smart, you would move the Transit Connect to the US freeing up capacity in Spain and Replace that production With Escapes for the US market. That way you are not adding 4th escape plant, and keep up utilization in Spain after the TC leaves.

I think you're spending money switching plants for a zero sum gain.

 

Maximize production where you sell. Escape overflow and TC production at Cuautitlan.

Leave MAP for Ranger-Everest-Bronco while Focus-Fiesta-C-Max go to new Mexican plant.

[Biker16]

I think you're spending money switching plants for a zero sum gain.

 

Maximize production where you sell. Escape overflow and TC production at Cuautitlan.

Leave MAP for Ranger-Everest-Bronco while Focus-Fiesta-C-Max go to new Mexican plant.

 

I see where you are going, but Simply don't believe You should be adding a 4th plant to produce such a Small amount when you have an Existing plant producing the same product, that will have excess capacity.

[RichardJensen]

Again, Biker, assuming that Ford has no idea what they're doing based on their years of profitability and their successful navigation of the worst crisis to hit the auto market in at least 80 years--and posting comments on a Ford fan site--is folly that I grow weary of enduring.