Ford Aims To Save Itself By Bringing Small European Cars To U.S.

DEARBORN, Mich. — Ford Motor Co. posted the worst quarterly performance in its history Thursday, losing $8.67 billion in the second quarter.

The company also said it will retool two more North American truck and sport utility vehicle plants to build small, fuel-efficient vehicles, and it announced plans to bring six new small vehicles to North America from Europe by the end of 2012.

The net loss includes $8.03 billion worth of write-offs because the sharp decline in U.S. truck and SUV sales has reduced the value of Ford's North American truck plants and Ford Motor Credit Co.'s lease portfolio. Even excluding those items, Ford lost 62 cents per share, worse than Wall Street expected. Twelve analysts surveyed by Thomson Financial, on average, expected a 27 cent loss per share.

Including the write-downs, Ford lost $3.88 per share in the April-June quarter, compared with net profit of $750 million, or 31 cents per share, in the same quarter a year ago.

The second-quarter loss surpassed Ford's previous record quarterly loss, $6.7 billion in the first quarter of 1992.

Second-quarter revenue was $38.6 billion, down $5.6 billion from the year-ago period. Analysts expected $34.6 billion.

Ford has been successful selling cars in Europe, and the company is banking on the new European models to boost sales and revenue as it deals with a market shift from trucks to cars brought on by high gasoline prices.

The company said it has sufficient liquidity to weather the latest downturn in the U.S. auto market without additional borrowing. Ford borrowed $23.4 billion in 2006 to fund its North American turnaround.

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"We are pleased that we went to the capital markets at the right time," Ford President and CEO Alan Mulally said in a conference call with investors and media. "We have the scale, the expertise and the financing to execute our plan."

Wall Street wasn't impressed, at least initially. Ford shares dropped 58 cents, or 9.6 percent, to $5.45 in morning trading.

The company said it will retool the Michigan Truck plant in suburban Detroit, shifting its products from large SUVs to make global vehicles off the European Focus platform by 2010.

The SUVs made at Michigan Truck _ the Lincoln Navigator and Ford Expedition _ will be shifted to the Kentucky Truck plant in Louisville, which makes Ford Super Duty pickups.

The company also will retool the Louisville Assembly Plant, which now builds the Ford Explorer midsize SUV, to produce vehicles on the European Focus frame, starting in 2011.

The company had previously announced it would retool its pickup truck factory in Cuautitlan, Mexico, to build the Fiesta subcompact for North America starting in 2010.

Ford also said its Twin Cities Assembly Plant in St. Paul, Minn., will continue producing the Ranger small pickup through 2011. The plant was scheduled to close next year, but Ranger sales are down just 4 percent in the first half of this year, versus 18 percent for the U.S. light truck market as a whole.

The company also plans to revamp the body shops in nearly all its North American assembly plants so that they will be more flexible and able to respond more quickly to changes in market demands. Chief Financial Officer Don Leclair said it costs about $250 million per plant to make those changes.

Leclair said Ford's capital expenditures will reach $6 billion annually between now and 2010 because of the cost of revamping plants and introducing new products and engines. Ford plans to upgrade or replace all of its engines by 2010.

"What you're seeing is kind of a bubble that we're going to go through ... but early on we're going to see cost savings because of the economies of scale that we're getting as we develop more and more vehicles off of fewer platforms," he said.

Cost cuts also will come from employee layoffs. Ford said 4,000 U.S. hourly workers took buyouts in the second quarter, and the company will continue offering buyouts at targeted U.S. plants. Ford also has announced plans to cut its salaried costs by Aug. 1 through voluntary and involuntary layoffs.

The company said its write-offs included $5.3 billion in North American auto operations and $2.1 billion for Ford Credit because of the drop in the value of the plants and equipment that make trucks and SUVs, and the lower price Ford Credit can fetch for them at auction when leases expire. Leclair said 85 percent of the Ford Credit write-down was triggered by the drop in truck and SUV values.

Ford reported a pretax loss of $1.3 billion in North America because of the deteriorating U.S. market and the shift away from trucks. U.S. sales overall were down 10 percent in the first half of the year, with Ford's sales down 14 percent.

The company, though, continued to be profitable overseas, posting a $582 million profit in Europe and $388 million in South America. The company also made $50 million at its Asia-Pacific-Africa division.

"The second half will continue to be challenging, but we have absolutely the right plan to respond to the changing business environment and begin to grow again for the long term," Mulally said in a statement.

Ford said it does not expect a U.S. economic recovery to start until early 2010.

The company identified only three of the European small vehicles it will bring to North America: the Transit Connect small van, the European Focus and the subcompact Fiesta. Most will be built in North America, and Leclair said some might be exported. Ford already has announced that the Transit Connect will be imported from Turkey.

Ford said the other three vehicles would be identified later, including one that is unique within its segment.

Other possible vehicles are the Kuga small crossover, the C-Max small van and the Mondeo midsize car.

Ford also announced that the next-generation Ford Explorer midsize SUV will come out in 2010 and be built on car underpinnings, making it more fuel efficient than the current truck-based model. And it announced it will build a seven-passenger car-based crossover vehicle for Lincoln in mid-2009.

___

On the Net:

http://www.ford.com

Comments

[KansasKowboy]

Ford's European Cars are really great. I always wished they would have sold them here.

[Trittydi]

What a bunch of LOSERS! More than 30 years too late.
*

[addisonsteele]

As the automotive journalist Brock Yates pointed out in his 1983 book, The Decline and Fall of the American Automobile Industry, in Europe, Ford has been building well-made small cars for years (the European Focus is a sibling of the Volvo S40/V50 and the Mazda3). The problem has been that the entire industry focused on the temporary high profits obtained from selling trucks and SUVs, rather than carving out a significant market share of the smaller car market, which the industry essentially abandoned to the Japanese carmakers. It's past time to purge the world of MBAs.

[JBS]

It's past time to purge the world of MBAs.

Hey! That works for me. Maybe we could have an open season every year like for deer.

[newshawk14]

A mentor of mine, who was one of the top servo systems engineers in the US,
felt that the best thing we could do to enhance our productivity, would be to
burn down the Harvard and Stanford schools of business.

[holeybuybull]

We should probably start with those in the advertising industry, who spend their time convincing americans to buy things they don't need, at prices they can't afford.

[teacake]

The problem with Ford, and possibly with all American auto companies, is a deadly lack of vision. They seem to always playing catch-up. From quality control to right down the core of corporate philosophy. With their arrogance displayed by those obnoxious super-size SUVs, the image of American lifestyle is now only a laughing stock in the eyes of the world. Those useless and stupid CEOs in American corporations get the salaries that they don't deserve. When the company sinks, these scumbags should go first. But noooooh! It's the workers who are punished (laid off) for the stupidity and poor management of those over-paid CEOs. This is why America is going down the tube: capitalism is destroying itself with its own greed.

[sco8d]

All the profitability in both GM and Ford is overseas now, in Russia, Europe, China and south America growth is great. It points to union busting and giving up on the American market and the American union worker.

[teacake]

While I generally support the ideals of labor unions, I do agree with you that the unions have played a major role in the destruction of industries in America. It seems as if the mafia has effectively choked up what once a healthy economy with their own share of greed, in competition with corporate America. By remaining faceless, organized labor union 'runners' tend to manipulate the trust of the workers to enrich themselves with the wealth built on the blood and sweat of the workers.

It's time to clean up the unions (not destroying them) to remove the scumbags who ride and thrive on the back of American workers.

[GWChimpzilla]

Ford, GM, and Chrysler are run by the dumbest multi-millionaires on the planet. The price of crude oil DOUBLED between 2001 and the summer of 2004. But only now, after the price of oil quintuples from 2001 to 2008 do they realize they need to sell their small cars in the US -- the same cars they have always been selling in the rest of the world. What were they thinking?

[blytzd]

They wanted to be fair and let Toyota move in and steal all the auto jobs that they shipped to Mexico and a good hunk of the market share too. Now they want to be all patriotic and plead to buy American (which would really be aToyota at this point not a Mexican made Ford).

[PDQ]

"Ford, GM, and Chrysler are run by the dumbest multi-millionaires on the planet."

You do realize that during the time you refer to, Chrysler was owned by Daimler Benz?

No, the dimbulb in this picture is the failed "oil man" who has resided at 1600 Pennsylvania Ave.

[SCG]

North American?

Will the Mexican workers be able to afford the automobile they build?

[therealredstateblues]

Are there any Mexican Henry Fords?

[FeelinGroovy]

Employees in many U.S. companies cannot afford the product their employer manufactures.

[therealredstateblues]

Does Mexico have any modern equivalents to Henry Ford? - that is business leaders who understand that you have to pay your workers enough to be able to afford to buy the products and services they produce?

[KYJurisDoctor]

Who buys gas guzzling Navigators and Expeditions anymore?

[suziq]

Who? Those 25%ers. Those who have the same lack of vision as the corporate execs - it's all about me-me-mine. If ford (and the other auto corps) had paid attention in the 1970's they would be sitting pretty right now - and so would the American public. Those 25%ers believe all the advertising and other bulls**t they are fed - thus we have let the corporations tell us what we need instead of vice-versa. With their help, we've made our bed....

[Paul]

Well it's a good thing Congress didn't mandate higher milage vehicles a few years ago.

That would be socialism.

[therealredstateblues]

But congress seems to have no problem at all with socialism for Wall Street

[sco8d]

..or big oil. You pay taxes so the gov. can hand it to Exxonmobile so they can charge us more for gas.

[iambusto]

with the stock price so down, they really cant be shorted anymore even. the upside to shorting is so limited now with them hovering so close to 0 !!!

[KillTheMessenger]

2012? The party will be over in 2009 when Honda is going to sell a low cost hybrid and in 2010 Toyota starts making the Prius in the US, thus getting a $1000-2000 advantage because of lower transportation cost.

[sco8d]

How about the Chevy volt all electric in 2010, if it does what they claim it will leave the prius in the dust. Detroit has to make it cool to own an American car again.

[rh654]

Why does Ford still have their Executives?

They ran the business so poorly that they have lost almost $10 BILLION in a single quarter and are screwed going forward.

Where do I send my Resume?

I will promise:
1) I will take 1/2 the pay of the CEO to run Ford.
2) If I lose the company more than $8 billion in a quarter I will quit with no golden parachute.

[BPCentrisAmerican]

When I was HS, GM imported the Opel 1900 a small sport sedan that could and did, the only problem is, and they sold it though Buick dealers, enough said. Ford sold neat little coup call the Capri, which made the Pinto look like the piece of junk that it was. Once again it was sold though Mercury dealers and once again they weren’t interested in selling it. The most interesting US small car line is Saturn, which are rebadged European models. My nephew drives a Saturn Aura a nice value for 19 grand. He was a Honda Accord guy, but decided to try a 2-year lease on the Saturn and has been quite happy with it.

[therealredstateblues]

I had one of those 73 capris - it was a wonderful car - I had the 2.8L V6 with a 5 speed - man that thing would cook - smoked a lot of guys with their muscle cars - didn't even know what hit em and still got 28 mpg. It was ahead of its time - real walnut dash, leather reclining seats, sun roof

Tough to get parts for it though and like all imports of the time expensive to repair if you could find someone who would work on them

[holeybuybull]

thereal, I had one of those Capris, too. Well, until my brother totaled it.

[bitabingbitabangbitaboom]

Give us cars with 1.4l; 1.6l; 1.8l; and 2.0l engines that develop between 70hp and 120hp.....­..........­.and you will SURVIVE

The Government does NOT have the CASH to BAIL Ford or GM Out and We the People are not Fools

Enough BOHICA!

[BPCentrisAmerican]

VW sells a model called the Golf GT in Europe, with a 1.3 liter turbo motor that makes a 170 HP, and gets close to 40 miles to the gallon, small cars do not have to be boring. The insurance company requirements in the US are making cars heavier and heavier, pretty soon we will be up to 15 or 20 airbags and the hardware to deploy them all this adds weight and cost. My 1988 2-liter twin cam Saab 900S was one of the safest cars I’ve ever owned with no airbags and it weighed in at 2,700 Lbs, my 06 Jetta with a 2.5-liter twin cam I-5 with 6 airbags is 3,200 Lbs. I will say the Jetta is roughly the same price, has a much room as the 3 door Saab, a 6 speed transmission better aero dynamics, handles better and gets 34 mpg to the Saab’s 30 mpg. I can only imagine if the Jetta weighed 4 to 5 hundred Lbs less.

[drkazmd65]

I don't know why meeting these specs would be so difficult bitabing,.­..

My 2000 Mazda Protege, 1.6l / 5-speed reported gets A 105-horsepower. The way I drive it (mostly highway, using some hypermiling techniques) it gets 39-41 mpg combined milage.

It's easy - if nothing else - just buy the friggin' engines from Mazda,...

[JBS]

I've got a 98 Mazda 626 (Ford owns Mazda right?) with whatever the standard 4 cylinder is and a 5 speed manual transmission. When I could justify driving combined highway/city driving, I was getting 35 mpg. But now I can't justify much highway driving, and I'm only driving around town ... and as little of that as possible ... so I only get about 28 mpg.

Before that, I had a 95 Ford Escort wagon - 4 cyl/5 spd - and averaged 36 mpg. Wish I still had the Escort wagon, but the combination of aluminum engine and plastic radiator didn't quite work out. Something in the cooling system melted & clogged the ports in the engine resulting in overheat and warped head & block. Wouldn't have been a problem if they'd gone with something like the little German iron 4 cyl they used in the Pinto.

Anyway, my point is Ford could make a decent, reasonably sized, powerful AND fuel efficient car. Problem is until now, too few in the USA wanted them.

[MyTake]

How do you figure this out? The carburetor technology has been stymied by oil cartel patent lawyers for 50 years in order to maintain cartel profit flow.

Apparently Ford and GM hire no engineers to design a carburetor that gets 90 mpg. Yet Ford runs gasoline engine vans while trickling hydrogen gas into the carburetor which cleans up the ignition burn dramatically and gives the van increased gas mileage. But Ford won't sell that attachment to the general public and now take a huge loss as a result.

Honda manufacture's a 4 door hydrogen fuel cell car (Jamie Lee Curtis has one) that get 300 miles per tank of hydrogen and emits no pollution.

So why does not Ford follow Honda's and BMW's lead? The reason is that the board of directors for the automotive corporations are interlocked with the board of directors of the oil cartel.

And still the population does not protest the U.S. oil cartel!

[darrell198023]

That makes a lot of sense...I'­ve always wondered why cars with high mpg were not sold in the US.

[BBackSoon]

Because oil was cheep enough and everyone likes to ride in big cars.

One other thought. I drive a Toyota Tercel. This is a little car. It is very scary looking directly into the wheel of big trucks. . This does not deter me but I do prefer to take roads other than interstates whenever possible.

Since almost all our freight moves by truck there are more and more of them. Have you noticed all the ads for truck drivers lately? Here just outside of St Louis there are 10 or 12 massive Distribution center warehouses. When I say massive we are talking 30+ dock doors down each of the 4 outside walls. These have all gone up in the last 3 to 5 years and they are constantly building new ones.

It is a shame we don’t have a real rail network anymore.

[darrell198023]

In this situation the American ppl should do the only logical thing.....­Boycott any auto company that fails to put forth an honest effort to decrease our oil dependency. Decreased sales have pressured them enough to consider offering European models in the future so if we apply more pressure they will have no choice but to come clean on fuel efficiency­/alternati­ve fuel solutions.

[darrell198023]

We should do the only logical thing. Stop buying from any automobile manufacturer that does not put forth real effort to decrease our oil dependency.

[suziq]

Lots of people did - how many Hondas/Toyotas do you notice on the road? Everybody with big gas-hog flies an American flag, so it's ok....

[StellaDuBois]

So why aren't you using e85 to power your vehicle?

[KillTheMessenger]

I have a magic bridge in Brookly for you. While cars drive across, invisible hands reconfigure the engines carburetor so that it will produce gasoline instead of consuming it. The pretty ladies at the anti-toll booth will hand everyone ten bucks for crossing and give them a free rubber hose to siphon off excess gasoline from the tank every three hundred miles.

[MajorKong]

To be fair, Ford tried this a few years back with the Contour and it didn't sell very well.