Amidst an ailing American economy, high fuel prices and the growing cost for commodities such as steel and aluminum, Ford Motor Company has released its latest corporate outlook that significantly reduces overall North American production and lowers its profit targets.
Predictibly, production of its larger trucks and SUVs will see significant cutbacks, while production of its small cars and crossovers will be increased gradually as part of the company's plan to reduce annual operating costs by $5 billion in 2008.
"The challenge affecting the entire industry is the accelerating shift in consumer demand away from large trucks and SUVs to smaller cars and crossovers -- combined with a steep rise in commodity prices and the weak U.S. economy," Ford CEO Alan Mulally (above left with Bill Ford Jr.) stated in a press release.
A manufacturing reduction of a further 20,000 units from earlier cuts is expected in the second quarter of 2008, down some 15 percent from the same time last year. In total, 690,000 vehicles are earmarked for construction.
The automaker has projected to lessen production by 15 to 20 percent in the third quarter versus 2007 and will build 510,000 to 540,000 vehicles. For the fourth quarter, production will be ramped up slightly to between 590,000 and 630,000 units, which in reality, is a still a decrease of eight percent against last year.
Ford hopes to diminish the blow of building less by increasing the shifts at production plants in which its current top-selling Focus, Fusion, Edge, Escape, Milan, MKZ and MKX are made.
With such drastic plans, Mulally and Dearborn are anticipating to "break-even companywide in 2009" thanks largely in part to "strong results in Europe and South America,' though it is admitted that company goals for profitability will now take longer to reach than had earlier been thought.
The happenings in North America are in stark contrast to what Ford is experiencing in its rest of the world markets where it is debuting new models, posting record sales and developing advanced concept cars.
According to Mulally, Ford's massive cost reduction plan for the Americas is right on track.
"We are continuing to make great progress on our plan," said Ford President and CEO Alan Mulally. "We are profitable and growing outside of North America, and our transformation plan in North America is working."
In its press release, Ford reassured those who are worried about the future in Dearborn insisting that the company is progressing successfully towards profitability. By 2010, Ford expects to have its fully redesigned product lineup ready for customers.
Source: Ford