Ford is planning a massive restructuring of its manufacturing operations, including retooling some of its truck plants to produce cars in order to keep up with market demands, reports The Detroit News. The plan is spearheaded by CEO Alan Mullaly, who has vetoed concerns that it would burn up too much cash and believes that the transformation is vital to Ford's survival.
Some details of the plan are expected to be announced in July, although its full scope could remain secret for several months. Major moves will include converting the Avon Lake, Ohio, plant that currently builds the E-Series van to build the more efficient Transit the automaker sells in Europe. Ford will also transform its Louisville Assembly Plant, which currently builds the Ford Explorer and Mercury Mountaineer SUVs, into a unibody plant that can build a mix of cars and crossovers.
It's likely that this plant will continue to build the Explorer, as the next-generation of the midsize SUV is expected to be built on a unibody architecture. The Michigan Truck Plant in Wayne, Michigan, that builds the Ford Expedition and Lincoln Navigator and is barely running a single shift should get the yet-unconfirmed F-100 on which we reported earlier. The automaker has also already announced that its F-Series plant in Cuautitlan, Mexico, will be converted to a car plant to build the upcoming Fiesta subcompact.
Ford isn't abandonding the F-150, however, and will make the necessary investment to hold on to its crown as king of the full-size truck. It is keeping two F-150 production plants running at single shifts instead of shuttering one, which will allow a quick ramp-up should the market rebound.
Even if these changes pan out, Ford still faces the task of making up lost profits. Trucks and SUVs are highly profitable, while cars, especially cheaper ones, bring in much smaller returns. According to the report, the automaker is struggling to make triple-digit profits on the Focus while profits on the F-Series topped out at over $20,000 for high-end Super Duty models. The new labor agreement with the UAW that reduces healthcare costs will help once it kicks in.
Ford's willingness to make these changes is seen as a positive, though Wall Street will be wary of any further cash burn on the part of Ford, which has already mortgaged all of its properties and recently announced that it will miss its target of returning to profitability by 2009. However, as David Cole, chairman of the Center for Automotive Research in Ann Arbor puts it, "You can't not do it. Alan is ready to bite the bullet. The old Ford is gone."
Source: The Detroit News