Ford’s Future: Evolving to Become Most Trusted Mobility Company, Designing Smart Vehicles for a Smart World
October 03 2017 - 4:10PM
Business Wire
- Ford initiates aggressive “fitness”
push, re-basing revenue growth assumptions and attacking costs,
while redesigning company operations for long-term success
- Capital will be allocated to regions,
products and services with highest potential for growth and return;
product shift calls for more trucks and SUVs, fewer passenger
cars
- Ford is accelerating work on smart,
connected vehicles, including AVs and EVs and digital services to
thrive in emerging transportation operating system
Ford Motor Company today is providing a strategic update to
investors, detailing plans to leverage its unique product
strengths, trusted brand and global scale to refocus and thrive in
an evolving and disruptive period for the auto industry.
The investor presentation follows a four-month deep dive into
Ford’s strategy and business operations led by President and CEO
Jim Hackett and Ford’s senior leadership team. Hackett said Ford
will improve its operational fitness, refocus capital allocation
and accelerate the introduction of smart vehicles and services.
“Ford was built on the belief that freedom of movement drives
human progress,” said Hackett, who became Ford president and CEO on
May 22. “It’s a belief that has always fueled our passion to create
great cars and trucks. And today, it drives our commitment to
become the world’s most trusted mobility company, designing smart
vehicles for a smart world that help people move more safely,
confidently and freely.”
The full slide deck of the presentation can be found here. Ford
is reaffirming its 2017 full-year financial guidance and said its
2018 outlook will be provided in January.
Reiterating its long-term goal of an 8 percent automotive
operating margin, Ford says it will embrace the profound
technological changes and new competition buffeting the industry.
To deliver, the company is expanding its scope to include vehicles
and services – all designed around human-centered experiences. The
company will tap its strengths integrating hardware and software in
complex devices, its proven ability to deliver scale and the trust
tied to the Ford brand.
Specifically, Ford is:
- Accelerating the introduction of
connected, smart vehicles and services customers want and
value. By 2019, 100 percent of Ford’s new U.S. vehicles will be
built with connectivity. The company has similarly aggressive plans
for China and other markets, as 90 percent of Ford’s new global
vehicles will feature connectivity by 2020.
- Rapidly improving fitness to lower
costs, release capital and finance growth. Ford is attacking
costs, reducing automotive cost growth by 50 percent through 2022.
As part of this, the company is targeting $10 billion in
incremental material cost reductions. The team also is reducing
engineering costs by $4 billion from planned levels over the next
five years by increasing use of common parts across its full line
of vehicles, reducing order complexity and building fewer
prototypes.
- Allocating capital where Ford can
win the future. This starts with the company reallocating $7
billion of capital from cars to SUVs and trucks, including the
Ranger and EcoSport in North America and the all-new Bronco
globally. Ford also has plans to build the next-generation Focus
for North America in China, saving capital investment and ongoing
costs. Further, Ford is reducing internal combustion engine capital
expenditures by one-third and redeploying that capital into
electrification – on top of the previously announced $4.5 billion
investment.
- Embracing partnerships. Ford
will continue to leverage partnerships, remain active in M&A
and collaborate to accelerate R&D. The company recently
announced it was exploring a strategic alliance with Mahindra Group
as it transforms its business in India, and Zoyte with the
intention of developing a new line of low-cost all-electric
passenger vehicles in China. When it comes to autonomous vehicle
development, the company recently announced a relationship with
Lyft to work toward commercialization and a collaboration with
Domino’s Pizza to research the customer experience of delivery
services.
- Expanding electric vehicle revenue
opportunities. The company recently announced a dedicated
electrification team within Ford, focused exclusively on creating
an ecosystem of products and services for electric vehicles and the
unique opportunities they provide. This builds on Ford’s earlier
commitment to deliver 13 new electric vehicles in the next five
years, including F-150 Hybrid, Mustang Hybrid, Transit Custom
plug-in hybrid, an autonomous vehicle hybrid, Ford Police Responder
Hybrid Sedan, and a fully electric small SUV.
“When you’re a long-lived company that has had success over
multiple decades the decision to change is not easy – culturally or
operationally,” Hackett said. “Ultimately, though, we must accept
the virtues that brought us success over the past century are
really no guarantee of future success.”
Revamping product development, modernizing factories
At the same time, Ford is redesigning its operations to better
compete in this disruptive era.
Hackett cites as a template the example of how the company
reimagined the all-new 2015 F-150. Since then, the F-Series has
gained market share and the average transaction price has increased
16 percent. It has improved fuel economy and increased capability
for customers, thanks in part to a 700-pound weight reduction that
helped make the F-150 the company’s most positive contributor to
CAFE standards for model year 2018. Additionally, 90 percent of the
manufacturing equipment can be reused for the next-generation
F-150, reducing future capital requirements. Finally, the
innovation on aluminum and light weighting will pay off across a
range of Ford trucks and SUVs.
Other priorities include:
- Reducing orderable combinations of
many nameplates, focusing on what customers value most. Already
the team has identified a ten-fold reduction of orderable
combinations in the next-generation Escape and is moving from
approximately 35,000 combinations in the current generation of
Fusion to 96 in the next generation.
- Rethinking product development
processes and incorporating new technology. In the next five
years, Ford is aiming to reduce new vehicle development time by 20
percent, with new tools and fewer orderable combinations. Through
the use of virtual assembly lines, the company has been able to
reduce new model changeover time by 25 percent.
- Redesigning the company’s factories
of the future. Accelerating and scaling 3D printing, robotics,
virtual reality tools and big data will improve logistics and
enable a more efficient manufacturing footprint.
“We believe Ford will achieve its competitive advantage by
focusing deeply on our customers – whether they’re drivers, riders
or cities – and that’s where we are playing to win,” Hackett
said.
About Ford Motor Company
Ford Motor Company is a global company based in Dearborn,
Michigan. The company designs, manufactures, markets and services a
full line of Ford cars, trucks, SUVs, electrified vehicles and
Lincoln luxury vehicles, provides financial services through Ford
Motor Credit Company and is pursuing leadership positions in
electrification, autonomous vehicles and mobility solutions. Ford
employs approximately 203,000 people worldwide. For more
information regarding Ford, its products and Ford Motor Credit
Company, please visit www.corporate.ford.com.
Risk Factors
Statements included or incorporated by reference herein may
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on expectations, forecasts, and assumptions by
our management and involve a number of risks, uncertainties, and
other factors that could cause actual results to differ materially
from those stated, including, without limitation:
- Decline in industry sales volume,
particularly in the United States, Europe, or China, due to
financial crisis, recession, geopolitical events, or other
factors;
- Lower-than-anticipated market
acceptance of Ford’s new or existing products or services, or
failure to achieve expected growth;
- Market shift away from sales of larger,
more profitable vehicles beyond Ford’s current planning assumption,
particularly in the United States;
- Continued or increased price
competition resulting from industry excess capacity, currency
fluctuations, or other factors;
- Fluctuations in foreign currency
exchange rates, commodity prices, and interest rates;
- Adverse effects resulting from
economic, geopolitical, protectionist trade policies, or other
events;
- Work stoppages at Ford or supplier
facilities or other limitations on production (whether as a result
of labor disputes, natural or man-made disasters, tight credit
markets or other financial distress, production constraints or
difficulties, or other factors);
- Single-source supply of components or
materials;
- Labor or other constraints on Ford’s
ability to maintain competitive cost structure;
- Substantial pension and other
postretirement liabilities impairing liquidity or financial
condition;
- Worse-than-assumed economic and
demographic experience for pension and other postretirement benefit
plans (e.g., discount rates or investment returns);
- Restriction on use of tax attributes
from tax law “ownership change;”
- The discovery of defects in vehicles
resulting in delays in new model launches, recall campaigns, or
increased warranty costs;
- Increased safety, emissions, fuel
economy, or other regulations resulting in higher costs, cash
expenditures, and/or sales restrictions;
- Unusual or significant litigation,
governmental investigations, or adverse publicity arising out of
alleged defects in products, perceived environmental impacts, or
otherwise;
- Adverse effects on results from a
decrease in or cessation or claw back of government incentives
related to investments;
- Cybersecurity risks to operational
systems, security systems, or infrastructure owned by Ford, Ford
Credit, or a third party vendor or supplier;
- Failure of financial institutions to
fulfill commitments under committed credit and liquidity
facilities;
- Inability of Ford Credit to access
debt, securitization, or derivative markets around the world at
competitive rates or in sufficient amounts, due to credit rating
downgrades, market volatility, market disruption, regulatory
requirements, or other factors;
- Higher-than-expected credit losses,
lower-than-anticipated residual values, or higher-than-expected
return volumes for leased vehicles;
- Increased competition from banks,
financial institutions, or other third parties seeking to increase
their share of financing Ford vehicles; and
- New or increased credit regulations,
consumer or data protection regulations, or other regulations
resulting in higher costs and/or additional financing
restrictions.
We cannot be certain that any expectation, forecast, or
assumption made in preparing forward-looking statements will prove
accurate, or that any projection will be realized. It is to be
expected that there may be differences between projected and actual
results. Our forward-looking statements speak only as of the date
of their initial issuance, and we do not undertake any obligation
to update or revise publicly any forward-looking statement, whether
as a result of new information, future events, or otherwise. For
additional discussion, see "Item 1A. Risk Factors" in our Annual
Report on Form 10-K for the year ended December 31, 2016, as
updated by subsequent Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K.
For news releases, related materials and
high-resolution photos and video, visit www.media.ford.com.
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