Current Financial Health
Out of the worst of times came change, and a road map for survival. We have spent the last several years radically overhauling our production strategy from what was, in essence, that of a regional company to that of a fully globalized business. We simplified by making many drastic changes, but the results are paying dividends – both literally and figuratively.
Through a difficult, multi-year process of workforce reductions and plant closures, we focused on minimizing overcapacity and reducing inefficiencies. The result today is a leaner and stronger Ford Motor Company. By staying laser focused on ONE Ford and on one global product strategy, we created a more flexible manufacturing operation that not only has saved us money, but has also resulted in faster product development and more efficient delivery of innovative new technologies in our core markets.
We have reduced the number of global vehicle nameplates from 97 in 2006, to 59 in 2008, to 38 in 2010, and to 37 in 2011. Eventually, we expect to improve that figure to 20 to 25 models globally.
Sales Volume Opportunities
Ford sees five key global platforms with sales volume opportunities as depicted here.
- +2 million
- +2 million
- 1 million
- +275 thousand
- +470 thousand
We ended 2011 on a sales-related high note, with the Ford brand surpassing the 2 million mark for U.S. vehicles sales, making it the bestselling brand in America. The last time any auto brand sold more than 2 million vehicles was in 2007, prior to the economic recession. Total Ford U.S. sales were up 11 percent for the year, compared to 2010, in large part due to the growing diversity of our product portfolio. In Germany, we were the fastest-growing manufacturer, with vehicle sales up 17.6 percent over 2010, and we remained the market share leader in Britain and Canada. Our wholesale sales in the Asia Pacific and Africa region were up 7.5 percent in 2011, compared to 2010.
Adapting Our Product Lines
Through much of the 2000s, we could have been considered largely a truck manufacturer; now, we’re a full-line automaker with competitive products in all segments of the market, from small and midsize cars to sport utility vehicles to pickup trucks. More than 80 percent of our U.S. growth in 2011 came from small cars and utilities, as fuel prices continued to encourage customers to move to smaller and/or more-efficient vehicles, whether passenger cars or utilities. Ford’s U.S. small-car sales were up 25 percent in 2011, with 244,291 Fiestas and Focuses sold in the U.S., giving us 10 percent of the small-car segment.
Today, we’re offering customers products with best-in-class fuel economy. Equally important, we’re offering customers choices of the fuel-efficient systems that work best for them – from EcoBoost®-powered gasoline vehicles to hybrids to electrified vehicles. In 2012, Ford offered nine vehicles reaching an anticipated 40 mpg or more. We are planning to triple our electrified vehicle production capacity by 2013, compared to 2011.
We continued to strengthen our balance sheet in 2011, a milestone year. We increased Automotive gross cash, reduced debt and improved liquidity.
In another important sign of our financial progress – and a sign of our confidence in our future – we announced in early December 2011 that we would reinstate a quarterly stock dividend of 5 cents per share, which was paid on March 1, 2012. Now that we have been able to protect the investments needed for future products, invest in growth around the world, and make significant improvements in our balance sheet, we can afford to resume the dividend and provide a return to our shareholders who have invested in our Company. Initially suspended in September 2006, the dividend is an important component of our vision of profitable growth for all – customers, suppliers, employees, dealers and investors.
Also as a result of our financial performance, we announced that we would be making profit-sharing payments to our approximately 41,600 eligible U.S. hourly employees. In accordance with the UAW/Ford collective bargaining agreement, Ford’s North American pre-tax profits of $6.2 billion generated profit sharing of approximately $6,200 per eligible employee on a full-year basis. Based on first-half 2011 results, the formula generated approximately $3,750 per eligible employee, which was paid in December 2011; for the second half of 2011, the formula generated approximately $2,450 per eligible employee, which was paid in March 2012. Individual profit-sharing payments to eligible employees could be higher or lower based on actual employee-compensated hours.
In addition, we expect to make cash contributions to our funded pension plans in 2012 of about $3.5 billion globally, including discretionary contributions to our U.S. plans of about $2 billion.
Similar financial progress can be seen in the recent growth of our workforce. In the fall of 2011, we pledged to add 12,000 hourly jobs in the U.S. by 2015 – 5,750 more than the previously announced 7,000 jobs (6,250 of which were hourly) to be added by year-end 2012. The commitment (part of a new four-year labor agreement with the UAW in the U.S.) means we’re bringing jobs back to the U.S. At the same time, we’re also adding 3,000 new jobs in our Asia Pacific region to help keep pace with product demand in that region.
This is welcome news after several years of painful reductions that lowered our employee base by approximately 40 percent between 2006 and 2010. As of April 2012, we had about 166,000 employees globally.
A critical component of our recent business strategy has been to focus on realigning production with demand. In some cases, this has meant retooling facilities that previously built large trucks and SUVs to instead manufacture smaller and/or more energy-efficient vehicles.
At our Kansas City (Missouri) Assembly Plant, we are investing $1.1 billion in a new body shop, a new tooling area, an upgraded paint shop and an all-new integrated stamping plant. These investments will support the 2013 North American product debut of the full-size Ford Transit van, which will achieve gas mileage at least 25 percent better than the E-Series vans it will replace when it starts production in North America in 2013. A portion of the investment also will be used to support next-generation F-150 pickup truck production at the plant.
The Kansas City Assembly Plant is one of several plants in North America to be revamped recently for the production of our varied product portfolio. Overall, we’re investing $16 billion in our U.S. operations – including $6.2 billion in U.S. plants – to design, engineer and produce more new and upgraded vehicles and components by 2015, reinforcing our commitment to U.S. manufacturing and American jobs.
Also in the U.S., we invested $550 million to transform our Michigan Assembly Plant (MAP) from a manufacturer of some of our largest vehicles into the producer of our all-new global Ford Focus for the North American market. In 2012, MAP will become the world’s first facility capable of building a full array of vehicles – gas-powered, electric, hybrid and plug-in hybrid – all on the same production line.
The 2012 Ford Focus
We’re committed to growth in other parts of the world, too. To meet increasing demand in the Asia Pacific region, for example, we are building six new plants – three in China, two in India and one in Thailand. We recently opened a new plant in Chongqing, China, to produce the global Focus.
U.S. Plant Investments
We are investing $16 billion in our U.S. operations – including $6.2 billion in U.S. plants – to design, engineer and produce more new and upgraded vehicles and components by 2015. Recent investments include the following.
- About $1.1 billion – $700 million more than was previously announced – at our Kansas City Assembly Plant and an adjacent property. The plant will be building our full-size Transit van when the new product joins our North American lineup in 2013.
- An incremental $850 million investment in Michigan-based plants between 2011 and 2013 to support expanded manufacturing capabilities for new fuel-efficient, six-speed transmissions. These investments will be spread across a number of plants, including Van Dyke Transmission, Sterling Axle, Livonia Transmission and Dearborn Truck.
- Approximately $600 million to redevelop our Louisville Assembly Plant to build the next-generation Ford Escape.