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Ford Considering $1 Billion in Investments in Michigan; R&D on Powertrains and Hybrids Included

9 August 2006

Ford is considering investments of up to $1 billion in several Michigan facilities as part of its Way Forward restructuring and turnaround, according to Mark Fields, Ford Motor Company Executive Vice President and President of The Americas. Fields made the statement during a speech at the Center for Automotive Research’s 41st annual Management Briefing Seminars in Traverse City, Mich.

The investments would fund expanding flexible manufacturing at several Ford facilities in Michigan and be used for the research and development of future products, advanced powertrain technologies and hybrid vehicles.

Ford recently announced that it will establish a development center for hybrid systems in Gothenburg, Sweden, to serve Ford’s Premier Automotive Group and Ford of Europe business units. (Earlier post.) Ford Motor in the UK will spend at least £1 billion (US$1.8 billion) to develop a range of global environmental technologies in the UK for its Ford, Jaguar, Land Rover and Volvo brands, including a variety of systems deploying different levels of hybridization (micro/mild/full). (Earlier post.)

In his talk, Fields highlighted emerging trends “we’re spotting that will dramatically affect our future products.

Just think of what’s happened since you were here last year. Gas prices are up 30 percent— and now topping $3 a gallon. Steel prices are up 35 percent. Copper and rhodium prices have skyrocketed—up more than 100 percent.

Then there are the segment shifts... During the second quarter, pickups were 12.7 percent of the industry compared with 14.5 percent for all of last year. That nearly 2 point decline coincides with the surge in gas prices, beginning in April. On an annual basis, it equates to roughly 300,000 fewer industry-wide truck sales.

Or, put another way, a 2 point shift away from trucks in the U.S. has an annual industry-wide price tag of about $8 billion in lost revenue, and the shift to more cars won’t fully make up the difference.

The lesson we take from this tectonic shift is that listening to our customers has never been more important. We as an industry can’t sit back and complain about these changes. We have to act on them and quickly.

The old saying “if you build it, they will buy it” needs to be put to rest. “If they will buy it, we will build it” is the way we need to approach the future.

Already, we see two very significant trends with long-term implications for the entire industry. The first trend is a growing, worldwide demand for sustainability and a smart energy policy. The second trend we see is a set of profound demographic changes that are already affecting the auto industry, and that will accelerate over the next decade and dramatically affect the types of vehicles we produce.

...Growth will come from listening better to customers. The pressure to build cleaner more fuel efficient cars that reduce our dependence on foreign oil and other non-renewable resources will be intense. And demographic changes will test our product plans.

—Mark Fields

Factoring in the implications of those trends, Ford expects the winning segments within the next ten years to include crossover SUVs and small cars, as well as small premium utilities. Hardest hit by the changes are the medium and large SUVs and minivans.

For expects small and full-size pickups to stabilize at about this year’s level and remain there for the foreseeable future, according to Fields.

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August 9, 2006 in Fuel Efficiency, Hybrids, Vehicle Manufacturers | Permalink | Comments (8) | TrackBack (0)

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Comments

To Mark Fields
From Long time customer and stock holder

Bring back the Ranger EV. This vehicle had a lead acid battery pack and only a 50 or 60 mile range. You should be able to double that range TODAY with a modern battery pack ( Nickel Metal or Litiom Ion ). It would cost you almost nothing in R&D.

My daily commute is only 16 miles. If you could offer an EV with a 100 mile range at a reasonable price, I would buy one in a minute.

I might even sell my Prius :)

Kyle Dansie

I live in Duluth, Minnesota. If I want an electric car of any kind, I believe that I will have to buy it in California, and then ship it here. I would do this to avoid having to originally register/insure it in California. I have looked several times for a practical, efficient electric vehichle, that is available to me, a midwesterner.
I know that the Ranger Pickup is built in St. Paul/Minneapolis, and I have heard that the factory there is closing. While I don't believe that reigniting production of the EV would be enough to turn things around for that particular factory, I hope that Mr. Ford keeps EV models of present production vehicles in mind as he redistributes Ford's manufacturing.

Or they can scale the Ranger design up and have it on the F-Series trucks. More expensive, but they hav got to move their trucks off the sales lots.

I guess you guys aren't paying attention to Ford's efforts:

They have testbed Ranger EV's with in wheel motors and NIMH batteries already. They are trying to get the in-wheel motors down in weight though as they are too heavy to go on the front wheels currently (around ~45lbs for the motors alone...add the weight of the wheels and it gets up to nearly 90lbs for each side).

Just think of what’s happened since you were here last year. Gas prices are up 30 percent— and now topping $3 a gallon. Steel prices are up 35 percent. Copper and rhodium prices have skyrocketed—up more than 100 percent.

Yeah, and NOBODY could have predicted any of that! Why, I remember the day we were sitting around the boardroom trying to decide what to name our new 9500 pound SUV: Explosion? Exhibitionism? and one of the junior executives started talking about "resource demand from China" and something called "Peak Oil"! Ha Ha Ha! Imagine that, resource demand from Coolies?! We sent him out for sandwiches and awarded ourselves more stock options while he was gone.

Bike Commander Dude: What are you going to drive in the winter?

I'm glad to see that Ford knows where the priorities are *cough - sarcasim*.

This whole "flex fuel" development is a load of utter bull*hit IMO (and in many others). It's great that we have cars that can run on biofuel, ethanol, baby seals and carrots. But unless these fuels are available and people CHOOSE to use them, it means squat. It's just being done because it takes relatively little effort (and money) to make an engine flex fuel capable. Change some jets, install lines and a tank that dont degrade with ethanol and *bingo* - you have a FFV AND you have checked off the requirements for CARB and ULEV (but only IF drivers fill those vehicles with B80 - which they wont).

It looks like Ford and GM are getting ever closer to tanking as Japanese and even Chinese auto manufacturers come out with better (better in every regard these days) vehicles that actually meet the consumers needs.

"Hardest hit by the changes are the medium and large SUVs and minivans."

What? Minivans? Minivans are part of the Solution - not part of the problem. Minivans do what no other vehicle can do - haul 7-9 people, haul 4x8 sheets of building material (have to take the seats out), and get decent fuel milage. Even a 1998 model Chevrolet Venture can get 30 mpg on the freeway. And, if GM would bring the diesel Vauxhall Zafaria to the US - 30 city and 50 highway would be possible (mid 40's at least) - don't believe me - visit the Vauxhall Web site.

There will always be a market for the minivan, it replaces the full size van, full size extra cab pickup truck, and the traditional station wagon for a lot of tasks. People who buy these buy them because they need them - unlike many people who buy SUVs and Pickups because they want a SUV or Pickup. Granted there are needs for all types of vehicles - I just never heard of anyone buying a minivan to look cool, to trick out, or for any other reason thatn to haul people or "stuff" in an economical manner.

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