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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