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Ford Slashes 4Q Production by 21%; Trucks Bear the Brunt

18 August 2006

Ford Motor Company announced a 21% reduction of North American fourth quarter production—168,000 units—as part of its broader turnaround efforts. The company is also reducing its previously announced third-quarter production plan by 20,000 units.

Truck models will take the largest 4Q cut—155,000 units out of the 168,000, or 92%. For the full year, Ford has cut truck production by 404,000 units compared to 2005, with 278,000 of that (69%) coming in the third and fourth quarters. Production of cars, on the other hand, will increase by a total of 118,000 units in 2006.

According to Ford, the plan reflects expectations for lower industry sales of light trucks and truck-based sport utility vehicles, as high gasoline prices are expected to continue to encourage demand for more fuel-efficient passenger cars and crossovers.

Bill Ford, the company’s chairman and CEO, outlined the decision to cut production in a note to employees, explaining the decision is part of broader efforts to accelerate the company’s North American turnaround and saying full details of additional actions will be announced in September.

Unconfirmed reports are already circulating that Ford will eliminate 6,000 more salaried jobs in the September announcement.

For full-year 2006, Ford now plans to produce 3.048 million vehicles at its North American assembly plants—1.134 million cars and 1.914 million trucks—a 9% reduction from 2005.

The revised 2006 production plan is summarized in the table below:

Ford_production

The new production plan will result in downtime at several assembly plants between now and the end of the year, including: St. Thomas, Ontario (Ford Crown Victoria and Mercury Grand Marquis), Chicago (Ford Five Hundred and Freestyle and Mercury Montego), Wixom, Mich. (Lincoln Town Car), Louisville, Ky. (Ford Explorer and Mercury Mountaineer), Michigan Truck in Wayne, Mich. (Ford Expedition and Lincoln Navigator), Twin Cities, Minn. (Ford Ranger) and all F-Series truck plants (Kansas City, Mo.; Norfolk, Va., Dearborn and Kentucky Truck in Louisville).

The following plants are expected to operate on straight time or overtime based on consumer demand: Hermosillo, Mexico (Ford Fusion, Mercury Milan and Lincoln MKZ), AutoAlliance International in Flat Rock, Mich. (Ford Mustang), Oakville, Ontario (Ford Edge, Lincoln MKX and Ford Freestar), Wayne, Mich. (Ford Focus), Kansas City, Mo. (Ford Escape and Mercury Mariner), Ohio Assembly in Avon Lake, Ohio (Ford Econoline) and Atlanta (Ford Taurus).

August 18, 2006 in Fuel Efficiency, Market Background, Sales, Vehicle Manufacturers | Permalink | Comments (19) | TrackBack (1)

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In light of shifting consumer trends due to rising gas prices, Ford has decided to cut production of its trucks from 168,000 units to only 13,000 units for the 4th quarter of the year. This also falls in line with their restructuring plan. Via Green Ca... [Read More]

Comments

The only thing that will help Ford in the long run is a significant change in their product line. That can't happen quickly, which forces them into these drastic steps in the mid-term.

I honestly wonder how much longer they can keep bleeding money, marketshare, employees, etc. at this rate before they're in bankruotcy.

The market is starting to play on demand for gas guzzlers.

Ford is still producing too many trucks. Their production mix is only down slightly from 64% trucks in Q1 to 62% trucks in Q4.

At that rate, it will take years to go to a more acceptable cars-trucks mix.

Did notice that the 06 Focus wagon (manual) now gets 37 mpg. That is a significant jump from the last few years, when they were getting 32-33. I assume this is just a tuning issue as it appears to be the same engine. (Admittedly, I don't know much about Ford.) Hopefully, Ford and all the other manufacturers can get back to tuning for mpg rather than power, in addition to selling smaller and lighter vehicles. A Civic today weighs more than a midsize from the 80s.

Perhaps they can move their Focus C-Max to the US market, or make another small MPV based on their C1 platform they share with Mazda3 and Mazda5. It would combine car like gas mileage with the ability to haul 6-7 people. It would have to be carefully designed adn marketed market since the MAzda5 is already on market and Ford does not want to have the GM debacle of differnt divisions stealing sales from each other.

Nemo,
"Hopefully, Ford and all the other manufacturers can get back to tuning for mpg rather than power, in addition to selling smaller and lighter vehicles. A Civic today weighs more than a midsize from the 80s."
_This is why they have intorduced subcompacts such as Honda's Fit, and Toyota's Yaris.

There are several other things Ford may face, or can do to revive sales.
a) The Escape hybrid is based on Toyota's hybrid tech. That technology, and patents which cover them, is under legal assault, and is leading to a cloudy future for Toyota's hybrids. How this will effect ors remains to be seen.
b) Ford has been working on hydrauic hybrids. This system will likely come in handy for delivery trucks and vans. It may also help raise fuel economy for their pickup lineup. Add in cleaner diesels (plus <10ppm sulfur fuel with biodiesel mixed in for lubricity) and the fuel economies may rise from 13-19 mpg to 26-38 mpg.
c) Capitalise on 5-6 speed transmissions, adding automated manuals and better CVT (belted, geared, hydraulic, mixed, etc.) later on.

Ford seems lost. The same problems year after year.

You can't improve product lines quickly? That is partly true. But you can improve wheels, fabric, carpet, and plastic trim rather quickly. It does cost money but how much does it cost to not sell cars?

Don't want divisions stealing sales from each other? What is your profit if none of them can sell cars?

Finally Ford might concentrate on the weak points of each product. The 500 had two - bland styling and rather weak engine. Each can be improved without huge costs. Ford knew it over two years ago. Was anything done?

Did anyone on Earth think the Lincoln version of the Fusion was worthwhile? Can anyone on Earth name the current Lincoln models? Here are two: ADDS = Attention Deficit Disorder Syndrome, and the XHWV = X Has What Value (algebraic edition).

Jaguar. Totally uncompetitive except at the very top where buyers might 'just want' the Jag. Those are pretty. Jag needs a blazing coupe to take on all comers at the high margin $90K point. Two cars both great.

Focus - constant critism of trim, lack of a performance version, dated styling. Was anything done?

Crown Vic - just drop it. Let those who want a similar car buy the Marquis at a higher margin.

And drop the Ford practice of optioning everything. The buyer sees $19,000 then finds out it is $29,000 once desired equipment is selected. The result is disgust - it leaves the impression that it is a cheap car with stuff nailed on. The desired impression: a fine car with all these features.

" Ford knew it over two years ago. Was anything done?"

Well ... Bill Ford did get on TV and tell us they were going to do something ... someday ...


Spent an hour lookng through five auto magazines while waiting for the son at the dentist the other day. Otherwise I wouldn't have wasted my time. There was barely a mention of Hybrids or fuel economy in any of them. Boy! Are they out of touch! This must be where American auto makers are getting their ideas.

The key to Ford survival is mpg. Ford thinking is archaic and that is why its products are not in demand. They are a doomed company if they cannot come up with a way to move ahead to high mpg rather than high HP. The life cycle of any company is ended when it cannot produce a product the consumer needs. It will be sad to see them go but that is the way of business. Companies that made coaches for horses in the 1800's could not last because people switched to cars. Ford cannot expect to be in business if the price of oil continues rising and more fuel efficient types of vehicles are required in this century.

adrianakau@aol.com

I know that Ford isn't near bankruptcy yet, but all this bad news for the Big Three, especially Ford, sure feels like we've opened a door into a brave new world created by higher oil prices.

Over on my site (http://www.grinzo.com/energy/) I've been getting a steady stream of e-mail suddenly from readers with wistful stories about a dominant US auto industry, and how grim things look now.

Any auto executive that could not see this coming 5 years ago does not belong in their position. They are totally dependant on oil and the prices were going to rise significantly. If the execs could not connect the dots, it is their fault. Unfortunately, the rank and file suffer for their incompetence.

Allenz wrote:
a) The Escape hybrid is based on Toyota's hybrid tech. That technology, and patents which cover them, is under legal assault, and is leading to a cloudy future for Toyota's hybrids. How this will effect ors remains to be seen.
--------------------
Assault implies a real challenge to Toyota which none of the lawsuits are. They are patent fishing and Toyota is in pretty good shape with thier patents. Ford and Toyota have an agreement so Ford is also in good legal shape with its patents. There are a number of overly broad patents that could be used against Toyota but in the end Toyota has the $ and its own patents to defend themselves.

Patents have been abused for a long time. They should allow the patent holder to recover their investment and then compete. Instead they are used to keep products off the market and create a monopoly.

The point of what ford and gm are going throgh is that it is far better to loose a fair amount of money now then it is to keep bleeding the massive amounts thier higher labor costs cost them.

"Hopefully, Ford and all the other manufacturers can get back to tuning for mpg rather than power, in addition to selling smaller and lighter vehicles. A Civic today weighs more than a midsize from the 80s."

"This is why they have intorduced subcompacts such as Honda's Fit, and Toyota's Yaris."

Fair enough, introducing (reintroducing) sub-subcompats (or B cars) is great.... but I was referring to tuning within the various classes. The engines could get 10-25% better mpg, with tuning changes only. If the boy racers want the extra hp, they can do their own tuning when they are adding the stupid 20 inch wheels and chrome exhausts.

Also, much could be gained by returning to smaller engines within the classes. Remember when subcompacts (Corolla etc.) had 1.5-1.6 engines, compacts (Camry, Accord) has 1.8-2.0, small SUV's (Bronco II etc.) has 2.3? Minivans has 1.8-2.2?
With all the advances in engine technology, those sized engines now have much more hp and would easily haul around vehicles of those classes. And save us millions of gallons of gas.

Ford could very easily improve the fuel economy of their light trucks by doing one thing: change the rear differential gear ratio.

Light Ford trucks basically use a rear-end similar to that used in the Crown Victoria/Grand Marquis series.
With a 2.87:1 ratio the Crown Victoria gets 18 City/ 27 Highway and that's with a V8 engine in a 4000 Lb. vehicle. However, police cars fitted with the 3.55:1 barely muster 13 M.P.G. in the city; those fitted with a 3.27:1 ratio might get 15 M.P.G. The trucks currently use ratios similar to those used in the police cars, and rarely get more than 13 M.P.G. with a standard 4.6L V8, while sporting similar weights when compared to the large body-on-frame sedans.

A simple change of ratios would cost nothing, and would make their trucks much more fuel efficient. Say you need a vehicle for towing? The dealers could always keep a few with low gearing on the lot just in case a buyer comes in needing a tow vehicle.

Or a two-speed rear end? Volkswagen uses them on its DSG 6-speed auto in the GTI/GLI and gets fuel economy ratings identical to my Dodge Neon (and the Volkswagen has 200hp vs. my 132).

The increase in Focus mileage is a difference in tuning, from EMISSIONS to milage, I think is was mentioned in Car and Driver, I will have to go back and double check. It was a ULEV I believe, probably is not anymore....

Oh, and double check my spelling too.

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