According to Ford Motor Company’s CFO, Lewis Booth, the automaker has managed to protect its pipeline of future products while aggressively cutting costs. Cost reductions measures, enacted over the last year, helped Ford avoid taking federal bailout dollars like its domestic counterparts, Chrysler and GM.
Addressing the automaker’s Management Briefing Seminars in Traverse City, Michigan, Booth said that a key component of Ford’s success was sharing vehicles and automotive components across various global regions. The benefit will be Ford’s ability to provide a new, competitive model lineup.
“I feel one of my principal obligations is to husband the resources of the corporation,” he said. By effectively doing this, he feels that the company will have the resources needed for future models.
Booth says that Ford plans to either replace or revamp up to 90% of its product line by volume in the European, Asia Pacific and North American regions.
He predicts that by 2014, Ford will have completed a complete cycle of redesigns, “and will be halfway through the next cycle.” He also says that this will be accomplished while the company continues to closely manage its spending.
Ford is currently on pace to reduce structural spending by nearly $15 billion, compared to 2005, by the end of this year according to Booth.
A key component of Ford’s cost-cutting strategy is selling the same vehicle worldwide. Ford calls these universal models its “core global platforms” and adheres to this model as much as possible. Ford currently produces approximately 345,000 units per core global platform annually. Within five years, that number is expected to increase to 680,000.
Ford’s redesigned Fiesta is one example of the core global approach. Gone are the differences that used to distinguish Fiesta’s sold in different regions in previous model years. Booth says that the approach eliminates the need to reengineer “parts that customers don’t really care about.”
However, some differences are unavoidable. The European version of the Fiesta will be competing in a market dominated by diesel engine vehicles. Europeans also favor manual transmissions over those with automatic transmissions. Booth says it would be a mistake to attempt to market the European model Fiesta in the U.S. and asserts, “We can’t assume Americans will embrace diesel engines.”
Booth says he is enthusiastic about the models Ford will be introducing to the U.S. market in the coming years. He say, “They’re going to look like a Ford, drive like a Ford and feel like a Ford.” Booth joked, “I think they’re going to smell like a Ford, though Derrick Kuzak [Ford’s head of product development] says there’s o objective goal on that.”
He concluded his remarks on a serious but upbeat note, saying, “We don’t sell commodity products. We sell exciting products. That’s what Ford is about.”