Ford forecasts $1 billion profit improvement from Michigan truck plant

By Ben Klayman DETROIT (Reuters) - Ford Motor Co's shift in production at a Michigan plant to trucks from less profitable cars will lead to a more than $1 billion improvement in operating earnings, an official at the No. 2 U.S.

Reuters April 18, 2019 00:06:59 IST
Ford forecasts $1 billion profit improvement from Michigan truck plant

Ford forecasts 1 billion profit improvement from Michigan truck plant

By Ben Klayman

DETROIT (Reuters) - Ford Motor Co's shift in production at a Michigan plant to trucks from less profitable cars will lead to a more than $1 billion improvement in operating earnings, an official at the No. 2 U.S. automaker said on Wednesday.

The increase in earnings, before interest and taxes, in 2021 compared with 2017 is due to the shift at the Michigan Assembly Plant in Wayne, Michigan, from C-Max hybrids and Focus compact cars to Ranger mid-sized pickup trucks and Bronco SUVs, Ford's Jim Baumbick, vice president of enterprise product line management, said at a Bank of America Merrill Lynch conference in New York.

"The absolute change in profitability is over $1 billion EBIT and we expect over the long, normal cycle, that to continue to improve," he said. "That's just an example of other choices that we're making in the portfolio that are going to unlock additional value."

Ford has been restructuring its operations globally to improve profitability and speed product development.

Ford is making product shifts elsewhere that are similar to those at the Michigan plant. Baumbick declined to provide details but said there were a couple of cases in which Ford was making "major changes in the overall profit contribution" from one vehicle to another.

The Ranger went on sale in January and the Bronco will launch next year.

In 2017, Ford built about 200,000 C-Max and Focus vehicles and will assemble more than 200,000 of the Ranger and Bronco vehicles in 2021, when the latter is at full production, Baumbick said.

Ford invested $850 million in the Detroit-area plant to retool for the pickup and SUV.

Baumbick said Ford will not chase volume over profitability with any launches. "If the better business has a slightly lower volume, then so be it," he said.

As part of Ford's push to speed up product development, Baumbick said a team of employees in 12 weeks developed a vehicle for the "affordable segments" that will go into production before the end of 2022. He declined to provide more detail.

Ford, based in Dearborn, Michigan, gets 150 percent of its operating profit from its strongest products, such as F-150 full-size pickup trucks and Transit vans. The focus is on shifting investments to areas that offer operating profit margins in the high teens on a percentage basis, Baumbick said.

He also said a Ford Mustang-inspired battery electric SUV that Ford plans to introduce next year would be profitable from its launch and build on company strengths, just like the upcoming electric F-150 will do.

(Reporting by Ben Klayman; editing by Steve Orlofsky and Tom Brown)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

JPMorgan freezes donations to Republicans who contested 2020 election
Business

JPMorgan freezes donations to Republicans who contested 2020 election

By Pete Schroeder WASHINGTON (Reuters) - JPMorgan Chase & Co will resume making political donations to U.S. lawmakers but will not give to Republican members of Congress who voted to overturn President Joe Biden's election victory, according to an internal memo on Friday seen by Reuters. The bank was among many corporations that paused political giving following the deadly Jan

Square considers making bitcoin hardware wallet - Dorsey
Business

Square considers making bitcoin hardware wallet - Dorsey

(Reuters) - Fintech company Square Inc is considering making a hardware wallet for bitcoin, Chief Executive Officer Jack Dorsey said in a tweet https://twitter.com/jack/status/1400839179513339905 on Friday. As bitcoin and other crypto-currencies have gained in popularity, many companies have emerged to serve a growing need to protect these assets from online theft. Bitcoin wallets can be stored offline or online at cryptocurrency exchanges, venues where bitcoin can be bought and sold for traditional currencies or other virtual coins.

Critics still unhappy as EU clarifies revamped copyright rules
Business

Critics still unhappy as EU clarifies revamped copyright rules

By Foo Yun Chee BRUSSELS (Reuters) -The European Commission on Friday defined the scope of revised copyright rules adopted last year following criticism from governments, including France and Poland, but EU broadcasters and internet activists said there was a danger of censorship. The revamped copyright directive, the first overhaul in two decades, aimed to provide fair compensation for the bloc's $1 trillion creative industry and its 11.7 million employees. A central provision, Article 17, backed by the creative industry, would force Google-owned YouTube, Facebook's Instagram and other sharing platforms to install filters to prevent users from uploading copyrighted materials