Ford to transform plans after $8.7 billion 2Q loss

2008 Ford Explorer

DETROIT - Ford Motor Co. said today its operations lost $1.38 billion in the second quarter as high gasoline prices drove consumers away from its big trucks. The company earned $258 million during the same quarter of 2007.



The company also said it took an $8 billion loss for reducing the value of various troubled assets, bringing the total net loss for the quarter to $8.67 billion.

In response to the downturn, Ford announced it will add six small European vehicles to the North American lineup and convert three large truck and SUV plans to small cars beginning this December.

Ford also said it will revitalize the Mercury product lineup by the end of 2010. With no new products on the long-term horizon, the survival of the Mercury brand had been in doubt.

Ford also confirmed it would continue production of the Ranger small pickup truck at the Twin Cities assembly plant in Minnesota through 2011.

The company's revised turnaround plan also calls for doubling its capacity to produce four-cylinder engines in North America by 2011. The company said its hybrid vehicle lineup, and production, will double in 2009.

In the financial report, Ford said the special charges for troubled assets included a $5.30 billion charge for Ford North America.

The North American unit posted a $1.3 billion pre-tax loss in the quarter compared with a $270 million loss during the same period a year ago.

Ford said it posted a pre-tax profit of $582 million in Europe during the quarter, up from $262 million. It also turned profits in Asia and South America. The Volvo unit lost $120 million compared with a loss of $91 million a year ago.

Ford ended the second quarter with $26.6 billion cash, down $10.8 billion from a year ago.

Ford said it posted second quarter revenue, excluding special items, of $38.6 billion compared with $44.2 billion during the same quarter last year. When removing the the recently sold Jaguar, Land Rover and Aston Martin units from 2007 results, Ford said its revenue would have been "down slightly."

Transit Connect coming to North America

2008 Ford Transit Connect

Ford CEO Alan Mulally said the progress Ford has made to create one global product development strategy gives the company the flexibility to respond to the changing market conditions in the United States.

"We are in a stronger position than ever to leverage Ford's global assets and continue to address the pressures facing us in North America," he said in a conference call with journalists today.

Ford announced that Mercury will get a new small car in 2010 and that a new European small vehicle will be a "whitespace" entry in North America in 2010.

The company also reconfirmed that it will:

• Add the European Transit Connect small van to the North American lineup in mid-2009.
  
• Add a new Lincoln seven-passenger crossover. It will arrive in 2009, Ford said today.
  
• Add the European Ford Fiesta in sedan and five-door hatchback versions in early 2010.
  
• Switch over to a new European Ford Focus in sedan and five-door hatchback versions in 2010.
  
• Build a unibody version of the next-generation Ford Explorer. It will arrive in 2010 and improve fuel economy by up to 25 percent.

Plant conversions

Ford said it will convert its Michigan Truck Plant in Wayne, Mich., over to small-car production in 2010. Ford didn't identify the vehicles, but said they would be derived from its global C-car or Focus-sized platform. Ford already assembles the Focus at a neighboring factory in Wayne.

Production of the Ford Expedition and Lincoln Navigator large SUVs currently built at the Wayne truck plant will move to the Kentucky Truck Plant in Louisville, Ky., early next year.

Ford announced that another assembly plant in Louisville, Ky., will switch over from building the Explorer SUV to producing more C-sized small cars beginning in 2011.

The third truck plant to be converted to small cars is in Cuautitlan, Mexico. Ford previously announced that move. The plant, which currently makes F-series pickups, will begin building the Fiesta small car in early 2010.

And the Ranger compact pickup will remain in the lineup for at least two more years than previously planned. The Minnesota assembly plant that makes the Ranger will continue production through 2011. It previously had been scheduled to close in 2009.

Along with the realignments, Ford is offering another round of targeted buyouts to hourly workers at its U.S. plants and facilities. Ford said it is on track to reduce salaried personnel costs by 15 percent in North America by Aug. 1.

More Ford Transit related post : New Ford Transit Connect sportvan prices announced

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