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Back in May, Ford Motor Company relieved Mark Fields of his duties and promoted Jim Hackett to the position of president and CEO. And now Hackett has revealed his blueprint for the Blue Oval, including investing more money in bakkies and SUVs and less in traditional passenger cars.
Providing “a strategic update to investors”, the US automaker detailed plans to leverage “its unique product strengths, trusted brand and global scale to refocus and thrive in an evolving and disruptive period for the auto industry”.
Hackett said that Ford would improve its operational fitness, refocus capital allocation and accelerate the introduction of smart vehicles and services.
The company explained that it would “reallocate” $7-billion of capital from passenger cars to SUVs and bakkies, including the Ranger and EcoSport in North America and the all-new Bronco globally.
Hackett added that Ford was “attacking costs”, with the plan of reducing automotive cost growth by 50 percent through 2022. As part of this, the company was targeting $10-billion in incremental material cost reductions, while reducing engineering costs by $4-billion from planned levels over the next five years by increasing use of common parts across its full line of vehicles, reducing order complexity and building fewer prototypes.
Ford furthermore revealed plans to build the next-generation Focus for North America in China, saving capital investment and ongoing costs. In addition, Ford said it would reduce internal combustion engine capital expenditures by one-third and redeploy that capital into electrification – on top of the previously announced $4,5-billion investment.
“When you’re a long-lived company that has had success over multiple decades the decision to change is not easy – culturally or operationally,” Hackett said.
“Ultimately, though, we must accept the virtues that brought us success over the past century are really no guarantee of future success.”