Ford chairman says 'fairly large' changes in store for automaker

DETROIT (Reuters) - Ford Motor Co F.N shareholders should expect "fairly large" changes in the coming year, Executive Chairman Bill Ford Jr. told Reuters, building on the automaker's moves to discontinue some North American models and boost electric vehicle investment.

FILE PHOTO: Bill Ford, executive chairman of the Ford Motor Company speaks at the Ford press preview at the North American International Auto Show in Detroit, Michigan, U.S., January 14, 2018. REUTERS/Brendan Mcdermid/File Photo

The automaker has promised to cut costs overall but still faces questions about lagging performance in certain regions and calls for more details on its restructuring. Its shares have barely budged since Chief Executive Jim Hackett took the helm last year.

“It could be regions, it could be functions, it could be areas of emphasis,” Ford said in an interview. “We’ve done some big things, and we still have some big things to do.”

The automaker lost $4 billion in South America from 2013 through the first quarter of this year, and its chief of global operations said in January it was “exploring every option you can imagine.”

Analysts have also urged an overhaul of European passenger car operations to help Ford reach its 8 percent pre-tax profit margin goal.

Bill Ford said the automaker will be able to use cost savings to return cash to shareholders, invest in new technology and businesses and fund restructuring.

“We believe we can take care of all three,” he said.

Hackett since January has outlined plans to cut costs by a cumulative $25.5 billion by 2022 and prune Ford’s list of North American sedans and compact cars, while boosting investments in electric vehicles and its product lineup in China.

The company plans to invest $11 billion in new electric vehicles by 2022, but cut overall capital spending by $5 billion over 2019 to 2022, a nearly 15 percent reduction from the prior plan.

Savings from discontinuing unprofitable passenger car models in North America will help pay for a fresher lineup of models, new electric vehicles and technology-driven ventures, Bill Ford said.

“We are adding lots and lots of new models, to the point where we are going to have in 18 months to two years one of the freshest showrooms in the industry,” Ford said.

Ford, like rivals, is investing in building more electric vehicles and automated driving systems. It is also investing in a network that can be used as the platform for transportation services.

The company last month indicated it is spending about $160 million a quarter on mobility services efforts and autonomous vehicles.

Responding to criticism from environmental groups over a shift in the company’s lineup to sport utility vehicles, Bill Ford said the new models will be more efficient than those they replace.

“Already some of the SUVs are more efficient than their counterparts on the car side,” he said.


Some analysts earlier this year expressed frustration with Hackett for not sharing more details of his restructuring plans.

Hackett had a learning curve in a new industry where decisions involve factors including regulation, currency risks, trade concerns and complex supply chains, Ford said.

“I’m really pleased how quickly that learning curve has flattened out,” he said.

Shareholders will have an opportunity to ask questions via teleconference when Ford leads an annual meeting on Thursday, a year after he introduced former Steelcase Inc SCS.N CEO Hackett to lead the company, replacing Mark Fields.

Ford shares have not recovered from a hit in January after Hackett and other executives forecast 2018 results that disappointed analysts and investors, and are down 10 percent year to date.

And despite overall profitability, Ford's market capitalization of $44 billion trails unprofitable Silicon Valley electric car maker Tesla Inc TSLA.O, which has a market capitalization of $51.3 billion, a reflection of investor doubts that Ford can re-ignite growth.

Ford shares fell nearly 2 percent on Wednesday after the company said production of its highly profitable Super Duty and F-150 pickup trucks would be temporarily shut down because of a fire at a key parts maker’s plant.

Reporting By Joe White, Editing by Meredith Mazzilli