Ford Motor Co., which has three auto factories in Russia, is monitoring the sanctions against that nation for its involvement in Ukraine and hasn’t yet seen an impact on its business, the automaker’s No. 2 executive said.
“Some new sanctions were announced yesterday and we’re trying to understand what those are,” Mark Fields, Ford’s chief operating officer, told reporters in a briefing at the automaker’s Dearborn, Michigan, headquarters. “At this point, we don’t believe it’s going to hurt our business. The issue we’ve been looking at is the overall health of the economy in Russia right now with the ruble weakening.”
President Barack Obama yesterday expanded financial sanctions on Russian officials and billionaires close to President Vladimir Putin. Ford still expects Russia to grow and become Europe’s largest auto market, though that could be slowed by its weakening economy, Fields said. Ford has increased its model offerings in Russia from two products in 2011 to seven now, with an eighth coming soon, Fields said.
Ford’s sales in Russia this year through February fell 21 percent to 10,556 vehicles, according to the automaker.
“Sanctions by their nature are expected to be short term, but if they become longer term that is something vehicle manufacturers need to look at,” said Michael Robinet, a consultant with IHS Automotive in Northville, Michigan. “Russia is an important place to be. Every emerging market comes with its own idiosyncrasies and instability factors.”
Ford makes Focus compact cars and Mondeo mid-size sedans at a plant in Russia’s Leningrad region. In October, it announced plans to build the EcoSport and Edge sport-utility vehicles with its Russian partner OAO Sollers. The 50-50 joint venture formed in 2011 took over the U.S. automaker’s car plant in Vsevolozhsk and builds the Explorer and Kuga SUVs in the Russian republic of Tatarstan. The Edge will be built this year at another plant in Naberezhnye Chelny, also in Tatarstan, the companies have said.
Ford is monitoring the tensions caused by Russia annexing the Black Sea peninsula of Crimea from Ukraine this week. Obama announced additional sanctions yesterday on individuals and one bank in Russia as East-West relations experience their biggest crisis since the Cold War.
“We just hope the situation today calms down and it ends peacefully and that we can continue to grow our business,” Fields said of the tensions in Ukraine. Ford will “continue to look at the business environment and as we see either the environment change in a positive or negative way, we’ll take the appropriate actions in terms of keeping the business on track.”
Ford slipped 0.5 percent to $15.47 at the close in New York. The shares have added 17 percent in the past 12 months.
Fields, 53, was tapped to become Ford’s No. 2 executive in December 2012 after leading the automaker’s North American operations from deep losses to record profits. The promotion put Fields in the lead position to replace Chief Executive Officer Alan Mulally, 68, who has said he will remain at Ford through the end of this year.
Mulally is credited with cultivating a more collaborative culture at Ford, which had long been characterized by backbiting. Fields, a 24-year veteran of the company, was among the first executives to switch to the more cooperative style Mulally introduced when he arrived from Boeing Co. in 2006.
Under Mulally and Fields, Ford managed to avoid the bailouts and bankruptcies that befell the predecessors of General Motors Co. and Chrysler Group LLC. Ford has earned $42.3 billion in the last five years after losing $30.1 billion from 2006 through 2008. Last year, surging sales of Escape SUVs, F-Series pickups and Fusion sedans helped drive Ford’s pretax earnings in North America to a record $8.78 billion.