Ford Adding 200,000 to Capacity as Fusion, F-Series Gain
Ford Motor Co. (F), gaining more U.S. market share than any other automaker this year, will add capacity to build 200,000 more vehicles annually in North America on demand for F-Series pickups and Fusion sedans.
Most of its North American assembly plants also will be idled for one week this summer instead of two, increasing production by about 40,000 cars and trucks, the Dearborn, Michigan-based company said in a statement today.
“The sales and marketing guys are obviously very confident, because they’ve asked for additional capacity, and we’re providing it,” Jim Tetreault, vice president of North America manufacturing, said in a telephone interview. “All of our products are performing quite strongly right now.”
The second-largest U.S. automaker is expanding again after adding 400,000 units of North American capacity last year. This means Ford will have added about 600,000 units of capacity over two years, or about 20 percent, to bring its total capacity to approximately 3.4 million. That’s a reversal from 2009, when Chief Executive Officer Alan Mulally slashed output to a 27-year low of 1.86 million amid the U.S. market’s downturn, helping Ford return to profit by better matching production to demand.
Now the company is outpacing competitors as the industry rebounds. Ford has gained 0.8 percentage point of U.S. market share through April, according to Autodata Corp. Larger rival General Motors Co. (GM) was second with a 0.5-point increase.
Ford is growing along with the other traditional U.S. automakers as they offer their most competitive lineups in a generation. Ford, GM and Fiat SpA-controlled Chrysler Group LLC reported better-than-projected U.S. sales increases for April, building on their first sweep of first-quarter market-share gains in two decades. GM’s stock last week rose to its highest level in two years, again topping the $33 a share price of its initial public offering, and Ford topped $15 a share for the first time in almost two years.
Chrysler said today that three of its assembly plants and all except one of its engine, transmission and stamping factories will skip summer shutdown this year. The assembly plants in Michigan and Ohio build Dodge Durango and Jeep Grand Cherokee and Wrangler sport-utility vehicles, as well as the SRT Viper sports car, according to the Auburn Hills, Michigan-based company’s website.
Since its 2009 bankruptcy, GM hasn’t had a formal summer shutdown, Mark Reuss, president of the company’s North American operations, told reporters this week at the company’s headquarters in Detroit. GM is bringing out about 20 new vehicles this year in the U.S., including a redesigned Chevrolet Silverado pickup and Impala sedan.
Automakers may build 15.9 million vehicles in North America this year, up from 8.5 million in 2009, according to researcher LMC Automotive. The industry contributed 14 percent of the 2.1 percent average rate of growth for gross domestic product in the recovery that began in the third quarter of 2009 through last year, according to Commerce Department data.
Ford’s sales of cars and light trucks rose 16 percent in the year’s first four months to 808,800, boosting its market share to 16.3 percent, according to Woodcliff Lake, New Jersey-based Autodata.
Ford plans to add almost 3,500 hourly workers in the U.S. this year, and all of those will be new hires at an entry-level wage, Tetreault said. The United Auto Workers union has agreed to a two-tier wage structure through 2015, extending an arrangement that started in 2007.
The UAW’s 2011 contract with Ford called for new workers to start at $15.78 an hour, compared to about $28 for senior employees, with the entry wage rising to $19.28 by 2015.
“Our cost of labor compared to where we were in 2007 has come down substantially,” Tetreault said. “That was very important to our strategy going forward as we restructured the company. It makes us more competitive.”
Ford said on May 2 that it will hire a third crew at its Claycomo, Missouri, plant to boost F-150 output starting in the third quarter, after F-Series U.S. sales rose 19 percent through April. Ford is adding more than 2,000 workers at the factory for the expanded production of its most profitable model line and to begin building the Transit commercial van in mid-2014.
F-Series pickups have led sales of U.S. full-size trucks the last 36 years and have been the country’s best-selling vehicle of any type for more than three decades. Ford plans to make more pickups to keep up with demand after 21 straight months of sales increases. Deliveries for the truck line are up 19 percent through April.
Ford also is adding a second shift of 1,200 workers to its Mustang assembly plant in Flat Rock, Michigan, to start building Fusions there in the third quarter.
“The Fusion is a perfect example” of the viability of American manufacturing, Tetreault said. “We’re building a car that we build in Mexico in Michigan, and it will be competitive.”
The rest of the 200,000-unit annual increase in capacity will come from the Chicago assembly plant that makes Explorer sport-utility vehicles.
The Fusion, heralded for its luxury-like looks, is Ford’s best shot at the sedan sales crown since the 1990s heyday of its Taurus, the last U.S. model in the segment to top Toyota Motor Corp. (7203)’s Camry and Honda Motor Co.’s Accord.
The Ford Fusion sedan posted record April sales after reporting its highest number for any month in March. The Fusion’s 25 percent gain through April compares with a decline of 6.8 percent for Toyota City, Japan-based Toyota’s Camry and an increase of 26 percent for Tokyo-based Honda’s Accord.
To help Ford maintain its sales pace, 21 factories, including six assembly plants, will take a one-week summer shutdown this year, the company said today. Automakers typically take two weeks of mid-year downtime to prepare to build vehicles for the next model year.
Ford’s North American operations earned $2.4 billion in the year’s first three months, the division’s best quarter ever, after setting annual records of $8.34 billion with a 10.4 percent profit margin last year.
Ford rose 0.1 percent to $14.97 at the close in New York. The shares have soared 47 percent in the last 12 months, while the Standard & Poor’s 500 Index climbed 26 percent.
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