Ford Shifts Production Focus To Smaller Cars After posting an $8.7 billion loss for the second quarter on Thursday, Ford announces plans to switch manufacturing operations at three North American plants from trucks to small cars. The auto industry has seen a dramatic decline in truck and SUV sales in recent months as consumers react to high gas prices.
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Ford Shifts Production Focus To Smaller Cars

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Ford Shifts Production Focus To Smaller Cars

Ford Shifts Production Focus To Smaller Cars

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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, host:

And I'm Melissa Block. There's been no shortage of alarming news coming out of the U.S. auto industry these days. Today, another sign of decline: Ford posted an $8.7 billion loss for the second quarter. Now, that huge number can be misleading. Most of that $8.7 billion came from one-time charges, but the loss on everyday operations was still more than $1 billion.

SIEGEL: Ford's main problems are the rising cost of gas and falling demand for trucks and SUVs, and so like other automakers, the company now says it'll focus on making smaller, more fuel-efficient cars. From Michigan Radio, Dustin Dwyer reports.

DUSTIN DWYER: In the U.S., Ford is largely a truck company. Its F-series pickup has been the best-selling vehicle in the nation for three decades, but in Europe, Ford has a lineup of small cars that would surprise most Americans. It's a lineup that's ideally suited for where the U.S. market seems to be headed.

This morning, Ford CEO Alan Mulally said six of those small European Ford models will be sold in the U.S. starting in 2010.

Mr. ALAN MULALLY (Ford Motor Company): With the environment changing and the fuel prices moving up and the customer demand switching to the smaller vehicles, this is a strategic decision that we're making that we want to serve all those customers in the United States with a full product line.

DWYER: And to get that full product line, Ford plans major changes to its manufacturing operations in the U.S. Those changes will take place here where I'm standing at the Michigan truck plant in Wayne, Michigan, just outside of Dearborn. The plant has been building trucks since 1964, but as you look out over the parking lot here right now, it's basically empty. Ford stopped production here a month ago because this plant builds big SUVs and people aren't buying big SUVs right now. So the plan is to take this plant and switch it over and make small cars here instead. Ford also plans to do that at two other truck plants in North America. But there is one factor that could complicate Ford's plan.

Mr. DAVID COLE (Center for Automotive Research): We really don't know what the price of fuel could be in a year.

DWYER: This is David Cole of the Center for Automotive Research.

Mr. COLE: It could be $5 a gallon, it could be $2 a gallon, and so one of the business imperatives for companies like Ford or the other auto manufacturers is to do everything possible to become more flexible and agile.

DWYER: But flexible is a relative term in the auto industry. Developing a new vehicle from the bottom up can take three years. Cole says reconfiguring plants is also a lengthy and complicated process. Even if Ford moves quickly, it will take more than a year to convert its truck plants so they can make cars.

Mr. COLE: And in part it's not governed by how fast you can get people in the plant and move stuff around. You've got to depend on tooling. you've got to depend on manufacturing equipment that might have to be ordered, and you may have to wait in line with other people that are trying to order the same kind of thing. It's a huge challenge.

DWYER: In addition to reconfiguring truck plants, Ford plans to boost production at plants that are already making popular vehicles. For example, the company will double the number of hybrids it builds next year. But all of those changes mean Ford will be in restructuring mode for some time to come. Ford CEO Alan Mulally had once hoped to return the company to profitability by 2009. Now, he says, that will have to wait until at least 2010. For NPR News, I'm Dustin Dwyer in Ann Arbor, Michigan.

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