A Sustainable Future: Ford’s Business Plan in a Nutshell

Following a release about Ford CEO Alan Mulally’s plan to road trip to congress and his willingness to accept a $1 salary, Ford has released its business plan to the public on a website called The Ford Story. In the plan Ford requests a $9 billion loan as a “backstop” which it will only take advantage of if the market sinks rather than picking up in the coming years. The plan documents Ford’s strategy to break even (or become profitable) both in North America and overall by 2011. Ford will present its plan tomorrow December 3, 2008. Here are the highlights:

Ford expects to ramp up sales in the coming years from the expectation of 12.5 million units in 2009 to a claim of 15.5 million units in 2011. Meanwhile, the automaker is still exploring the possible sale of Volvo.

The plan calls for an investment of $14 billion over the next seven years on fuel efficient technologies. By 2010 Ford wants half its light-duty nameplates to qualify for “Advanced Technology Vehicle” status under the U.S. Energy Independence and Security Act. This status would grant Ford a loan of $5 billion that, according to the Department of Energy, “protects the taxpayers and provides specific loan parameters for automobile manufactures to develop advanced vehicle technologies.” It then wants to increase that number to 75 percent of vehicles in 2011 and further to 90 percent by 2014.

Ford also plans to improve fuel economy in its cars and light trucks by 14 percent in 2009 models and progressively boost that figure to 36 percent by 2015. And Ford’s green plans don’t stop there. Ford’s accelerated vehicle electrification plan includes a strategy to launch a van-type full battery electric vehicle (BEV) for commercial fleets in 2010 as well as a BEV sedan in 2011.
More UAW-Ford negotiations are planned to take place to further reduce labor costs and two more plant closures are scheduled for this quarter with four more to happen sometime between 2009 and 2011.

The downsizing doesn’t stop there; dealers are also on the chopping block in Ford’s quest for efficiency. Ford plans to have 3,790 U.S. dealers by year end, a reduction of 14 percent from the end of 2005. Ford also plans on significantly reducing its major sourcing suppliers.

Finally, Ford announced that it will sell off its five corporate airplanes to further fund its efforts. It will also not give out any bonuses or merit raises through 2009.

Ford is making some big claims to transform its numbers in the next couple years, but will the recovery plan impress congress? We will all find out shortly.

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