The future in North America, maybe. The problem remains that big trucks are not saleable globally so there is no way to hedge this gas-guzzling bet.
Ford Motor Company announced late yesterday the retirements of three long-serving global executives – Kenneth R. Kent, 64, vice president and treasurer; Joe Bakaj, 56, vice president, Product Development, Ford of Europe; and Bill Russo, 56, vice president, Manufacturing, Ford of Asia Pacific – effective at the end of the year.
A couple of the exits are noteworthy for signaling that major disruptive actions are about to occur. For example – was Kent responsible for floating the addled-brained idea that Ford Motor would cut its dividend that Ford Family members depend on? Nevertheless, the pressure remains for Ford to cut costs and start once again, yet again on a restructuring plan to increase shareholder value and boost a ~$9 per share price of common.
Ford’s Q3 results were disastrous. Once again top Ford executives claimed they had a multi-year plan to fix things, but that same pledge has been made since Ford 2000. Ford also said that because of the higher costs and uncertainty impacting the entire sector, coupled with unexpected deterioration this year in the Europe, Middle East and Africa, and China businesses, current company forecasts show that it will not reach its previously announced 8% EBIT margin or high teens ROIC targets by 2020. No wonder another job-destroying reorganization in process.
Ford admits that adjusted EPS guidance for the full-year 2018 in the range of $1.30 to $1.50 and positive cash flow that will be lower than 2017. Ford also said that because of the higher costs and uncertainty impacting the entire sector, coupled with unexpected deterioration this year in the Europe and China business, current company forecasts show that it will not reach its previously announced 8% EBIT margin or high teens ROIC targets by 2020.
In a solid North American market, Ford delivered a Q3 8.8% EBIT margin, supported by more than $1 billion of improved mix, due to the continued shift towards utilities and trucks, as well as high-end trim models. The problem remains that big trucks are not saleable globally so there is no way to hedge this gas-guzzling bet.
So back to Europe. Consider Joe Bakaj who became vice president, Product Development, Ford of Europe, in November 2013. He had more than 30 years of Ford product development experience having served as vice president, Powertrain Engineering, and vice president, Global Product Programs. in addition to his current role. Bakaj worked on Ford’s small EcoBoost engines and the Ford Transit – arguably Europe’s largest commercial vehicle brand, and America’s top selling commercial van.
Europe, of course has been destroying shareholder values for decades now, and GM’s wise decision to exit Europe did not bring about the corresponding – and predicted by AutoInformed – action at FMC. Until next year? Much speculation is occurring in Detroit circles that Volkswagen will play a large role in North America and Europe in taking over Ford plants and possibly supplying Ford with vehicles in Ford’s marginal markets. Volkswagen is the clear market leader in Europe, a major player in Asia, and under threat in the U.S. from job-destroying Trump Tariffs.
“We estimate a large portion of Ford’s restructuring actions will be focused on Ford Europe, a business we currently value at negative $7 billion,” Morgan Stanley analyst Adam Jonas wrote to investors. “But we also expect a significant restructuring effort in North America, involving significant numbers of both salaried and hourly UAW and CAW workers.”
Jonas noted that other automakers will be forced to follow GM’s and Ford’s actions as the industry transforms, first to abandon factories building slow-selling sedans and ultimately to retool to build electric and self-driving vehicles.
“We believe existential business model risk will be prioritized over near-term profits and cash return,” Jonas wrote. “We still do not believe investor expectations have fully considered the near-term earnings risk.”
Stay tuned. This coming Ford reorg will be long, large, painful and bloody. To white collar workers over the age of, oh, 50, there is little chance in remaining in the auto industry.
AutoInformed.com on:
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
Restructuring Storm Building as Ford Announces Senior Retirements in Treasury, Product Development, Manufacturing
The future in North America, maybe. The problem remains that big trucks are not saleable globally so there is no way to hedge this gas-guzzling bet.
Ford Motor Company announced late yesterday the retirements of three long-serving global executives – Kenneth R. Kent, 64, vice president and treasurer; Joe Bakaj, 56, vice president, Product Development, Ford of Europe; and Bill Russo, 56, vice president, Manufacturing, Ford of Asia Pacific – effective at the end of the year.
A couple of the exits are noteworthy for signaling that major disruptive actions are about to occur. For example – was Kent responsible for floating the addled-brained idea that Ford Motor would cut its dividend that Ford Family members depend on? Nevertheless, the pressure remains for Ford to cut costs and start once again, yet again on a restructuring plan to increase shareholder value and boost a ~$9 per share price of common.
Ford’s Q3 results were disastrous. Once again top Ford executives claimed they had a multi-year plan to fix things, but that same pledge has been made since Ford 2000. Ford also said that because of the higher costs and uncertainty impacting the entire sector, coupled with unexpected deterioration this year in the Europe, Middle East and Africa, and China businesses, current company forecasts show that it will not reach its previously announced 8% EBIT margin or high teens ROIC targets by 2020. No wonder another job-destroying reorganization in process.
Ford admits that adjusted EPS guidance for the full-year 2018 in the range of $1.30 to $1.50 and positive cash flow that will be lower than 2017. Ford also said that because of the higher costs and uncertainty impacting the entire sector, coupled with unexpected deterioration this year in the Europe and China business, current company forecasts show that it will not reach its previously announced 8% EBIT margin or high teens ROIC targets by 2020.
In a solid North American market, Ford delivered a Q3 8.8% EBIT margin, supported by more than $1 billion of improved mix, due to the continued shift towards utilities and trucks, as well as high-end trim models. The problem remains that big trucks are not saleable globally so there is no way to hedge this gas-guzzling bet.
So back to Europe. Consider Joe Bakaj who became vice president, Product Development, Ford of Europe, in November 2013. He had more than 30 years of Ford product development experience having served as vice president, Powertrain Engineering, and vice president, Global Product Programs. in addition to his current role. Bakaj worked on Ford’s small EcoBoost engines and the Ford Transit – arguably Europe’s largest commercial vehicle brand, and America’s top selling commercial van.
Europe, of course has been destroying shareholder values for decades now, and GM’s wise decision to exit Europe did not bring about the corresponding – and predicted by AutoInformed – action at FMC. Until next year? Much speculation is occurring in Detroit circles that Volkswagen will play a large role in North America and Europe in taking over Ford plants and possibly supplying Ford with vehicles in Ford’s marginal markets. Volkswagen is the clear market leader in Europe, a major player in Asia, and under threat in the U.S. from job-destroying Trump Tariffs.
“We estimate a large portion of Ford’s restructuring actions will be focused on Ford Europe, a business we currently value at negative $7 billion,” Morgan Stanley analyst Adam Jonas wrote to investors. “But we also expect a significant restructuring effort in North America, involving significant numbers of both salaried and hourly UAW and CAW workers.”
Jonas noted that other automakers will be forced to follow GM’s and Ford’s actions as the industry transforms, first to abandon factories building slow-selling sedans and ultimately to retool to build electric and self-driving vehicles.
“We believe existential business model risk will be prioritized over near-term profits and cash return,” Jonas wrote. “We still do not believe investor expectations have fully considered the near-term earnings risk.”
Stay tuned. This coming Ford reorg will be long, large, painful and bloody. To white collar workers over the age of, oh, 50, there is little chance in remaining in the auto industry.
AutoInformed.com on:
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.