Ford plans savings in ‘every part’ of business

Company is bloated and needs to cut costs to compete with global rivals, says markets boss

The 2019 Ford Mustang Bullitt at the 2018 North American International Auto Show in Detroit, Michigan. Photograph: Jewel Samad/AFP/Getty Images

The 2019 Ford Mustang Bullitt at the 2018 North American International Auto Show in Detroit, Michigan. Photograph: Jewel Samad/AFP/Getty Images

 

Ford is bloated and needs to cut more costs in order to compete with its global rivals, one of the company’s most senior executives has said.

The carmaker needs to make savings in “every part” of the business, global markets president Jim Farley said.

“I’m not satisfied with where our automotive business is, we have to improve our fitness and our cash flow and profitability,” added Mr Farley, who became the second most senior executive at the carmaker last year.

Ford earmarked $14 billion (€11.5 billion) of savings to make in October, “but since then we’ve made even more progress in identifying the areas where we can be more efficient,” Mr Farley said at the Detroit Motor Show.

He said the company would target “costs in general, everything from investment levels, materials costs, logistics costs, marketing costs, every part of our business”.

“It’s one of the most important things we’ve been really working on over the last six months.”

Investments

Carmakers the world over need to make significant investments in new technology as they develop electric and self-driving cars, on top of the regular business of making and selling vehicles.

At the same time, the US market – one of the largest drivers of profitability for carmakers – has peaked.

Car sales in 2017 were 17.2 million, and the industry is expecting to sell about 16.8 million this year.

Earlier during the Detroit show, Ford significantly ramped up its investment in electric vehicles from $5 billion to $11 billion.

Before he was promoted to the company’s number two last year, Mr Farley ran Ford’s European division, where he presided over a return to profitability amid sweeping cuts. – Copyright The Financial Times Limited 2018