Category
- Agriculture
- Automobiles and Machinery
- Bank, non banking financing, investment
- Blasting
- Construction
- Consumables
- Education
- Energy
- Engineer , Architecture and Geodesy
- Finance, Audit,Accounting and Brokerage
- Food
- Foreign Trade
- Geology Exploration
- Health
- Information Technology
- Insurance
- Labor Safety
- Legal and Business consulting
- Lighting
- Mining equipment
- Mining Services
- Other product and service
- Road
- Sewing and textile products
- Transportations
- Travel
Events
Ford to move all small-car production to Mexico as profits set to fall www.theguardian.com
Ford has warned shareholders that it is pouring cash into “emerging opportunities” and expects a steep decline in its financial performance in 2017.
The second-largest US automaker dropped its expected pre-tax profits forecast from $10.8bn to $10.2bn as it announced plans to expand its self-driving and electric lines in the face of intense competition from Silicon Valley as well as traditional car firms.
Chief executive Mark Fields also said that the company was moving all of its small-car production to lower-cost Mexico, drawing another rebuke from Republican presidential candidate Donald Trump who called the decision “horrible”.
“We will have migrated all of our small-car production to Mexico and out of the United States,” over the next two to three years, Fields told Wall Street analysts at annual investor day presentation.
Fields reiterated plans to explore ride-sharing options for its automated vehicles, framing the change as an expansion into a new market. “As we expand to be an auto and a mobility company, we’re not moving from an ‘old’ business to a ‘new’ business,” Fields said. “The world is moving from simply owning vehicles to owning and sharing them. That’s why we are expanding to sell more vehicles and provide transportation services at the same time.”
The lowered guidance from Ford was also driven by old school problems as well as future plans. The company lowered its 2016 pre-tax profit forecast to $10.2bn from a minimum of $10.8bn because of an expanded a vehicle recall. Multiple models across multiple years were found to have door latches that could malfunction and cause the doors to fly open while driving, causing a $640m impairment charge.
The recall comes at a bad moment as Ford attempts to move forward with the development of nascent technology that will take years to return investment, notably self-driving cars. The company has highly ambitious plans to enter the emerging sector as early as possible with a “high volume” of cars available.
Ford is also pushing an unusually large number of electric vehicles and will invest some $4.5bn in 13 new models that will comprise 40% of its lineup by 2020.
Driverless cars are gaining acceptance in parts of the US. Uber began a pilot study for automated cabs in Pittsburgh this week, although they have a human co-pilot for now. And California’s legislators are pushing for a relaxation in the rules governing robot cars on their roads.
Ford expects its first fully automated models to be road-ready by 2021, regulators permitting. Though the focus at the moment is on consumer vehicles, the possibility of automated commercial highway travel is also enticing. Rival manufacturers including Daimler and General Motors are also working on plans to build driverless trucks that would allow trucking companies to send shipments across the country.
Ford and its peers are also facing a growing challenge from technology companies including Apple and Google which are testing their own models, while high-end electric vehicle maker Tesla already produces vehicles that enable partial automation with its “autopilot” function, which was involved in a fatal accident this summer.
Caught between a rock and a hard place, Ford said it “plans to achieve cost efficiencies averaging $3bn annually between 2016 and 2018 and is adding new processes like zero-based budgeting to further its business transformation”.
“Zero-based budgeting” requires that every single budget item be individually approved, which bodes ill for new staplers at the Ford offices.
Beyond the simple cost of the research and development, though, there are serious regulatory hurdles to interstate travel in self-driving vehicles, as the US Congress has pushed back on automakers who believe their own standards are high enough: “If I asked somebody, ‘Do you think that that red light means stop?’ and they came back to me and said: ‘We have great respect for stoplights,’ I would say, ‘The answer is ‘yes’,” Senator Michael Blumenthal of Connecticut told General Motors’ Michael Ableson at a hearing in March.
“The credibility of this technology is exceedingly fragile if people can’t trust standards,” Blumenthal said. “Not necessarily for you, but for all the other actors that may come into this space at this point.”
Published Date:2016-09-15
