Ford Considers Billion Dollar Investment in Michigan

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Ford considers $1 billion investment in Michigan
Fields: $3 gas forced the revision of Way Forward plan


Richard Truett | |

Automotive News | 8:48 am, August 9, 2006




TRAVERSE CITY, Mich. -- Ford Motor Co. is working with the state of Michigan on investments approaching $1 billion for plants in the state.

Mark Fields, Ford's president of the Americas, made the announcement today with Michigan Gov. Jennifer Granholm at the annual Management Briefing Seminars in Traverse City, Mich.

“We are rebuilding our business for the future with an emphasis on more new products faster -- and that includes more customer features and advanced technologies throughout our entire lineup," Fields said in a statement released today.

"Even as we reduce our overall capacity in line with demand and make the tough but necessary cutbacks throughout our business to secure our future, we are not retreating one bit from the necessary investments to bring out more products for our customers. The competitive landscape and our future demand it."

Ford said its potential $1 billion investment would be dedicated to expanding flexible manufacturing at several Ford facilities in Michigan and be used for the research and development of future products, advanced powertrain technologies and hybrid vehicles. The investment is being considered in partnership with a state of Michigan incentive package designed to retain jobs.

Fields said the new investments are not yet finalized.

"There is no vision for Michigan's new economy that does not include Ford cars and trucks designed, engineered and made in Michigan," Granholm said in the Ford press release. Granholm is running for re-election this year.

$3 gasoline prompts changes

Fields also said Ford is revising its Way Forward restructuring plan in part because of $3 per gallon gasoline.

At a dinner with reporters Tuesday Night, Fields said high fuel prices are driving consumers away from some of the company’s most profitable vehicles, such as the F-series pickup and Explorer SUV.

Fields said Ford started to feel the impact of high fuel prices in April. He said high gasoline prices are changing buying patterns, forcing tradesmen, such as plumbers, to put off buying new trucks and causing personal use buyers to switch to more efficient vehicles, such as crossovers.

“We underestimated the swiftness of segment changes. The segment shifts were swifter and more permanent than we anticipated,” Field said.

Last year, he said, pickups accounted for about 14.5 percent of the new vehicle market. That figure had dropped to 12.7 percent in the second quarter of this year.

The shift away from trucks and SUVs contributed to Ford’s bigger than expected second quarter loss of $254 million.

Fields said Ford’s goal still is on track to return to profit by 2008, even though the company’s heavily truck-based lineup is focused on “where profit was and not where it is.”

But Fields said Ford is working harder to respond quicker to changing market conditions.

Small car in the works

Fields said Ford does plan on offering a car smaller than the subcompact Focus, but he wouldn’t say when, nor would he offer any product details.

“We are not just going to offer an econobox just to check that box and say we are in that segment,” said Fields. He said the company is evaluating a number of potential small cars for the U.S. market.


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