Ford Is Ready to Forfeit 90K F-150 Pickups for Factory Retooling Effort
Ford (NYSE:F) is betting a huge amount on its new F-150 pickup — like more than it usually would with any given new model. The decision to convert to an aluminum alloy-clad vehicle was made knowing that the production lines and repair facilities would have to be subjected to some really intense re-tooling that will cost a lot — but how much exactly, no one is really sure yet.
However, we got a better idea of how much on Tuesday when Ford said it was prepared to sacrifice the production of 90,000 Ford F-150 units in order to retool the facilities in order to start the production of the 2015 model. Assuming the starting price of the 2014 F-150 of $25,000 (though it’s likely the 2015 will cost a little more), Ford is looking at a minimum of $2.25 billion in lost revenue. That doesn’t include the revenue from higher-end models, and represents the loss of production associated with shutting the plants down in order to overhaul them with the new aluminum worthy setup.
To minimize disruption to supply, Ford is building up inventory of the F-Series currently and still expects the truck to be the best selling vehicle line in the U.S. this year, according to comments cited by Bloomberg and made by Ford’s president of the Americas Joe Hinrichs said. That’s a title that Ford has held onto for 32 years.
“It’s a one-time hit that we have to deal with on the production side to convert [the factories],” he said at the company’s product development center at its Dearborn, Michigan headquarters. “Remember, we get paid on wholesales and revenue — 90,000 F-150s — I won’t tell you what that really means, but it’s a lot.”
Considering the sales status of the current F-150 (it consistently sells far and away more units than the second place vehicle each month), the decision is a monumental one that indicates that Ford is confident that it’s bet on aluminum will pay off handsomely in the long run.
Naturally, margins and profits may suffer some in the short term as a result — Ford wasn’t about throwing estimates around though — but Ford, more than everyone else, know what’s at stake.
“There isn’t a vehicle that is more important to Ford than the F-Series,” Michelle Krebs, an analyst with researcher AutoTrader.com, told Bloomberg. “They’re taking an enormous risk with the next-generation truck because aluminum is untested at this scale and they don’t know how it will be received by customers.”
That swap should save about 700 pounds, and thus improve handling, fuel economy, and performance. While there have been a fair share of critics who question aluminum’s ability to stand up to the rigorous demands that pickups endure, Ford stealthily tested its new body in some of the most rugged environments it could find.
In addition to being the most popular truck in America, the F-150 is also one of the “most American,” having been made of largely American-made parts by American labor. Check out some of what else made the cut:
1. 2014 Toyota Tundra (tie)
Another entry for Toyota, this time tied for top spot on the list. The Tundra, Toyota’s larger pickup model, achieves a Kogod Index Score of 78.5, far outclassing Ram, Chevy, and GMC models. The Tundra is not only assembled in the United States, but also has its transmission and engine built here as well. As for the percentage of North American content, the Tundra sees 75 percent of its materials sourced from America. Very impressive for a Japanese-born pickup, as it’s obvious Toyota’s efforts to appeal to American buyers is paying off with its models remaining popular choices for truck fans.
1. 2014 Honda Ridgeline (tie)
Perhaps the most surprising of all the entries on the list, the Honda (NYSE:HMC) Ridgeline ties the Tundra and one other for top spot. The Ridgeline, while not nearly as popular with consumers as Toyota or Nissan’s trucks, is nearing a decade in production. Achieving identical scores to the Tundra, including an American-built transmission and engine, the Ridgeline’s impressive 78.5 score on the Kogod Index has propelled it to the top. Although the Ridgeline is definitely different from what traditionalist would consider a true American pickup, when it comes to the numbers, the Ridgeline can’t be beat.
1. 2014 Ford F-150 (tie)
Coming in at what is perhaps no surprise, the Ford F-150 assumes the throne as the most American pickup of 2014, alongside the Ridgeline and Tundra. Perhaps putting the F-150 slightly ahead is a high Kogod Index score of 87.5, beating all other pickups handily. The truck’s transmission, engine, and final assembly are all American sourced, and 75 percent of the truck’s parts and materials are from the United States as well. As America’s best selling vehicle for many years, the F-150 is a true American truck for shoppers looking to spend their money stateside.