It’s not uncommon for auto manufacturers to idle their facilities throughout the year, giving their workers some needed time off and checking up on the equipment and tools to ensure everything is operating as it should. When Ford (NYSE:F) idles its Dearborn Truck Plant in Michigan and its plant near Kansas City, Missouri, though, it will be using the cumulative 13 weeks to retool the facilities to prepare for the production of its 2015 F-150 pickup.
Dearborn will be idled for 11 weeks, while the Missouri plant will be down for two weeks. With 16 model launches coming this year in North America alone, it’s crucial that Ford’s rollout of the new truck — and its aluminum structure — goes as smoothly as possible, also considering that the F-150 is a profit margin machine for Ford. The model accounted for 31 percent of Ford’s U.S. light-vehicle sales in 2013; Morgan Stanley says that the truck is responsible for 90 percent of Ford’s global profits.
“We see ’14 profit pressure from extended truck production downtime for the transition to the new aluminum F-150 pickup truck and increased sales of smaller vehicles that have narrower margins,” Efraim Levy, an analyst with S&P Capital IQ, said in a note to investors, per Automotive News.
Levy’s concerns were echoed by Ford, which has warned that profits may decline in 2014 as the company gears up its crown jewel for one of the most extensive overhauls in its history. The expected declines are “largely attributable to F-Series,” Ford CFO Bob Shanks said during Ford’s conference call on Tuesday, according to Automotive News.
The anticipated decline, however, comes on the heels of a record $8.8 billion profit for 2013, as Ford has come off one of the most tremendous years in its history.
As far as inventory for the F- Series goes, Shanks and Chief Operating Officer Mark Fields are confident that the company will have sufficient supply to meet the demand. Inventory has been a bit of a rough patch for Ford when it came to new product launches.
Automotive News, quoting an analyst from Barclays, noted that there is a usual degree of uncertainty that accompanies a product launch. However, with the new F-150′s extensive use of aluminum — thus requiring new equipment, different supply channels, and new processes altogether — that level of uncertainty is higher than normal.
The production version of the new F-150 has been well-received, it appears, and with its enormous weight savings and the likelihood of reduced repair times and costs, it should have little trouble catching on, especially among loyal Ford buyers.