Hinrichs: “We don’t expect restructuring costs tied to any specific initiatives.”
When Ford Motor Co. went through its Way Forward restructuring a decade ago, it closed 14 plants and slashed tens of thousands of blue-collar jobs.
But Joe Hinrichs, Ford’s president of global operations, said Tuesday the company’s latest effort to become more financially efficient won’t involve any such actions.
“We don’t expect restructuring costs tied to any specific initiatives,” Hinrichs said at a Goldman Sachs conference in Boston. “We don’t have that kind of footprint redo that has to be done.”
CEO Jim Hackett has called for Ford to shed $ 14 billion in costs over the next five years. That includes $ 10 billion in incremental material cost reductions and $ 4 billion in engineering savings.
Hinrichs said the material cost cuts will involve “aggressive plans” to save money with suppliers on production of current vehicles, as well as reductions on new models that will come early next decade.
The automaker also plans to save money by reducing complexity. That includes a tenfold reduction in orderable combinations of the next-generation Escape crossover.
The $ 4 billion savings on the engineering side will focus on reducing product development time, Hinrichs said.
“None of those require restructuring charges,” he said. “They do require redesigning how we do our business together.”
Hinrichs likened Ford’s goal to be more financially fit to losing weight, saying that your first steps would be to examine your diet and then start working out. Ford is doing the same thing in looking at how its vehicles are made.
“We can’t afford the cost structure we have today if we want to get to the margins we want to get to,” he said.
Ford is targeting global profit margins of 8 percent.
Without offering specifics, Hinrichs said that growth could mean a drop in revenue.
“Expectations are going to be lower on the revenue front,” he said. “It’s all about margins, clearly.”
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