|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
Ford Is Doing Good Things Lately
Posted by: Muhammad Bazil (IP Logged)
Date: February 24, 2013 09:49PM
Ford Motor Company (F) is doing very interesting things lately. Chief among them is the new technology which they have purchased from Trexel. These technology rights allow Ford to create plastics which are aerated. The small gaseous voids create lighter-yet no less strong-material. The voids also mean less materials being used. This lighter material results in lower production costs, and higher fuel efficiency. There's nothing to dislike about that. Ford says that the new aerated plastics will be used mainly on unseen parts. Inner door panels and other hidden infrastructure will be cast using this process. There's no chance of a front bumper looking like Swiss cheese. Trexel is an independent privately owned company and does not appear on any stock markets
Ford Motor Company is doing something it hasn't done in six years, paying a $.10 dividend. This time it's not posting $17 billion in losses and calling for suspension. In fact, the final quarter of 2012 is expected to post a 28 percent increase in earnings. What's even nicer for stockholders, or prospective stockholders, is that at the end of 2011 their dividend was only a nickel. Doubling that in a year’s time is certainly a confidence builder to say the least. This good news is driven largely by the continued success of their F-Series trucks. Debate over the announcement that it expects a 10% margin as opposed to the closer to 11% that analysts were expecting, has dampened the fever a little bit. But nobody expects them to take a loss as they had in previous years.
Other news out of Dearborn, Michigan includes the announcement of a new senior leadership change. While their chief operating officer, Mark Fields, will remain in place, Ray Day has been appointed group vice president. He'll be responsible for communications and public relations activities. This will include their global reputation. Of course they always keep a namesake at the helm, and Lena Ford has been elected as a vice president and leader for the new Global Dealer and Consumer Experience organization. This aptly named wing will address dealer strategies in a global holistic approach. All of this points to the commitment to their new "One Ford" plan.
The One Ford plan seems to take aim at the whole planet. There will not be any foreign market-specific models. Ford will be making one line of automobiles for sale to the entire global market. This is not exactly new to Ford, it was imagined more than a year ago, but it is certainly new to the industry.
Ford is not immune to any of the European woes. Both GM (GM) and Ford have taken major losses on the smaller continent. While their Japanese competitors seem to be doing fine both there and in Asia, it's the pickup truck from both GM and Ford which are not hauling their own weight. General Motors is down 1.8 billion last year in Europe; Ford is down $2 billion. That is something to consider for sure. Although in North America Ford and its pickup trucks were well ahead of GM.
One Company which Ford has always held in its rearview mirror may now be taking on its blind spot. Volkswagen has been rethinking the idea of platforms. Ford has been able to minimize their platforms to only a few under its One Ford plan, and thereby make their production model more effective; Volkswagen’s new modular approach is a groundbreaking way to increase cost-effectiveness in automobile production. They are using only three different vehicle architectures. On these architectural platforms a whole line of cars can be built. What's groundbreaking is that these architectures are modular. On these three different platforms, dozens of different cars may be built. Because the platforms are modular that means that Volkswagen will be ordering more parts. The larger scale purchases mean greater savings in the long run. It is estimated by many that this would result in a 10% margin for the Germans, which is the margin that all major global automakers strive for.
So Ford's opponents are learning. General Motors has a new plan to essentially copy the One Ford program. Toyota has followed Volkswagen's strategy and made modularization of their platforms a goal. Ford has followed suit with that goal. If it wants to stay just one step ahead, especially in their popular pickup line, these things cannot be ignored. Hold this stock for sure. The price is moderately cheap, and on any given day you can catch a downturn and a deal. With all of these new strategies, personnel and production technologies in place, it's sure to give your portfolio mileage.