Ford Motor’s (F, Financial) aluminum facelift to its top selling model, the F-150, was viewed with skepticism by many. Ford took a huge risk in switching to aluminum and shifting to an unproven design, particularly after attaining a strong position in the U.S. market. The F-Series has been America’s favorite for decades and the highest selling vehicle in the country for 33 straight years. So a move of converting to aluminum was quite a bold step.
Would customers be as excited to buy the new aluminum bodies F-150, was one big question analysts asked. After getting a positive response, Ford’s been faced with the challenge of supply shortage as the two facilities making the F-150 were being retooled. Let’s take a look at Ford’s attempt in making a revolutionized offering to its customers and the challenges it faced in doing so.
A quick glance
The new F-150 continues to be the country’s preferred choice with sky high demand for the latest version. The usage of aluminum has made the truck around 700 pound lighter from the last steel version. The revamped truck offers 26 miles per gallon. It received a five-star rating from the National Highway Traffic Safety Administration (NHTSA). The new pickup continues to sport rugged looks and provides massive durability that millions admire in Ford’s pickups.
The vehicle is selling like hot cakes, with the Blue Oval delivering 240,139 trucks in the first four months of 2015. However, that number would have been much higher, had Ford been able to manufacture the pickup at the desired capacity. But production challenges crippled Ford’s F-Series supply as the automaker was involved in retooling the two facilities.
Production challenge has been impacting sales
Manufacturing challenges kept the company away from making the most of the initial demand for the latest version. In March, the F-150 sales were reported to be down. And this is not because of slowness in demand, but it is because of the automaker’s incapability to keep in pace with the massive demand. Even during the winter when car sales are typically low, there was no dearth of F-Series buyers. But Ford didn’t have the means to augment production as its facilities were being retooled. The Detroit player’s Kansas City facility’s upgrade was worth $1 billion which is critical for the aluminum trucks production.
The F-150 production met with another impediment in the past couple of months due to shortage of frames. Recently Todd Hillyard, the UAW Local 249’s bargaining chairman at Ford’s commented “Demand for our F-150 is sky high. Frames continue to hold both truck plants back from running overtime days on the weekend.” Evidently Ford had no other option but to bar overtime shifts during weekends though demand for the F-150 kept rising.
Ford said the F-150 production was 40% lower in the first quarter of 2015 compared with a year ago level. Ford’s Chief Financial Officer Bob Shanks estimates that this clubbed with the sluggish ramp-up time required for the latest Ford Edge crossover has dragged down the company’s profits by as much as $1 billion. Automotive News reports that in April production at the Dearborn plant and the Kansas City plant was 9.2% and 28% lower, respectively over last year.
Finally some good news
In May, Ford said that a 77 day supply of F-Series trucks had been created to serve the mounting demand. What’s even better is that the company’s done with retooling both its facilities and is now prepared to manufacture the 2015 F-150 at augmented rates, said Bob Shanks. The company expects dealers to be sufficiently stocked by end of this month.
Shanks confirmed that the Dearborn and Kansas City plant making the F-150 are ready to process the vehicle in greater volume. The Dearborn facility started working in full capacity in January, while the Kansas City Assembly was forecast to begin production in full force by end of June.
The company is happy to report that the model changeover cost came in lower that projections and transaction prices are reasonably higher than expectations. There’s no doubt that Ford went through months of poor F-Series sales due to supply shortage, but it’s now time to reap the benefits.
