On the surface, Ford’s announcement of $1.7B in net profit for 2018’s first quarter seemed like a boon for the Dearborn-based automaker.
However, big changes are coming for Ford.
During Wednesday afternoon’s earnings call, Ford leadership announced a plan cut $11.5 billion from its spending plans and that it will cease production of several sedans, including the popular Fusion and Taurus. In turn, the automaker will limit its North American sedan production to just the Mustang and the Focus Active crossover, which will debut next year.
According to CFO Bob Shanks, Ford is planning to almost double its cost-cutting goal to $25.5 billion by 2022.
By cutting slow-selling, low-margin car models from its lineup and putting the focus more on money-making vehicles like trucks and SUVs, CEO Jim Hackett is aiming for more profitability.
“We’re going to feed the healthy part of our business and deal decisively with areas that destroy value,” Hackett says. “We aren’t just exploring partnerships; we’ve now done them. We aren’t just talking about ideas; we’ve made decision.”
Despite the manufacturing changes, Ford says no American jobs will be lost in the short term. According to Ford communications manager Daniel Barbossa, of the phased-out vehicles, only the Taurus is made in the U.S., at a plant in Chicago. Barbossa says that factory will remain open, building the Explorer and a new SUV.
Ford’s big first quarter net income looks good, however, the company says that the profits are mostly due to this year’s lower tax rate.