Ford wants to improve its quality and streamline its manufacturing, CEO Jim Farley and other executives told investors Monday. That means using fewer parts per vehicle, capitalizing on lucrative segments, and streamlining its supply chain. Farley said soon the fruits of its labor will be more evident and encouraged investors to “make [their] own decision” about whether or not the company was undervalued.
Farley and the heads of the automaker’s three recently reorganized business divisions—Ford Blue, Pro, and Model E—gave details on how it plans to do this in the coming years. One interesting example it provided was the number of parts reductions it plans to apply to new models, particularly the F-150. The automaker claims the revised pickup truck will have 2,400 fewer parts as soon as next year. That could be everything from fasteners to parts under the hood, although specifics were not provided.
The Dearborn automaker is seeing increased competition in segments like the two-row crossover/SUV market, and it’s not a battle it thinks it can win without serious streamlining. Other automakers such as Tesla are also innovating new production techniques which reduce the number of parts per vehicle. Farley has spoken positively of Tesla’s efficiency before and could be following suit.
In terms of suppliers, Inefficient or inconsistent partners will be allowed to step up their game or risk being dropped. As AP reports, Ford allegedly doesn’t have great relationships with many of its component manufacturers and wishes to strike better, more efficient deals where possible.
That news comes as the company expects greater profit from its internal combustion business, Ford Blue. As the business transitions into offering more and more electric vehicles, it sees a boost in profitability as key to supporting the higher costs associated with EVs. That also lowers warranty and retail costs, which translates into higher quality. The president of Ford Blue, Kumar Galhotra, said that means testing vehicles like its Super Duty pickup beyond existing standards to the point of failure. He claims this will allow it to prolong vehicle life and save the company money and Farley has spoken in the past about the need to improve vehicle quality. The automaker has recently suffered a slew of recalls that underscore the need for improvement.
Labor is one part of its business that Ford doesn’t predict will need much streamlining. EVs require fewer parts, Farley says, and he claims that large assemblies like the battery pack and its components still require similar amounts of labor to produce. That sentiment might need to be taken with a grain of salt; Ford will renegotiate its contract with the United Auto Workers labor union, which is keen on preserving as many jobs as it can in its next contract.
Despite announcing far fewer electric models than its rival General Motors, Ford has recently cut deals with Lithium providers to supply enough of the vital resource to be competitive in the newer future. He says the automaker has been “stuck in a box” for some time but its battery and vehicle manufacturing capabilities are ramping up. Despite a low stock price, Farley is optimistic about the company’s prospects in the near future. As transportation electrifies, he will have stiff domestic and international competition to challenge that bright outlook.
Got a tip or question for the author? You can reach them here: peter@thedrive.com