DEARBORN – The World Headquarters auditorium was filled to the brim Tuesday with employees eager to hear 2013 year-end results and get an idea of what 2014 has in store for the business.
“What a great year,” said Alan Mulally, Ford president and chief executive officer. “Full-year results for the total company are among the best in our history, with record profits coming from North America, Asia Pacific and Africa.”
All totaled, Ford Motor Company closed out 2013 with an operating profit of more than $8.5 billion, $603 million more than 2012 delivered. This result, according to Mulally, directly ties to sustained commitment to the One Ford plan. Ford Credit, which also has been gaining momentum as the company grows, contributed $1.7 billion to this overall profit.
Among the many successes of 2013, Mulally recounted that Ford launched 11 vehicles around the world, revealed the next-generation Mustang which will be offered globally for the first time, and saw improvements in several markets including Europe and the Middle East and Africa.
Also in 2013, Ford was upgraded to an investment grade rating by Standard and Poor’s, the last of the four major credit reporting agencies to elevate Ford’s rating.
“All of these positives allowed us to double the quarterly dividend to 10 cents per share, an amount we plan to increase by 25 percent in 2014.” said Mulally. “Profit sharing paid to hourly employees also hit records in 2013.”
To wrap up 2013, Mulally shared a slide that showed how the company performed compared to Annual Incentive Compensation Plan targets. The company performed above target with regard to pre-tax profit and Automotive operating cash flow but fell slightly below plan on cost performance, market share and quality. However, since each of these categories bares a different weight, the company still performed better than targeted overall.
Plans for 2014
As he moved onto plans for 2014, Mulally described the ways the company is investing for more profitable growth in the future. “Our projections for 2014 are lower due to the significant investment being made throughout the year preparing for the launch of 23 new or refreshed products globally,” he said.
Mulally said he expects profits to remain strong next year, totaling between $7 billion and $8 billion because of the cost of re-investing in the business.
Mulally shared that global economic growth should be in the 2.5 to 3 percent range with global industry sales growing to between 85 and 90 million units. In the United States, growth also is expected to be in the 2.5 to three percent range carried by an improving housing sector and demand for new vehicles.
In Europe, a trend of stabilization is forecast with support from the European Central Bank indicating interest rates will remain low for an extended period to aid recovery.
Forecasts for Asia Pacific and Africa suggest stable growth in the 7.5 percent range for China as the region transitions to a consumption-led economy while growth projections for India are in the range of 5 percent.
To close his presentation, Mulally added the following, “What a tremendous year. I am just so proud to be serving with all of you. The corporate reputation continues to move up, it moves up with the strength of our products. People believe we make great products and we are contributing to a strong business they can count on. So it has been a great year and we have a lot to be excited about in 2014. We are going to be really busy and even though we will be making a little bit less money this year, we will continue to be strongly profitable. Thank you!”
Employee Q & A
Following the presentation, Mulally responded to several questions from the audience including questions sent in from employees around the globe.
One of the first questions came from a chassis engineering employee who asked how to defend and promote the changes that are coming to the Ford F-150 to skeptics, specifically with respect to the use of high-strength aluminum alloys.
“Coming from the aerospace industry, I know how Ford Tough aluminum is.” said Mulally. “It is time to do it. Every year we have made improvements to that vehicle which have kept it the best-selling truck in the U.S. for the last 37 years. When you can take 700 pounds out of a vehicle and you can give that benefit to towing and hauling and corrosion resistance and less dings and so on, it really becomes a tremendous value proposition. That is why we started with such a large vehicle, because the value is so big. It is so rewarding to see the impact this truck is going to have on fuel mileage and carbon dioxide emissions, with such high sales volumes, we are going to make a tremendous difference in the world.”
Another employee asked what the role of solar power would be in the future of Ford vehicles after seeing the C-MAX Solar Energi concept debut during the Los Angeles auto show.
“It will come along slowly,” Mulally said while noting Ford’s goal is to offer consumers the power of choice by making products available to them in a variety of highly efficient powertrains including improved petrol engines, hybrid and full-electric options. Mulally said as infrastructure for electrified vehicles progresses and batteries come down in price, we can expect to see an increase in popularity of these types of vehicles, but that solar power was not something we would see right away.
The final question came from a powertrain engineer who asked what the plan was to add value to the Lincoln brand.
“Lincoln’s story is a fantastic story and the brand is known around the world,” said Mulally. “We lost focus of Lincoln eight years ago when we owned several other luxury brands. And at first, we had to focus on building up Ford, but in the last couple of years we have increased our attention and investment in the Lincoln brand.”
Mulally said the luxury market is changing now and moving to include smaller vehicles – both sedans and crossovers. He pointed to the Lincoln MKC as a game-changer for Lincoln, especially with respect to expanding to China. “You will see Lincoln becoming more fully differentiated as we go and we expect to see big changes as we move to China with Lincoln. Response to the brand there so far has been overwhelming.”