DEARBORN - Even sub-zero temperatures in Southeast Michigan didn’t prevent company leaders from gathering at Ford WHQ Tuesday afternoon for the Americas’ quarterly Business Review.
Joe Hinrichs, president of The Americas, began the presentation by lauding North America’s record pre-tax profit of $8.8 billion in 2013, up $.5 billion over 2012.
“When I got up on this stage a year ago and we congratulated everybody for our 2012 performance, we talked a lot about 2013 being an opportunity for us to grow market share,” he said. “I’m proud to say the team earned half a point of share for the full year. It was a very strong performance and that means we were the leader in the industry in market share growth last year in the U.S. to go with that $8.8 billion profit in North America. So congratulations to the team for that.”
Though Ford of Canada’s pre-tax profits were down from 2012, Hinrichs congratulated the team for achieving its fourth consecutive year as No. 1 in the marketplace.
“Canada is still our second most profitable market in the world behind the U.S.,” he said. “We have a very strong business there.”
Hinrichs said the South America team did an outstanding job of breaking even with operating results in a difficult environment wrought with significant economic and exchange challenges.
“We increased market share. We got a good price for new products and we had very good acceptance of new products. That’s very encouraging in South America,” he said. “But we’re managing in an uncertain environment. Things change by the week and the month and there are more risks than opportunities at the moment in South America so we need to support the team.”
Since 2014 is to be a record year for Ford product launches – 23 throughout the world and 16 in North America – it seemed only fitting that Hinrichs was surrounded on stage by the some of the most exciting vehicles to launch this year in North America – the 2015 Ford Transit, Mustang and F-150 and the 2015 Lincoln MKC.
Hinrichs said the foundation of the business is based on a fresh portfolio of vehicles.
“Nobody’s going to have a fresher product lineup. Nobody’s going to have the kind of products that we have that will change the game in the industry. And nobody has all of us working together to make a difference,” he said. “Our challenge going into 2014 now is to manage every dime, nickel and penny that we can to maximize our profits in this environment in both North and South America and set that foundation up with great launches and improved quality so that all of this leads to better success in 2015 and beyond.”
Hinrichs repeatedly emphasized the importance of quality and launch execution.
“We have a fabulous business here but it’s based on a foundation of trust and reputation of our brand and that’s eroding,” he said. “We have to stop that from happening. So I ask all of you, if there is one extra minute to spend, make sure to spend it on improving quality no matter what role you play.”
Emily Kolinski Morris, senior economist, Corporate Economics Strategic Issues, provided an update on the economy and the industry during Tuesday’s meeting.
She said that global economic growth is projected to grow about 2.5 to 3 percent this year.
“Let’s keep a good global backdrop, a little bit of acceleration in global economic growth this year,” she said. “We do have a lot of challenges that we’ll be facing in the Americas markets in 2014. These challenges are going to be in some sense the first step toward unlocking the potential for these markets in the longer term, which we still think is very, very good.”
K.R. Kent, executive director and controller, The Americas, provided the group with an update on profits and margins.
He pointed out that the operating margin in North America was down 8/10 of a point in the fourth quarter of 2013 compared to same period last year, largely due to product recalls in December.
“This just continues to reinforce how critically important quality is and how it does have a financial impact to the business,” he said.
Kent also emphasized the importance of everyone keeping a careful eye on spending in 2014.
“We have to be vigilant of every dollar we spend to make sure we’re truly getting the value for it,” he said.
Also presenting at Tuesday’s gathering was Frank Davis, executive director, North America Engineering, who provided a product update. He said the company’s vision for product development remains the same.
“We’re unchanged from our strategy perspective,” he said. “We’re all about bold and emotive designs, vehicles that are great to drive, great to sit in, have exceptional fuel economy and are instantly recognizable as a Ford or a Lincoln. And we’re always focused on value and quality.”
Davis highlighted a number of new products, including the Lincoln MKC and Navigator and the Ford Transit Connect, Ka/Figo, Transit, Mustang and F-150.
“The Product Development team is all about a balanced portfolio – small, medium and large cars, trucks and utilities – at an industry-leading cadence,” he said. “We want to have the freshest lineup in the industry.”
Hinrichs concluded the event by once again thanking everyone for their efforts in 2013.
“When you step back and think about the journey the North American team especially has been on since 2009 . . . I think you all deserve a round of applause,” he said.