DEARBORN - Robert Shanks, executive vice president and chief financial officer, Ford Motor Company, addressed more than 700 supplier executives from around the globe Tuesday during the 15th Annual Outlook Conference hosted by the Original Equipment Suppliers Association (OESA).
The day-long annual event, considered a “can’t miss” among industry leaders, focused on the global scope of the automotive business and called on a select group of industry leaders to share their insights on where the industry is going and how suppliers will help shape that trajectory.
Shanks’ presentation, “The Suppliers’ Role in Profitable Growth for All,“ used the tenets of the One Ford plan to outline how current and future Ford successes would not be possible without dedicated cooperation from the supplier base.
Aggressively restructure to operate profitably at the current demand and changing model mix
Statistics show, the rapid rise in demand for vehicles throughout the Asia, Pacific, Africa regions will soon shift both the industry volume and mix of vehicles in these regions.
“We expect global industry volume to grow to more than 100 million units before the end of the decade,” Shanks said. “As this occurs, we expect to see a shift in the mix of volume by region of about 5 percentage points – toward Asia Pacific Africa, with slight decreases for the Americas and Europe.”
“Looking at (vehicle) mix by segment, small cars will continue to grow, reaching nearly two-thirds of the total industry.” Shanks added.
In addition to changing up the supply volume and vehicle mix, Ford also is aggressively moving to consolidate the number of platforms it uses globally to streamline the manufacturing process.
“In 2007, we had 27 different platforms,” Shanks said. “Next year, we will have 15 platforms. Our target is 9 global core platforms.”
Suppliers will play a critical role in making this goal a reality for Ford.
Accelerate the development of new products that customers want and value
Key to keeping demand growing is maintaining a fresh lineup.
“The fundamentals of the Global Product Plan are consistent,” Shanks said. “Developing and building beautiful emotive vehicle designs that are great to drive, a pleasure to sit in, with exceptional fuel economy, instantly recognizable in look, sound and feel all with exceptional value and quality.”
Maintaining an industry-leading refresh rate while checking off all of the above, now that will be the challenge and one Ford will no doubt require the aid of suppliers in meeting.
Finance the plan and improve the balance sheet
To lead this segment, Shanks ran through a list of Ford’s recent financial successes giving credibility to the One Ford plan and illustrating why Ford is an ideal partner.
Here are a few that were shared:
• The company earned a record Third Quarter operating profit of $2.6 billion, our 17th consecutive profitable quarter.
• The company’s pre-tax profit was driven by best-ever Third Quarter results for the automotive sector. This reflected continued strong results in North America and a combined profit for the regions outside North America for the first time since Second Quarter 2011.
“Globally, we are seeing strong results as our plan gains momentum around the world,” Shanks said letting suppliers know Ford is on a growth track and is ready to take suppliers along for the ride.
Work together effectively as one team, leveraging Ford's global assets
“Ford is growing rapidly, and we are expanding with new plants and added capacity around the world,” Shanks said. “Presently, our potential volume is now more than 6 million units per year, supported by more than 130,000 hourly and salary jobs around the world in our manufacturing operations.”
Shanks went on to describe how Ford has maximized efficiency to such an extent that despite growth to meet capacity demands, the company continues to produce more cars with fewer plants.
“We have cut the number of plants in half (from 22 in 2003 to 11 today) while increasing capacity,” Shanks said. “This has contributed to optimizing how we produce vehicles and how we run the business.”
This pace of streamlining while adding production is expected to continue as Ford projects 90 percent of its plants around the world will be running on a three-shift or crew model by 2017. Shanks said this will help increase production by more than 30 percent.
Where do suppliers fit into this model?
According to Shanks, creating ways to increase production and provide new jobs and opportunities, but doing it in a way that is sustainable for our long-term workforce will continue to be a priority as the industry grows. Suppliers able to provide creative solutions that help meet these goals will be in high demand.
“Our supplier partners are key to innovation and profitable growth for all,” Shanks said. “Ford’s goal is to be your customer of choice.”
Shanks was one of a select few automotive executives asked to speak during the conference. Others at the podium included;
• Grace Lieblein, vice president, Global Purchasing and Supply Chain, General Motors Corporation
• Simon Nagata, president and chief executive officer, Toyota Motor Engineering and Manufacturing North America
• Rich Schostek, senior vice president, Honda North America