Automotive News is reporting that assembly plants in Dearborn and Kansas city will be shut down for a total of 13 weeks as it retools to switch production to the all new F-150 pickup truck that has an aluminum body. The launch of the 2015 F-150 will be closely watched, as Ford and its competitors see how consumers accept the lighter, more expensive truck.
Meanwhile, an analyst report seems to confirm TTAC’s initial story that Ford was forced to delay production of the new truck by up to three months due to difficulties with the new aluminum body.
Brian Johnson, an analyst with Barclays Capital, noted that
“There has already been a delay in the production schedule, likely due to challenges in stamping, riveting, and welding of the aluminum,” Johnson said in a report published earlier this week. “Moreover, Ford also faces risks with regard to potentially higher warranty expense and customer acceptance (large pickup buyers may be resistant to change, and may be skeptical of the new truck’s durability).”
The success of that launch will have a significant impact on FoMoCo’s 2014 profits. In 2013, F series trucks (which include the heavier duty pickup lineup that starts with the F-250 and runs through the F-650 medium duty truck) represented 31% of Ford’s light vehicle sales . Morgan Stanley estimates that the F series accounts for 90% of Ford’s global profits.
The increased downtime for the F-150 launch might lower Ford’s North American pretax profit by $800 million this year, according to Buckingham Research Group analyst Joseph Amaturo.
It’s not just a question of how they start making and selling the new truck either. Ford needs to manage production and inventory of the outgoing model if they want to maximize profits. The automaker needs to build up a large enough inventory so that when the plants shut down dealers are not affected. At the same time it doesn’t want to accumulate too many, leading to discounts and incentives.