Just to show that as far as passenger cars go, Ford considers that market segment dead in the US, they have announced a big investment in two factories in Chicago to build more SUVs – highly profitable ones at that – and the killing off of another nameplate in the US: the Taurus. This plate was credited with saving Ford when it was first announced back in the mid 1980s and now it is dragging the business down.
Ford has two plants near the city, one built nearly 100 years ago assembles the Taurus, Lincoln Navigator and an Interceptor for the police forces. Nearby is a 60 year old stamping plant that services those assembly lines. Now, Ford will inject $1bn of new investment into these ageing plants so that it can add in the assembly of the next generation Ford Explorer to replace the Taurus. The plants currently employ 5,800 workers and this will rise by another 500.
Most of the money will go in new technologies, stamping equipment etc however $40m will go to improve basic employee working conditions. The factories, being so old, have not kept up to date on security systems and simple things like rest areas and food service areas! All-in-all it should be a great improvement in facilities.
Interestingly, the upgrades to working conditions were part of an agreement with the United Auto Workers Union back in 2015 – and it is only now being actioned. Strangely … this agreement expires at the end of this year with negotiations about to start on the 2020 replacement!
When the work and investment was announced, a senior Ford executive was quoted as saying that 90% of the working capital is now focused on trucks and SUVs in the US. It is clear that this is where the Big Three get their money from, however let’s hope that a price war doesn’t start – that squeezes the profits down.
As a side note, the last Taurus left the building on March 1st in the US although it may survive a little longer at Ford’s Changan plant in China. At its peak it sold over 400,000 units a year however with an early announcement that it was being killed off, it only sold 28,000 in the US last year.