Confidence at the Ford Motor Co. has improved slightly in the stir of the automaker's massive buyout program. But Ford's retail sales in the United States continue to fall short of internal forecasts, according to the company's latest monthly report card as distributed to employees last week.
According to Ford's report card titled 'North America May 2007,' 60 percent of the automaker's employees were "looking forward to the future as Ford employees." That was up four percentage points from Ford's last quarterly survey of employee morale in the first quarter of 2007. Nevertheless, the poll found that less than 45 percent of Ford workers believe the automaker's "Way Forward" turnaround plan will thrive. The automaker's poor performance on the retail sales front implies their concerns may be reasonable.
In the document, the Dearborn automaker's April retail market share in the United States plummeted to just 9.7 percent and that is about a full percentage point lower than Ford had projected and far from its full-year goal of 10.5 percent to 11 percent. The automaker blamed the decline on "the weak housing market and higher fuel prices." The sales of sport utility vehicle and trucks were definitely hard-hit.
Those numbers are not likely to reverse anytime soon, said Jesse Toprak, the chief economist for Edmunds.com. Edmunds' website, which uses information on purchaser demand, sales forecasts and future product plans to predict Ford's market share, sees a continuing slide in the near future. This is because Ford remains too dependent on the cooling segments of large trucks and sport utility vehicles.
"At least they're realizing they cannot keep going blindly after market share," Toprak said. "Their overall strategy of how to approach the U.S. market has to change. You can make money with less market share."
Ford has managed to keep its share of the retail market relatively stable, company spokesman Jim Cain said. The automaker also has moved to create a portfolio that offers as many cars and crossovers as trucks and huge sport utility vehicles. This move is expected to help the automaker to become less vulnerable to gas and housing concerns. "We have launched a raft of new fuel-efficient products," Cain said. "It takes time to turn a ship."
Also according to the report card, the Detroit automaker missed its material cost reduction target for the month. "Material cost reductions through April were five percent below forecast," the report card states, blaming the underperformance on ongoing weakness among suppliers of the automaker. "Some negotiations have been extended due to continued distress in the supply base."
On the positive side of the issue, Ford said that it continues to make progress on selling off the former Visteon Corp. facilities it retrieved as part of a 2005 bailout of its former parts subsidiary. In 2006, the automaker reported a $12.6 billion loss. And it needs the swift performance of the to recover and compete capably in the automotive industry.
Ford is in the midst of a sweeping restructuring plan that aims to restore the automaker to profitability by 2009. Successful new products and a focused recovery plan are boosting employee morale, Ford spokesman Oscar Suris said. "The trend will continue," he said, "if we keep doing our jobs."
