On Tuesday, Ford blew away analysts and observers when it reported revenue of $37.7 billion, which beat expectations by $2.2 billion. Ford also brought in $3 billion in profit for the last quarter of 2013, a tremendous surge of 90 percent over the profits of the same quarter a year prior. The positive results highlight “an outstanding year and a good quarter,” as Ford CFO Bob Shanks described in an interview with the Wall St. Cheat Sheet.
We were able to steal a few valuable minutes from Shanks on the day of Ford’s earnings release, and in that short time, touched on matters ranging from Ford’s new F-150 to what kind of product Ford is shaping the Lincoln brand into.
With is profits soaring, it’s pensions in a greatly improved state — thus helping improve Ford’s risk profile, Shanks noted — and a slate of 23 new products rolling out this year, Ford is seeing a dramatic rebirth as the remnants of the financial crisis fall away. Ford has unveiled three new models over the past couple of months, all of which play important rolls for the company in one way or another. During our brief chat with Shanks, we discussed what these roles could be.
2015 Ford F-150
Conversation quickly turned to Ford in the U.S., where the company recently debuted the new 2015 F-150 at the North American International Auto Show earlier this month. The new truck has been completely redesigned around the extensive use of aluminum, which helps save weight, and thus improves handling, efficiency, and even repair times.
For Ford, Shanks said the new F-150 represents a huge step forward for the company, and one that Ford is exceptionally proud of. ”Obviously coming from Ford I would say this, but I think its really such a spectacular product, it’s just such a fabulous step forward in terms of product excellence,” Shanks told us. “And I’m so excited in terms of what it means from the manufacturing technologies involved, no one else has done anything at this level of volume and scale — you’ve got luxury players like an Audi, Jag, or Land Rover that do aluminum bodies; but no one has done it at this scale before.”
The scale that Shanks is referring to is the mass-volume that the F-150 operates at. As the best selling vehicle in the country, it routinely sells more than 60,000 units per month, making the bet to favor aluminum over steel an enormous one.
When asked to expand on why go for the jugular with its decision to move into the new material — the F-150 is a big profit engine for Ford — and not a smaller volume vehicle as a sort of ‘test run,’ Shanks noted that many employees — engineers, specifically — already had aluminum experience from Ford’s previous role as the parent of Jaguar and Land Rover.
“A lot of our guys here did have experience from when we had Jag and Land Rover with building lower volume aluminum bodies,” he said. “So that confidence and expertise resided in the company. I think what we’re demonstrating is when you’re the leader, you need to continue to set the bar higher and higher and higher, and that’s what we’ve done with one of the crown jewels of the company in terms of sales, and in terms of profitability.”
2015 Ford Mustang
For Ford, the move to take the Mustang to a global stage holds a few uncertainties, seemingly about what the demand will be outside the U.S. One thing is for certain, though — the Mustang brand alone is a powerful force that Ford plans to use to its advantage. “I don’t know what’s going to happen in terms of volume, but the thing’s that’s interesting is the power of the brand,” Shanks said, citing an anecdote about some folks in Spain who were members of a local Mustang club — only, Ford doesn’t yet sell the Mustang in Europe.
“We see that everywhere in the world, it’s just such an iconic representation of American culture. We’ll see what it does in terms of volume, but just the effect it has on brand — the halo effect — where we sell this around the world, I think it’s going to be a positive thing for us.”
The Mustang and the F-150 are among 23 new models that are being rolled out this year, which Shanks said he is most excited for overall. “I am so excited about all the products that we’re going to be launching around the world, because that’s the future growth,” he exclaimed.
2015 Lincoln Navigator
Our talk with Shanks also touched on the new Lincoln Navigator, which was just unveiled within the last couple of weeks. Shanks noted that the feedback has been largely positive, even with the conspicuous decision to leave a V8 option — typically a hallmark of the large SUV class — of the menu. In its place, Ford will provide its gutsy 3.5 liter turbocharged EcoBoost engine.
We asked Shanks about the decision, and the correlation to Lincoln’s other products, which largely focus on more efficient powertrains instead of chasing after the likes of BMW or Mercedes-Benz with power and track-like reflexes. Shank offered a rather thought-provoking reply; to many, the BMWs and Mercedes of the world have long been the luxury benchmark, the yardstick that all manufacturers are measured with. But Lincoln, as Shanks noted, is not trying to compare. For its luxury brand, Ford is using its own yardstick.
“That’s an interesting observation,” he said. “We want to be Lincoln, we don’t want to try to out-BMW, or out-Mercedes the Germans. So as we develop Lincoln — and this will be over a long period of time — I think you’ll see us concentrating on design, craftsmanship, technology, and also the personal experience that consumers receive in the network.”
This is increasingly apparent with Lincoln’s offering of the Black Label trim options, and its emphasis on better fuel efficiency — a hybrid MKZ will cost the same as a gasoline model, and the recent decision to go with the more fuel-savvy V6 in place of the Navigator’s traditional V8. We look forward to seeing how the Lincoln brand continues to grow into its new image in the future.