Reuters is reporting that Ford Motor Company is estimating a loss of $2 billion for the first quarter of this year. That billion, with a “B”. For any business, regardless of size, that is a huge amount to lose.
The Reuters piece goes on to say that Ford is looking for ways to bolster it’s cash reserves to help the company reach the other side of the global economic shutdown. In the meantime, it has to deal with a sales loss of 12.5% for the first quarter of this year. That’s not as drastic as some other manufacturers, but a loss is still a loss.
How to move forward
Currently, the automaker has plants shutdown, has limited traveling, and encouraged employees to work from home. Ford is also trying to determine how to develop and maintain consumer interest around a new product, like the 2021 Bronco, when the traditional auto industry events have all been canceled or delayed. Consequently, the hit to the bottom line is huge, and the ability to attain customers searching for the new product is limited.
Taking the measures to protect the employees buy shutting down and limiting activities is certainly a good move. People’s health is more important than money. But businesses go into business with the intention of staying in business. It’s a given that there will always be an unaccounted for variable in any business plan. In this case, it is a beforehand never heard of COVID-19. Sadly though, this variable has had global consequences, with many businesses wondering if they will make it through the flattening of the infection curve. Even companies with emergency funds are scratching their heads in this environment. Ford is no different.
Launching the Bronco
The launch of the Bronco is very close, and Ford is counting on the vehicle to do well, bringing in customers to the showrooms en masse. To that end, they are moving forward with the Spring launch of the vehicle. But, Ford is not only building the Bronco; it is also providing substantial modification options for it that the consumer can also purchase. So, the Bronco is certainly a large part of the plan to offset the $2 billion worth of damage from last quarter.
Not what it seems
According to Reuters, Ford had $70 Billion worth of assets on December 31st. It only had $30 billion in cash-in-hand on April 9th. To have $30 billion sounds like a lot, but in the big picture, $30 billion has cover factory upgrades, labor commitments, parts, and marketing. Don’t forget that a single thirty-second advertisement in the Superbowls is over $1 million. Marketing alone could sap a large portion of those funds easily, let alone trying to launch a new product that they have to bring top-of-the-mind awareness to – the Bronco.
Ford is trying to come up with a recipe for success, but right now, it is dealing with a $2 billion loss. That’s more like a bad recipe for prune juice. Thankfully, the cup of prune juice is almost done because the worldwide epidemic is seemingly being kept in check, and people are starting to return to work in different parts of the world. So, if things continue to turn, and the Bronco is a hit, the disgust of the prune taste may soon become a forgotten memory.