Ford begins production on its all-new F-150 today. The pickup truck has been America’s best-selling car for 32 consecutive years, selling 763,402 alone in 2013. The new F-150 will be completely overhauled, and will use aluminum instead of steel body panels—taking about 700 pounds off of the car and lowering its gas consumption in the process.
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Increased fuel efficiency aside, this overhaul is a big financial gamble for Ford, who will have to change their factories in Dearborn, Michigan and Kansas City, Missouri extensively in order to produce the vehicle to new specifications. According to Ford’s own estimates they will lose 90,000 units of truck production this year while they retool the F-150 factories. At an average cost of $40,000 per unit that’s a loss of $3.6 billion in potential revenue.
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It begs the question: if it ain’t broke, why fix it?
“I think that’s what leaders do,” explains Ford Motor Company CEO Mark Fields. “Our whole ethos as a company is to set new standards through innovation and with leadership comes responsibilities. When we ask customers what they wanted in their future trucks they told us they wanted more capability and fuel efficiency.”
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Fields, who was passed the torch as CEO by longtime chief Alan Mulally in July of this year, says that making these big changes is how he plans to maintain leadership, “instead of just resting on your laurels.” Mulally is largely credited with turning the company around after the 2009 auto crisis.
As to the losses in potential revenue, Fields see this year as a building block for the next stage of growth. “The way you make that revenue up,” says Fields, “is by building the toughest, most capable and smartest pickup truck in the marketplace.” His approach to growing the business is “investing in great product that will be head and shoulders above the competition.".
Ford announced disappointing earnings for Q3 2014, earning $835 million, down from $1.3 billion one year ago. Revenue also slipped slightly down to $35 billion from $36 billion in the previous year.
