Bloomberg News

Ford Considering More U.S. Production After Boost for Fusion (2)

August 29, 2013

Ford Motor Co. (F:US), expanding output of its Fusion sedan to a U.S. plant, said that factory could produce another model as demand expands.

“We certainly have the flexibility for the future to do more,” Joe Hinrichs, Ford’s president of the Americas, told reporters today as the first Fusions rolled off the line in Flat Rock, Michigan. “We’re trying to get our capacity set up to meet demand. With the growing demand for our trucks, growing demand for Fusion, other product lines, that’s what we’re focused on.”

Chief Executive Officer Alan Mulally is hiring almost 6,500 new workers this year in the U.S., where Ford is the second-largest automaker and leads the industry in market share growth through 2013’s first seven months. The Fusion is challenging Toyota (7203) Motor Corp.’s Camry as the nation’s top-selling car while selling at an average premium of more than $2,300 per vehicle.

The additional shift of 1,400 new workers at the Flat Rock plant will boost Fusion capacity more than 30 percent, the Dearborn, Michigan-based company said today in a statement. Demand for the car overwhelmed the only factory where it had been made, in Hermosillo, Mexico.

“We could have sold more if we had more,” Hinrichs, 46, said of the Fusion. “We expect the sales momentum to stay here in the U.S. and around the world.”

Flat Rock now builds the Fusion and the Mustang sports car, which are based on different vehicle architectures.

Production Flexibility

“The Mustang and the Fusion are two different platforms, so we’ll be introducing two right now,” with flexibility for more, Hinrichs said. “We could do a lot of different things.”

The United Auto Workers union also signaled that Ford may add another new vehicle at the plant.

“I don’t think we’re done yet,” said Tony Bondy, chairman of UAW Local 3000, which represents hourly workers at Flat Rock. “I’ll leave it at that.”

The Flat Rock plant is about 25 miles (40 kilometers) southwest of downtown Detroit, which last month filed for the largest municipal bankruptcy in U.S. history. Detroit is reorganizing as the U.S. auto industry nears its fourth straight annual sales gain, the longest streak in more than a decade.

“If it had not been for the auto industry, Michigan would be in the same shape that Detroit is in,” Jimmy Settles, vice president of the Detroit-based UAW’s Ford department, said today at the factory. “The rebound of the auto industry is the reason why Michigan is prospering.”

16 Million

The auto industry’s seasonally adjusted annualized sales rate for August may climb to about 16 million cars and light trucks, Erich Merkle, Ford’s U.S. sales analyst, said today at the plant. The monthly pace last exceeded that level in November 2007, according to researcher LMC Automotive.

The Fusion’s sales surge -- 13 percent this year through July -- has outpaced the broader market and cut a quarter from Camry’s lead at this time in 2012. The car also has demonstrated how much consumers care about attractive design and shown how aggressively U.S. carmakers can now compete in all segments.

Ford’s Hermosillo plant couldn’t make more than about 350,000 Fusions and Lincoln MKZ sedans annually, according to LMC Automotive. The Flat Rock factory will be able to produce as many as 100,000 more Fusions a year, LMC said.

The availability of Fusion in North America will rise to as much as 350,000 cars annually, according to Ford’s statement.

Higher Prices

The average Fusion selling price this year through July rose 5.8 percent to $26,343, behind only Volkswagen AG (VOW)’s Passat among mid-size cars, according to Kelley Blue Book.

Fusions are selling at a premium of $1,176 to the segment average and $2,378 above Toyota City, Japan-based Toyota’s Camry, which ranks No. 11 in segment pricing this year, behind entries such as Chrysler Group LLC’s 200 sedan, said the researcher, which includes some incentives in its analysis.

Camry’s average prices have fallen 2 percent to $23,965, and the car has slipped from ranking eighth in the segment a year ago. The model has been the market’s best-selling car for the past 11 years and 15 of the last 16.

Ford rose 3 percent to $16.50 at the close in New York. The shares (F:US) have gained 27 percent this year while the Standard & Poor’s 500 Index advanced 15 percent.

The added Fusion output draws Ford closer to production levels that Toyota and Honda Motor Co. (7267) reach with their Camry and Accord. It also positions Ford to continue growing in coastal states that were long a source of weakness.

California Momentum

“Our share is up significantly, and importantly our share is growing in important trend markets like California,” Mark Fields, Ford’s chief operating officer, said on Bloomberg Television today. “The vehicle has a personality.”

In California, a state that has given U.S.-based carmakers fits for years, the Ford brand’s 18 percent jump in light-vehicle sales during the year’s first half put the marque within 0.1 percentage point of the Honda brand’s market share, according to the California New Car Dealers Association.

Fusion is a standout among Detroit’s most competitive set of cars in a generation. The model’s redesign has drawn comparisons to Aston Martin styling. General Motors Co. (GM:US)’s Chevrolet Impala last month received the highest rating from Consumer Reports among all sedans, a first in at least 20 years for a U.S. carmaker to have outscored all Japanese and European competitors in that segment.

“There’s no doubt the Detroit Three have made fantastic progress,” Mark Hogan, who in March was the first American to be appointed as an outside director to Toyota’s board, told reporters yesterday in Ypsilanti, Michigan. “Toyota loves the competition and we’ll keep getting better and better, too.”

To contact the reporter on this story: Craig Trudell in Southfield, Michigan, at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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