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Why Ford Motor Stock Closed Higher on Friday

By John Rosevear - May 8, 2020 at 5:07PM

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Factories will restart on May 18, but there's a big question lingering.

What happened

Shares of Ford Motor Company (F 2.14%) closed higher on Friday, after the company confirmed that it will begin reopening its factories in the U.S. and Canada on May 18.

Ford's shares ended the day at $5.24, up 7.6% from Thursday's closing price. 

So what

Ford confirmed on Thursday that it will join Detroit rivals General Motors (GM 1.79%) and Fiat Chrysler Automobiles (FCAU) in resuming production in North America on May 18. 

Ford's plan is to restart production in North America in several phases.

  • Parts depots will reopen next Monday, May 11.
  • On May 18, all but two of Ford's vehicle assembly plants in the region will reopen, but will run at less than full speed. Factories that had been operating on three shifts before the shutdown will reopen with two shifts; most two-shift factories will reopen with a single shift; most one-shift plants will continue to run on one full shift.
  • The two exceptions, in Flat Rock, Michigan, and Oakville, Ontario, will resume production on May 25 with a single shift. Those plants make the Ford Mustang and Lincoln Continental (Flat Rock), and the Ford Edge and Nautilus SUVs (Oakville). 
A reminder to stay 6 feet away from others is on the floor near a stairway at Ford's Dearborn Truck Plant in Dearborn, Michigan.

Ford has already begun preparing its factories to resume production on May 18. Image source: Ford Motor Company.

All of Ford's factories will operate under strict protocols to keep workers and visitors safe and (whenever possible) socially distanced. Among other changes, Ford will allow extra time between shifts to limit interactions between arriving and departing employees, and will require masks for anyone entering a Ford facility. 

Now what

I expect that Ford (and GM, FCA, and other automakers) will be able to restart production with some routine snags, but no huge disruptions. That's great news for investors, as Ford (and most other automakers) record revenue when vehicles ship to dealers. Ford's revenue will rise sharply (and its cash-burn rate should fall) as its factories get back up to speed. 

The bigger question is this: What will demand for new vehicles be like as America (and Canada and Mexico) reopen? Pickup trucks sold relatively well in April, but overall U.S. sales were down sharply. Will buyers return? Automakers and dealers (and auto investors) will all be watching closely. 

John Rosevear owns shares of Ford and General Motors. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
F
$15.83 (2.14%) $0.33
General Motors Company Stock Quote
General Motors Company
GM
$38.63 (1.79%) $0.68
Fiat Chrysler Automobiles N.V. Stock Quote
Fiat Chrysler Automobiles N.V.
FCAU

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