The first of two press days at the North American International Auto Show is just getting under way as I write this, but Ford (NYSE: F) has already made big news -- on a somewhat surprising front.
Sure, it was great that the all-new Explorer won North American Truck of the Year honors, but that wasn't a huge surprise. Nor was last Friday's revealing of the Focus Electric particularly shocking (so to speak), because we had been expecting Ford's first mass-market all-electric car for some time.
And it wasn't much of a surprise to hear the company announce an expanded range of compact cars (including a cool mini-minivan and new hybrids) that will use the platform underpinning the all-new Focus. It fits perfectly with both CEO Alan Mulally's "One Ford" global strategy and Executive Chairman Bill Ford's long-standing push toward a greener era for the Blue Oval.
But when Ford President of the Americas Mark Fields said that the company would be adding more than 7,000 jobs in the U.S. over the next two years, that turned some heads.
Are we sure this is a good idea?
As a Ford shareholder, my first reaction was probably a lot like yours -- the company just spent years reducing capacity and getting its costs under control, and now it wants to expand? But on reflection, this is good news (and not just for the Midwest's unemployment rate). Consider:
- Maxing out existing capacity. How do you maximize production in an auto factory? Run it all day and all night, using multiple shifts of workers. Ford's sales have been climbing for months, demand is strong, and adding shifts is (much) cheaper than adding factories.
- Beefing up product and technology development. Ford hasn't been specific about exactly what positions it'll be offering, but the company did say that about 750 of those new jobs would be salaried positions. Ford's aggressive technological push has been well-documented, and its need to maintain a high new-product tempo obvious. It's reasonable to assume that the company will be hiring engineering talent as part of its investment in those efforts.
- Lower-cost workers. The Detroit automakers' landmark deal with the United Auto Workers in 2007 introduced a "two-tier" wage system. Under the deal, which was intended to help the U.S. automakers become more competitive with foreign rivals, newly hired union workers will be paid $14 to $15 an hour, about half the rate of older workers.
So yeah, at least until we have more details about these hiring plans, I'm thinking that this is good news, and not just for Ford.
Ford's other big news
As I said above, there's still lots to come at the big auto show in Detroit (and at subsequent shows in Chicago and New York, also regular sites for major announcements from the automakers). But what we've seen from Ford so far is worthy of note:
- The Focus Electric. Like many "green" cars, the electric version of Ford's new Focus sports a distinctive look, in this case a unique front end somewhat reminiscent of the upcoming Model S from Tesla Motors (Nasdaq: TSLA). But the Focus Electric isn't exactly a Model S competitor -- it's smaller and less expensive, for one thing, and expected to have a shorter range (probably about 100 miles, though Ford hasn't yet given a number).
- An expanded range of small green cars. The Focus Electric is just one part of Ford's plan for the platform underpinning the new Focus compact. Not only will the Focus itself be available with four different powertrain configurations (gas engine, conventional hybrid, plug-in hybrid, all-electric), but other models will follow: The C-MAX, a small minivan already popular in Europe, and the Vertrek, officially a "concept" but likely to be the successor to the Escape SUV here in the U.S. as well as the similar-but-different Kuga SUV sold abroad. As with the Focus itself, which is the global successor to two similar but different models, the Vertrek (which may or may not keep that name) is another step in implementing the "One Ford" consolidation strategy.
- More hybrids. While the company is still in wait-and-see mode with respect to the market for purely electric cars (hence the four drivetrains for the Focus), Ford has put big resources into hybrid development, announcing that the C-MAX will be available in both conventional hybrid and plug-in versions.
See a theme here? Ford is obviously out to beat Toyota (NYSE: TM) and Honda (NYSE: HMC) on quality and efficiency in the categories it sees as the future of autos, at least over the near term -- and to maintain its lead over a General Motors (NYSE: GM) that is finally showing signs of gathering steam. But each of those companies will have surprises of its own as the auto show season continues to unfold.
