Counting On A Pickup
Struggling Ford bets the ranch on a glitzy new F-150, the world's bestselling vehicle
It's quitting time at the Luck Stone quarry in Leesburg, Va., and the boys are out for a little fun. Tony Toler, the pit manager, aims a brand-new 2004 Ford F-150 pickup truck toward a 45-degree hillside. On the walkie-talkie, he calls the foreman, Paul Jenkins, riding right behind in his '98 Dodge Ram. "You with me, boy?" he needles his colleague. "We want to see if that Dodge is as Ford-tough as this Ford."
Both trucks clamber up the hill with ease. On the way back down, however, the going gets rougher. Loose gear flies into the front seat of the F-150 from the rear. I brace myself against the dashboard to avoid becoming part of it. The Ford, in low gear, holds the hill without slipping. But the Dodge skids halfway down the berm before hitting the bottom. Back on the pavement, Toler--a Dodge devotee himself, whose own pickup is a '95 Ram--is impressed. "It pulled up there fine," he says of the Ford. "It felt good."
It had better. As Ford Motor Co. works through a "back to basics" program and a huge revitalization plan, its fortunes are hitched squarely to the new F-150, headed to dealers this month. After disastrous excursions into auto-repair shops, the car-rental business, and other side ventures, Ford has been losing market share and struggling to remain profitable. The company told employees last month that it might have to cut 1,800 white-collar jobs to balance the books.
Slipping behind. Ford's earnings were better than expected in the second quarter, with $417 million in net income. But almost all of that came from cost cutting and from the company's financial services arm; automotive operations barely broke even. And rebates averaging more than $3,000 per vehicle are driving car prices--and profit margins--down. Worse for Ford, its passenger car division for the first time has slipped behind Toyota in U.S. sales.
The company that was once the world's most profitable automaker now hopes its journeyman pickup will pull it out of its rut. With annual sales of more than 800,000--about the same as the Honda Accord and the Toyota Camry combined--the F-series is the bestselling vehicle in the world. It accounts for 15 percent of Ford's North American revenue and hauled in $6,000 worth of profit per vehicle in 2002, according to Merrill Lynch--enough to turn a corporate loss into a modest profit. And Ford says the new F-150 will be better, tougher, and more profitable yet.
But the '04 F-150 has a lot of hills to crest before it fulfills those expectations. Expensive manufacturing techniques and dozens of option configurations have made the new truck as much as $1,500 more costly to build than the old one. Yet Ford will price it just $245 to $635 above its predecessor, meaning the company will eat the additional cost--and maybe more, since Dodge and Chevrolet are likely to greet the new competitor with deeper discounts that Ford may have to match.
High stakes. Importers, meanwhile, are moving in on the last chunk of Big Three turf. Toyota plans to add a Made in the U.S.A. badge to its Tundra pickup by building it in Texas, and Nissan will soon begin building its own F-150 competitor, the Titan, in Mississippi. That makes the '04 F-150 Ford's most important new vehicle in years. "Nothing could devastate this company more," predicts Jerry Reynolds, owner of Prestige Ford near Dallas, "than if this truck isn't a success."
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