Still, Ford’s guidance contrasts with average analyst estimates in a Bloomberg survey for adjusted earnings per share to rise by 1 cent next year, to $1.84, and for adjusted net income to rise to $7.45 billion from $7.37 billion.
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The industry has known for decades that domestic manufacturers struggle to make a profit on small cars. Shifting assembly to Mexico can reduce costs to a point. But it also puts Ford and the industry back in the political crosshairs.
Why is Ford moving to Mexico?
Ford says profit from its core automotive business will improve every year between now and 2018.
Chief executive Mark Fields told a meeting in the company’s base of Michigan, US, of the intention to move operations out of the country, unexpectedly provoking a reaction from Republican presidential candidate Donald Trump.
Ford will “fortify” what it calls its “profit pillars”: trucks, commercial vehicles, SUVs, and performance vehicles.
Trump has been using Ford for months as a prime example of what’s wrong with USA trade policy, but Ford has been strongly rebutting the GOP nominee. Ford updated its outlook Wednesday, Sept. 14, 2016, at its annual investor day.
“We are replacing small vehicle production with two new products at Michigan Assembly that have yet to be announced”.
This plant may also build the rumored Ford Model E electric vehicle, which may share a platform with the next-generation Focus.
Shares of Ford dropped more than 1.5% after it announced its 2017 outlook. “They will likely be larger, more profitable vehicles like the Ford Ranger pickup”.
But he also said the company must respond to a global shift away from personal vehicle ownership to one in which personal ownership will be challenged by on-demand shared mobility.
Trump has on multiple occasions vowed to impose up to a 35 percent tariff on any Mexican-built Ford cars the automaker tries to sell in the U.S. Fields declined to say if that action would stop Ford’s plan if Trump is elected.
That’s a sea change in thinking for a company that until recently was mostly thought of as a builder of cars and trucks.
“We see huge social economic and environmental benefits”.
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During the past six months, we’ve been focused as a leadership team on building Ford’s expanded business model – with a more clearly defined vision, strategy and roadmap on how to deliver success.
