DETROIT -- Strong demand for SUVs and pickups has generated big profits for Ford Motor Co. But Ford's outlook for the industry took a negative turn in July, as the automaker warned of looming risks to its financial goals.
Amid skepticism on Wall Street, CEO Mark Fields aims to prove that Ford is in much better shape to withstand a downturn in the market. He's also working to prepare the automaker for a future in shared and autonomous vehicles by adding mobility services to its portfolio. And for more than a year, he has had to defend the company against continual attacks from Republican presidential candidate Donald Trump, who has criticized plans to move small-car production from Michigan to Mexico.
Fields, 55, spoke with Staff Reporter Nick Bunkley, News Editor Dave Guilford, Publisher and Editor Jason Stein and TV Reporter China Haley of Automotive News Europe sister publication Automotive News at Ford's headquarters last week.
Q: You were an outlier when you came out after the second quarter with such a negative outlook. Why?
A: You always have to look at the business environment. You need to be able to interpret the outside world and what it means for your business. We'll just continue to look at the facts and react very proactively. The way we run the company, we're all sitting around a table every Thursday morning looking at these things. It allows us to be very proactive as opposed to reactive. Against a backdrop of it's still a very healthy industry by historical standards, but there are stresses in it and we're getting ahead of that.
Is the industry controlling production and supply without crazy price cutting?
When you look at the amount of capacity that was taken out during the Great Recession, a lot of the industry is operating at a higher capacity utilization, including ourselves. But at the same time, when you combine that with more flexible union contracts, it allows you to adjust to the market more appropriately, and we're doing that. We're always following our strategy of matching production with demand. So we took a week of downtime at Flat Rock because we want to make sure that, as some of our competitors are out spending a lot more money than us, we're managing the business appropriately. From a production standpoint, if we see that it's temporary, we can do things like we did last week -- take a down week, take out overtime, maybe slow some line speeds. If it's more pronounced, you take shift adjustments, but we're not there.
Is the industry acting in a rational way?
It depends on the competitor, and it depends on the month. All you've got to do is look at last month and some of the things that were in the marketplace. I can't speak for our competitors, but it all depends on different motivations. The auto industry benefitted disproportionately in the early part after the recession than the rest of the general economy. Part of it was pent-up demand. Now as demand is flattening, you're seeing competitive pressures become greater. You will see more erratic SAARs on a month-to-month basis. Part of that is various competitors at various times are going to do what they feel is necessary to run their business.
We manage to profitability, not to market share. We want to be profitable, we want to make sure our dealers stay profitable and healthy, and that's the way we're going to run our business -- be very consistent.
Ford's retail share is down a couple of 10ths. Do you need to do anything differently?
Our total share is up a 10th so far this year in North America. Our retail share is down a few 10ths. Part of that has to do with the car side of the business. We've said we'll focus on some of the segments where customers are migrating towards, whether it's SUVs or pickup trucks, and we're doing nicely there.
So are you basically letting the car side of your business settle to a more natural level?
We're always market-driven, we always have to be customer-centric and see where the customers are going. Clearly we want to keep our dealers competitive in the marketplace, but at the same time it has to have a strong eye toward what's going on in the marketplace and not try to push the market unnaturally where it otherwise won't go.