Ford Motor Company (F)

In response to record gas prices during the summer of 2008, Ford announced plans to begin producing some of its european models (such as the Mondeo and european version of the Focus, both of which are far more efficient than Ford's current American offerings) in the United States. This offers the advantage of quickly bringing highly demanded fuel efficient cars to the U.S. market without having to invest the money and time to create an entirely new automobile.^[1]

It expects sales of small cars to increase as it tailors its North American offerings to follow its European models. “Ford already delivers the best small cars in Europe,” said Mark Fields, Ford’s president of the Americas, in a speech at a conference in Traverse City, Michigan, Reuters reported. “Now it’s North America’s turn, and we intend to deliver these small cars profitably.”

New CEO Alan Mulally has already observed several inefficiencies in Ford's operations. Ford could save over $15 billion if it could duplicate GM's fixed cost per unit of $6,060 compared to $8,400. He has aggressively cut costs by $1.7 billion, including $1.2 billion in North America.

All totaled, Ford has cut 46,300 jobs in North America in the past two years, Reuters reported. And last year, it negotiated a new contract the United Auto Workers union. The company could make even more progress in the second quarter, because it won’t have to worry about a one-time $416 million charge that reflected money Ford spent just to reduce expenses. Also the company expects to close its $2.3 billion sale of the Jaguar and Land Rover brands to Tata Motors in the next three months.

International sales of Ford products have increased since 2000. Ford further cemented its earnings with impressive international sales numbers and news, including:

• Pre-tax profits soared 237% in Europe (from $219 million to $739 million)
• Pre-tax profits went up 127% in South America (from $113 million to $257 million).
• Pre-tax profit in the Asia/Pacific region was $1 million pre-tax profit in the Asia/Pacific region compared to a $26 million loss last year.
• Ford introduced the Ford Fiesta, an all-new global small car, at the Geneva Motor Show. It’ll be "sold in virtually all of our major worldwide markets by 2010."

"Particularly impressive was the continued strength in Europe," Calyon Securities analyst Mark Warnsman said in a research note, Reuters reported. "The outstanding result in Europe would have meant little, however, if North America had not pulled itself back to close to breakeven."

Mulally trumpeted Ford’s international sales, which he sees as an indication of future profits. "We remain committed to our key business objectives, including our goal of reaching North America and overall automotive profitability in 2009 despite the challenging economic conditions," he said.