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Ford To Focus On Doubling Profits In 2019, Its CEO Tells Employees

Ford To Focus On Doubling Profits In 2019, Its CEO Tells Employees
There is a process of global restructuring ongoing at the US car maker Ford which includes reorganizing its European operations through cuts as announced by the company recently.
Ford, the second largest auto maker of the US, does not want to accept the "mediocre" results achieved by it in 2018, said the company’s Chief Executive Jim Hackett to the employees this week and that the company has set aims to double the annual operating profits that it had made in 2018, in the current year. 
These comments by Hackett were made to employees through an e-mail as reported in the media. 
Ford had recently announced some significant downsizing in its European operations which is part of the larger plan of restructuring its global operations. Another important announcement made by the company is a partnership for commercial vehicles with Germany's Volkswagen and the two companies have together wants to engage in the joint development of electric and self-driving vehicles which the companies say would result in cost savings of billions of dollars.
The fourth quarter results of Ford as reported by the company saw its 2018 operating profit reaching $7 billion and a profit margin of 4.4 per cent which was lower than the 6.1 per cent that was achieved by it in 2017. The company has set an operating margin of 8 per cent for the current year.
"2018 was mediocre by any standard," Hackett said in the email according to the media. "Yes, we made $7 billion last year. But think of it this way: this represents a 4.4 percent operating margin, about half what we believe is an appropriate margin. So we are aiming for much closer to $14 billion."
No timetable of achieving the $14 billion target was offered by Hackett. The CEO was only doing the math to show employees how the margin target translated to overall profit, said a spokesperson for Ford. .
It has been 20 months since Hackett has become the head of the company and in the e-mail he also said that it was "time to bury the year (2018) in a deep grave, grieve over what might have been and become super focused on meeting, and, in fact, exceeding this year's plan."
There was however also no specific forecast for 2019 provided by Ford for the Wall Street. The company only said that there was enough potential for the company to enhance earnings and revenues.
In contrast, the close rival of Ford in the US - General Motors Co, forecast higher than expected estimates for 2019 earnings on January 11.
"I become mad for a short time. Likely mad at myself, but also because I know we are better than that. ... I know that our competition hasn't been better than us by magic," Hackett also said while referring to the 2018 performance of Ford.
There are deliberations within Ford about significantly reducing the time frame for itself to increase its portfolio of electric cars compared to the time frame that was set when Hackett assumed charge, he said in the e-mail. He also asked employees to comment on what and how the company can learn from the trends of electric cars that it had failed to understand earlier in China which is also the largest auto market in the world as well as the largest market for electric vehicles in the world. Ford has bot been doing well in the Chinese market of late.

Christopher J. Mitchell

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