Ford Motor Company is reassuring investors that the automaker would remain profitable even in the event of a severe market downturn where US sales dropped by 30 percent in a single year.
According to The Detroit News, Ford CFO Bob Shanks told a group of investors: “We think we’re in very good shape for a downturn.” He said that if US sales were to take a 30 percent hit, the automaker would cut costs by reducing shifts (esp. overtime) at its US manufacturing facilities, reducing profit-sharing, and pulling funds away from sales and advertising. Those steps would free up roughly $3 billion, he said, so that Ford could continue to fund engineering and release new products.
Mr. Shanks went on to say that Ford is poised to break even if US sales declined to just 11 million units – a full 37 percent lower than 2015’s record 17.5 million sales. The recession of 2008-’09 only saw sales fall roughly 20 percent.
Sales this year look poised to eclipse even last year, although as The Detroit News reports, analysts fear that the current cycle has reached its peak and will soon start to decline again. Regardless, the Ford CFO said that the automaker would continue paying dividends to investors, and that its rating would likely remain investment grade.