After idling a total of five manufacturing plants throughout North America last year, Ford managed to cut down its unsold inventory in the region to a 78-day supply, as of the end of February.
Still, avoiding a mountain of inventory is high on Ford’s agenda, with company Executive VP and CFO Bob Shanks telling analysts and investors not to “be surprised” if Ford cuts production or idles North American plants over the coming months. Automotive News reports that the Blue Oval’s car plants are the most likely to see downtime, like Ford’s Michigan Assembly Plant in the US and its Cuautitlán Assembly Plant in Mexico. The Kansas City Assembly Plant, which produces Ford F-150s and Transits, could also be idled soon.
Unfortunately, shuttering factories temporarily cuts into revenue; Ford will have to weigh that against its desire to reduce excess inventory.
“Closing a plant down for a week or reducing a shift reduces the amount of vehicles made and therefore reduces revenue,” AutoPacific Manager of Product Analysis Dave Sullivan told Automotive News. “That’s what makes it dangerous; when you know your revenue is what you push out the door. If there is no demand, you can continue to push, and that’s when bad things happen.”
Ford this year is forecasting pretax profits of $9 billion, down from $10.4 billion in 2016. The company expects its fortunes to improve in 2018, however, likely surpassing 2016’s haul.