Ford brings new Focus to small-car market

In its heyday, Ford Motor Co.'s Michigan Truck plant generated up to $3.7 billion a year in profits building sports utility vehicles. On Wednesday, the auto maker will detail plans to convert the plant to produce a compact car that never made a nickel in the U.S.

Building a profitable Ford Focus small-car line will require huge changes in how the vehicles are equipped and assembled. By one estimate, the earlier-model Ford Focus lost as much as $1 billion a year. But Ford believes it now has a new formula to turn those losses into steady profits.

Among the changes planned: Ford will build the same vehicle here as in Asia and Europe -- allowing for greater economies of scale. It is also counting on new union work rules to reduce labor costs. The Dearborn, Mich., auto maker aims to revive the car's reputation by producing a battery-powered Focus model, its first all-electric passenger car.

Of course, higher gasoline prices also factor in its outlook. Sales of the Focus and other small cars have tracked gasoline prices.

"We do need more price certainty in the marketplace," Bill Ford Jr., Ford's executive chairman said in an interview Tuesday. He previously has called for a gas tax to stabilize price fluctuations.

Meanwhile, Mr. Ford said he opposed attempts to increase federal fuel-economy standards while gas prices remain low. The Obama administration is considering such a move.

"In the United States, clearly we had been focused on our bigger trucks and SUVs and made a few small cars but without a consistency of purpose," added Ford Chief Executive Alan Mulally. "We all came to the consensus that we needed to do more work on that business case because we absolutely wanted to serve the U.S. customers for smaller vehicles," he said.

Mr. Mulally said as a result of the world-wide production and expected labor-cost savings, the Focus in the U.S. will be "profitable from initial production" starting next year.

Full story