Ford overhauls five-year business plan due to weak European economy

Article by Anita Panait, on June 9, 2012

Ford Motor Co is overhauling its internal five-year business plan to take into consideration the weakening of the European economy in 2011, according to the company’s Chief Financial Officer Bob Shanks. Ford’s CFO said that the company needs to develop a better plan in response to an anticipated less favorable external environment. 

Shanks said the company is in the process of creating a course of action in response to new realities. He, however, declined to detail the changes to the company’s five-year business plan because of its confidential nature. The company will present the next update to its top executives in mid-July. The current European debt crisis has resulted to lower demand for new vehicles in the 19 markets Ford tracks in the continent.

There is also a heavy rivalry between carmakers despite overcapacity, resulting to paper-thin margins and tough price competition. Ford expects to post losses of between $500 million and $600 million in Europe this year. In an interview, Shanks told Reuters that they failed to anticipate the current situation in Europe. The company prepares four internal updates on its business every year; with two of them being detailed studies of the business and that include five-year projections.

According to Shanks, Ford will continue to tweak its five-year outlook through 2012. In December, the company will present the plan to its board of directors for confirmation. The global market is currently on its toes due to concerns on the viability of Spain's banks as well as the possibility that Greece will exit euro zone after an election on June 17. [source: Autonews]

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