Ford continues to rev up cost-cutting initiatives
By Staff -- Purchasing, 3/12/1998
New sourcing, manufacturing, and distribution strategies helped Ford Motor Co. trim nearly $3 billion from its costs in 1997, and triple it's target at the start of the year. And the cost-cutting spree isn't over yet.The nation's No. 2 automaker plans to slice another $1 billion from its costs in 1998, according to company officials.
Ford spokesman Chris Vineyard says "this year's goal is going to be much tougher to meet because cost savings, which are easier at first, get tougher as you go along." However, if 1997 is any indication of what Ford can accomplish, the automaker could wind up beating its savings target handily.
At the beginning of 1997, Ford predicted it would cut $1 billion from the $103 billion it spent each year. After saving nearly $800 million in the first business quarter, Ford upped its cost-cutting goal to $2 billion. Ford eventually beat that target as well, marking its first-ever decline in costs.
Vineyard says savings have come from a mix of initiatives, including streamlining Ford's manufacturing and order-to-delivery processes.
Another big cost saver: standard parts. Ford is pushing to have at least half of the parts in its vehicles standard across several platforms. The company has already beat this target with some overseas models. For example, the Fiesta, Ka, and Puma subcompact cars have 80% of their parts in common.
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