Ford CEO Jim Farley wears hairshirt during fourth-quarter 2022 earnings call but has a plan for future growth and improvement.
Ford did not make enough cars, or make them well enough, or get the parts it needed, all of which resulted in ugly fourth-quarter earnings and a net loss for 2022.in confessing the company's execution issues and expressing his frustration."We should have done much better last year," he said in the fourth-quarter 2022 earnings release.
"We left about $2 billion in profits on the table that were within our control, and we're going to correct that with improved execution and performance." The continued mea culpa in a call with investors to discuss the financial results came with descriptions of the deep level of angst and reorganization taking place internally to become a leaner company, starting this year.
Farley gave some examples. Each vehicle platform is 25-30 percent cost inefficient. That means Ford has to get more production from the current pipeline or reduce how much it costs to maintain the current lineup. While engineers tackle that, the supply chain is under a microscope after spending $1 billion in premiums last year on increased freight, shipping, and other costs of the supply chain disruption and fallout from the Covid-19 pandemic.
The extra money spent to try to get enough parts did not prevent the automaker from falling short of expected sales by 100,000 units, which adds up to about another $1 billion in lost revenue. Ford also needs to reduce the complexity of its vehicles; complexity means they take longer to build and cost more.Teams have spent the last few months getting deep into where Ford needs to go, Farley said, and we can expect to get updates on this exercise over the course of the year.
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