Ford cutting North American engineering costs

14/04/2008 - 21:18

DETROIT (Reuters) - Ford Motor Co expects to cut its engineering costs in North America by 30 percent under its broad plan to cut complexity and improve global sourcing of materials and development, the automaker's product development chief said at a conference on Monday.

Derrick Kuzak declined to specify the dollar amount the automaker expected to save on engineering by 2009 over its 2006 expenses under the global effort, but did say some of it would be reinvested and some put to the profit line.

Ford has been restructuring its operations with an emphasis on taking out complexity, and where possible adopting global plans for vehicle platforms and purchasing.

The company also has opted to bring some interiors development back in-house to retain the "Fordness" of a vehicle, Kuzak told reporters on the sidelines of the SAE International 2008 World Congress in Detroit.

"I like to call the interior the second home on wheels," he said. "So we are very focused on making that second home on wheels completely Ford, improving the perceived problem in the choice of materials, the fit and finish and bringing in a lot of comfort and convenience."

The automaker wants customers to know they are sitting in a Ford by the feel of the seat, the sound of a door shutting and an engine starting, even if they are blindfolded, Kuzak said.

"They will all be distinctively Ford and every Ford world wide will sound look and feel the same way," he said.

Ford, which posted losses of $2.7 billion in 2007 and $12.6 billion in 2006, has been cutting the complexity in its cars and trucks to focus on the combinations customers want the most, which also has reduced frustrations among car dealers.

Kuzak also said a significant part of the fleets from automakers will have to become electric over the next decades as the industry aims to meet rising fuel economy standards.

New energy laws mandate a 40 percent increase in U.S. fuel economy standards to 35 miles per gallon by 2020, the first increase in the standards in three decades. All car makers are looking at ways to meet the gradual increases in economy.

"If you go out 30 years, then by our numbers and how far fuel economy has to be improved and CO2 reduced, you do need to have plug-in hybrids, electric vehicles or hydrogen, not the 10 percent (of the fleet) they were talking about, but a significant proportion," Kuzak said.

(Reporting by David Bailey; Editing by Tim Dobbyn)

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