Ford announces $75 million plan to retool Michigan truck plant for small cars

Building on an earlier announcement in July when it had announced a massive $8.7 billion quarterly loss (See: Ford announces $8.7-billion quarterly loss, goes for major restructuring), Ford Motors on Tuesday said it will spend $75 million to convert its Michigan Truck plant into a facility that will roll out smaller cars as part of the automaker's plans to shift production to more in-demand fuel-efficient vehicles.

In July, Ford CEO Alan Mulally had said that the company was shifting its focus "to bring to the North American market smaller, more fuel-efficient vehicles that people increasingly want." Now, those words are giving rise to concrete actions.

Ford's truck plant in Wayne, Michigan, which currently builds the slow-selling Ford Expedition and Lincoln Navigator SUVs, is scheduled to produce cars in 2010.

Ford said the SUV-related equipment would be disassembled and transferred, beginning in November, to its Kentucky truck plant, which begins producing the large SUVs in the second quarter of 2009.

The 1,000 Michigan truck workers will transfer next door to the Wayne assembly plant in January, where a third shift will be created to boost production of the hot-selling Ford Focus. Once the conversion is complete, Michigan Truck workers will return to their plant to produce a new product and augment the Focus output when needed. (See: Ford Focus is the most improved model in the JD Power and Associates 2008 APEAL study and Ford to introduce high-end series Focus models in 2009)

The investment and conversion are part of Mulally's plan to overhaul the automaker in response to rapid decline in pickup truck and SUV sales in the US amid $4-a-gallon gasoline. Ford is betting that revamping three production plants and introducing six of its European models in the US starting in 2010 will help the company return to profitability. (See: Ford sets best-in-class quality targets on all-new global small vehicles)

Mulally was forced in June to scrap the company's long-standing goal of restoring full-year profitability in 2009. He expects the US economic recovery to begin by early 2010, with US auto industry sales returning to trend levels as the economy returns to health. US auto sales are currently at their lowest levels in about 16 years. (See: US auto sales limp at 16-year lows)

Ford's Michigan truck plant is one of three truck and SUV plants in North America that will be converted to build compact and subcompact vehicles. The other two are assembly plants in Cuautitlan, Mexico and Louisville, Kentucky.

The Mexico plant is slated to begin building a Fiesta sub-compact car in 2010. The plant currently produces the F- Series pickup trucks. The Louisville plant also will begin producing a new small car in 2011. It is now home to the Ford Explorer. (See: Ford shifts base from the US to Mexico for new ''world car'')