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posted: 5/3/2013 6:02 AM

Ford boosting F-150 production as pickups sales grow

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Bloomberg News

Ford Motor Co., reacting to U.S. pickup sales that have gained momentum for almost two years straight, said it plans to add workers at an F-150 truck factory to boost production of its most profitable model line.

Ford will hire a third crew at its plant in Claycomo, Missouri, to boost F-150 output starting in the third quarter, the company said in a statement. The No. 2 U.S. automaker is adding more than 2,000 employees at the factory for the extra pickup production and to begin building the Transit commercial van in mid-2014.

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The F-Series pickup line is a juggernaut for Dearborn, Michigan-based Ford. It's led the U.S. truck segment the last 36 years and has been the best-selling vehicle of any type in the country for more than three decades. Ford plans to make more pickups to keep up with demand after 21 straight months of increases for the F-Series as rebounding housing and energy sectors lift U.S. market share for Ford, General Motors Co. and Chrysler Group LLC.

"It's a huge vote of confidence in our truck, our sales and what's going on in the industry overall and the economy," Joe Hinrichs, Ford's president of the Americas, said in a telephone interview. "We wouldn't be hiring if we didn't think it was going to last. It is a strong indication of how we feel about our continued leadership in the segment."

Kansas City Assembly will be capable of operating 120 hours per week after the third crew is added, up from the 100 hours per week that it's been running with two shifts, Hinrichs said.

Beating Estimates

Ford, GM and Fiat SpA-controlled Chrysler yesterday reported better-than-projected U.S. sales increases for April, building on their first sweep of market share gains in the first quarter of any year in two decades. Ford's sales of cars and light trucks rose 18 percent, and GM and Chrysler both increased 11 percent, according to company statements released yesterday. The automakers exceeded the average estimates of 11 analysts in a survey by Bloomberg for gains of 17 percent by Ford and 10 percent by GM and Chrysler.

Automakers are making gains in the U.S. as consumer confidence improves and the recovery in the housing market gathers momentum, buoyed by record low borrowing costs and a tight supply of homes for sale.

New-home construction in the U.S. climbed in March to the highest level in almost five years, with starts increasing 7 percent to a 1.04 million annual rate, the Commerce Department said April 16. Auto dealers including AutoNation Inc., the largest U.S. retailer of new cars and trucks, also are citing growing demand from energy companies in states such as Texas.

Detroit Three

"There still is a significant number of personal-use buyers in the market, but what's fueling the sales growth now are the housing, construction and oil industries that need trucks and have traditionally driven truck sales," said Hinrichs, 46. "Most of the drivers for the increased sales you're seeing on trucks are coming from the commercial side."

Combined sales of Ford's F-Series, Detroit-based GM's Chevrolet Silverado and GMC Sierra and Chrysler's Ram trucks surged 29 percent, the companies said. The automakers built on gains in the first three months of the year, when Ford, GM and Auburn Hills, Michigan-based Chrysler all gained U.S. market share in a first quarter for the first time since 1993, according to the Automotive News Data Center.

Profit Contribution

"The Big Three are gaining big time because the housing market's gaining big time," Eric Noble, president of the Car Lab, an industry consultant in Orange, California, said yesterday on Bloomberg Television. "The economy is going well enough that businesses and independent owners have confidence they can chin the bar. They've got to replace the tools, and that means replacing the truck."

No model is more important or more defended by U.S. automakers than the full-size pickup. The $8,000 to $10,000 in gross profit that each truck hauls in for the three companies account for the vast majority of their earnings -- an estimated 90 percent for Ford and two-thirds for GM, Morgan Stanley said earlier this year.

Toyota Motor Corp. revealed a redesigned Tundra in February at the Chicago auto show that is scheduled to arrive at dealerships in September. Tundra deliveries have increased 15 percent this year to 31,856. Chrysler's Ram trucks, the No. 3 model line of pickups among U.S. automakers, almost outsold Tundra in the month of April alone, with 31,409 deliveries.

Silverado, Sierra

"The Japanese automakers don't get the same lift benefit from those kinds of things that stimulate truck growth," Larry Dominique, president of TrueCar Inc.'s ALG and a former product planner for Nissan Motor Co., said by telephone. "Those trucks that put a lot of coffers into the domestics, when they're up, it really is a boon to the domestic manufacturers."

Ford's North American operations earned $2.4 billion in the year's first three months, the division's best quarter ever, after setting annual records of $8.34 billion with a 10.4 percent profit margin last year.

GM is rolling out revamped Chevy Silverado and GMC Sierra pickups this month. Ford answered GM's new offerings by showing an F-150 pickup prototype at the Detroit auto show in January called the Atlas that foreshadowed its future trucks.

The Atlas has a massive front end, with thick chrome bars across the grille accented by narrow LED headlamps. It features cameras in the front, rear and side mirrors to give the driver a 360-degree view on an 8-inch dashboard screen while backing up. It also has technology borrowed from hybrids that shuts the engine off at stoplights to save fuel.

Ford has said it plans to shed as much as 750 pounds (340 kilograms) from its next-generation truck to improve fuel economy as part of a company fleet-wide goal to cut 250 pounds to 750 pounds from all of its models.

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