Ford will double China purchases
It will buy up to $3 billion in parts
BY EUGENE TANG and STEPHEN ENGLE
BLOOMBERG
Ford Motor Co., which reported its biggest loss in 14 years earlier this week, said it will double its purchasing of China-made components this year to cut production costs.
Ford will buy between $2.5 billion and $3 billion in auto parts in China, said Bill Ford, chairman of the Dearborn-based carmaker. That compares with $1.6 billion to $1.7 billion last year. The parts will be exported to assembly plants in other Asian countries, the United States and Europe.
"We are only scratching the surface in China," Bill Ford said Wednesday in Beijing. "China is very key to our global sourcing strategy, particularly as the quality of the local suppliers ramps up."
Ford needs cheaper parts from China, where an average manufacturing job pays about 10% of an equivalent union job in the United States, to meet its goal of cutting $6 billion in annual costs by 2010. The carmaker reported a $5.8-billion third-quarter loss as sales slumped in the United States.
Ford was the last of the three largest U.S.-based carmakers to produce vehicles in China, investing $1.5 billion in 2003 to assemble Mondeo sedans and Fiesta compact cars in southwestern China's Chongqing city. The carmaker agreed in 2004 to build a third China factory in Nanjing city to assemble eight new models with its Mazda Motor Corp. affiliate.
The company buys about $9 billion in parts in the entire Asia-Pacific region annually, according to Mark Schulz, Ford's executive vice president for international operations. Globally, the company buys between $80 billion and $90 billion in parts a year, he said.
In China, the company buys steering systems, suspension, batteries and other parts, Schulz said.
Ford's China sales more than doubled in the first nine months of 2006 to 114,685 vehicles, based on direct sales to consumers. That's about 2.2% of the 5.28 million vehicles sold in the same period in China.
It will buy up to $3 billion in parts
BY EUGENE TANG and STEPHEN ENGLE
BLOOMBERG
Ford Motor Co., which reported its biggest loss in 14 years earlier this week, said it will double its purchasing of China-made components this year to cut production costs.
Ford will buy between $2.5 billion and $3 billion in auto parts in China, said Bill Ford, chairman of the Dearborn-based carmaker. That compares with $1.6 billion to $1.7 billion last year. The parts will be exported to assembly plants in other Asian countries, the United States and Europe.
"We are only scratching the surface in China," Bill Ford said Wednesday in Beijing. "China is very key to our global sourcing strategy, particularly as the quality of the local suppliers ramps up."
Ford needs cheaper parts from China, where an average manufacturing job pays about 10% of an equivalent union job in the United States, to meet its goal of cutting $6 billion in annual costs by 2010. The carmaker reported a $5.8-billion third-quarter loss as sales slumped in the United States.
Ford was the last of the three largest U.S.-based carmakers to produce vehicles in China, investing $1.5 billion in 2003 to assemble Mondeo sedans and Fiesta compact cars in southwestern China's Chongqing city. The carmaker agreed in 2004 to build a third China factory in Nanjing city to assemble eight new models with its Mazda Motor Corp. affiliate.
The company buys about $9 billion in parts in the entire Asia-Pacific region annually, according to Mark Schulz, Ford's executive vice president for international operations. Globally, the company buys between $80 billion and $90 billion in parts a year, he said.
In China, the company buys steering systems, suspension, batteries and other parts, Schulz said.
Ford's China sales more than doubled in the first nine months of 2006 to 114,685 vehicles, based on direct sales to consumers. That's about 2.2% of the 5.28 million vehicles sold in the same period in China.
