Ford Motor Co (F.N) is on track to have cut structural costs by up to $15 billion since 2005, but has room to make further reductions, the automaker's chief financial officer said on Wednesday.
There are always going to be more opportunities, CFO Lewis Booth said in a webcast appearance at the IAA Investor and analyst conference at the Frankfurt Motor Show. There may be diminishing returns, but there are always going to be more opportunities.
Ford, which remains on track to reach at least break-even in 2011, has focused in its cost-cutting on producing higher volume global platforms to take advantage of economies of scale and reduce product development costs.
The automaker has improved its investment efficiency for tools and engineering, but there are other opportunities, if not a quantum leap, Booth said.
I would say it is now continuous improvement, but there will be improvements, Booth said.
Ford, which posted net losses totaling about $30 billion from 2006 through 2008, expects its second-half cash outflow to be significantly reduced from the levels registered in the first half at the height of the U.S. auto sales downturn.
Booth said Ford expects to see its cash flow improve as the production volumes return to more normal levels. The automaker plans a more gradual increase in production compared to the sharp production cuts it made in 2008 and 2009 in reaction to the industry sales downturn, he said.
U.S. auto sales fell to monthly rates not seen since the early 1980s earlier this year amid the recession and have rebounded from those low levels in July and August under the support of the government cash for clunkers program.
The clunkers program ran the last week of July and roughly the first three weeks of August, pushing industry sales rates up sharply.
U.S. industry auto sales have started slowly, as expected, with the clunkers program exhausted and inventory levels sharply depleted and it is too early to forecast what the monthly sales rate might be, Booth said.
(Reporting by David Bailey, editing by Dave Zimmerman)