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Ford looks to fill gap due to Japan supply problems
by Staff Writers
New York (AFP) April 26, 2011

Honda moves forward Brazil factory break for lack of parts
Sao Paulo (AFP) April 26, 2011 - Japanese carmaker Honda said Tuesday it will close a plant in Brazil earlier than scheduled because of a possible parts shortage resulting from Japan's earthquake and tsunami.

The Brazilian plant normally takes a two week break in July during the southern winter season, but it will be pushed forward to somewhere between the end of May and beginning of June, the company said.

"Due to natural disasters and their impact experienced by suppliers of Honda Motor Co., there could be a shortage of auto assembly parts starting in May" at the factory in Sumare, outside Sao Paulo, a company statement said.

The Honda plant in Manaus in Brazil's Amazon basin will not be affected, the statement said.

The Sumare plant currently turns out 650 vehicles a day -- Civics, Citys and Fits.

After the March 11 quake and tsunami, Honda briefly suspended production of cars and parts in Japan. By March 31 it announced a phasing in of production and of exports.

Honda already announced similar breaks in North American, Philippine, and British plants due to parts shortages.

Ford Motor is looking to fill the gap created by supply shortages rocking its rivals in the wake of the massive Japanese quake and tsunami, its chief financial officer said Tuesday.

"If we see opportunities, we'll try to provide cars to our customers," Lewis Booth told AFP in a telephone interview after Ford posted a first quarter profit of $2.55 billion.

Booth said it's still too early to project how much of a market share boost Ford will post this year as a result of the major production cuts at Toyota, Honda, Nissan, Mazda and Mitsubishi.

"We're not giving any projection on that because it is still unclear how much production will be available from our competitors," Booth said.

"In North America, our local dealers just became aware this weekend about how restricted the production in Japan may be, so we haven't seen any change in market activity until now."

While Ford's Asian operations have taken a hit from the parts shortage, the automaker said the shortages will not have a "material impact" on its overall results and that the first quarter impacts were "minimal."

It also announced plans to boost second quarter production by about 12,000 units from a year ago to about 1.5 million vehicles.

Booth said sales were "running pretty well" in Ford's major global markets and global growth continues despite "the problems in Japan, higher oil prices, instability in North Africa and the Middle East."

Ford remains "on track" in terms of "mid-term sales" but expects profit growth to slow later in the year because of "commodity cost increase, structural cost increases; enormous seasonal factors that make the first quarter a strong quarter," Booth added.

Booth expressed satisfaction with the results of Ford's troubled European division, where pre-tax operating profit nearly tripled to $293 million on an eight-fold increase in sales, after recent losses.

Ford has also been affected by labor unrest in Europe, including a recent strike at its French plant.

"In terms of profitability we are very pleased with the results thanks to a continued discipline on incentive spending and costs, improved product line mix," said Booth.

"In terms of structural (issues), we are very comfortable in terms of the structure we have in Europe and with our workforce."

earlier related report
Ford revs up profits in best first quarter since 1998
New York (AFP) April 26, 2011 - Ford, the second-largest US automaker, said Tuesday its first-quarter profit surged 22 percent from a year ago, revved up by sales of fuel-efficient vehicles as it coped with higher commodity prices.

Ford reported $2.55 billion profit for the first three months of the year "as fuel-efficient new products, continued investment in global growth and the strengthening of Ford's core business boosted results."

It was the eighth consecutive quarterly profit for Ford, the only major US automaker that did not seek a government bailout during the 2008-2009 financial crisis, and the best first-quarter profit since 1998.

However, the automaker cautioned that its profits later in the year "may not be as strong" due to rising commodity costs, seasonal factors that favor the first half of the year, expected lower profits at its finance arm, and "higher investment in costs related to our longer term growth and brand plan."

"We remain on track to deliver continued improvement for full-year pre-tax operating profit," chief executive Alan Mulally said in a conference call.

Rising oil prices will have an impact on global economic growth and the supply shortage resulting from the Japanese quake and tsunami represent a challenge for the automotive industry, Mulally said.

But Ford's investment in fuel-efficient vehicles means it is "really well-positioned to serve our customers" as demand shifts to smaller cars, Mulally said.

The supply shortages have not had a "material impact" on Ford's operations outside of the Asia-Pacific region and the number-two US automaker could see its market share expand as a result of production cuts at its Japanese rivals, Mulally said.

"Clearly with the strength of our product line now and the overall demand... there's going to be some opportunity for us to serve even more consumers going forward," he said.

Ford raised its second-quarter production estimate to about 1.5 million units, up 12,000 units from a year ago, reflecting "continued strong customer demand" for its products.

Ford's earnings per share of 61 cents were up 22 percent from the same period in 2010. First-quarter revenue rose 18 percent to $33.1 billion.

The results beat Wall Street estimates and Ford shares closed 0.8 percent higher at $15.66 in New York trade.

Jessica Caldwell at noted the earnings report followed Ford's best sales month in four years -- in March, when Ford knocked out rival General Motors for the top spot in US auto sales.

"Ford's momentum stems from the company's balanced product portfolio and its commitment to refresh its lineup at an aggressive pace, which keeps dealers excited and continues the buzz among car-shoppers," she said.

"Fluctuating gas prices and shifting consumer preferences don't matter much when you have a strong representative in every major product category as Ford does."

The automaker is also continuing to make progress in slashing the mountain of debt it acquired to survive the crisis, cutting $2.5 billion to end the quarter with $21.3 billion in liquidity and $16.6 billion in debt.

In North America, Ford posted pre-tax operating profit of $1.8 billion, compared with $1.2 billion a year ago, thanks to higher auto prices and sales volume.

The South America business reported a 3.4 percent rise in pre-tax operating profit to $210 million.

In Europe, pre-tax operating profit nearly tripled, to $293 million on an eightfold increase in sales, thanks in part to a favorable foreign-exchange rate.

Operations in Asia-Pacific and Africa pumped up a 43 percent gain in profit to $33 million.

Ford said it expects its 2011 market share in the US and European markets to be equal to or improved from 2010.

For the first quarter, Ford said it held 16 percent of the US market and 8.5 percent of the European market.


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