Ford plans new model onslaught to fight sales slump

General Motors announced last week that it would be delaying development work on several new models to help cut costs in the near term, but Ford has a different idea for future success. Rather than cutting back, Ford is betting its future on its ability to design a new generation of must-buy vehicles.

Meetings on the subject of what to do to prevent the current slide from progressing into bankruptcy have been underway for the last six weeks, reports The Detroit News. The outcome is the plan to create new cars rather than cutback and rely on existing models.

"We're only going to be in business if we create products that people really do want and value," said Mulally.

Part of the package for the future includes finding ways to make more money off small cars in the U.S., as the company already does in Europe. Recently renegotiated contracts with the UAW will help toward that goal, but there are still the issues of materials prices, American demand for features and power and the low price floor of small cars in the U.S. conspiring to erase profit margins.

Still, Ford is confident in its plan to move forward on the strength of new products. Cutting costs without offering something new doesn't make sense to product development leader Dennis Kuzak.

"Outstanding products are the heart of any turnaround of our business and its future success," said Kuzak. "The whole intent from the beginning was to protect the product plan and the capital spending and engineering that goes with it and look for every other element of cash that isn't directly tied to the products."

To generate that cash Ford will be cutting $8-$9 billion in expenses via restructuring, a 10% salaried payroll cut, and reduction in executive bonuses. Advertising budgets will also be reduced. The sum of all these cuts, together with asset sales and drawing on the company's Ford Credit financial agency, will help put the Blue Oval's balance sheets back in order - if all goes according to plan.