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Rising aluminum costs cut into Ford's profit

When Ford reports fourth-quarter results on Wednesday afternoon, it is expected to fret that rising metals costs have cut into profits, even as rivals say they have the problem under control. Aluminum prices have risen 20 percent in the last year and nearly 11 percent since Dec. 11. Steel prices have risen just over 9 percent in the last year. Ford uses more aluminum in its vehicles than its rivals. Aluminum is lighter but far more expensive than steel, closing at $2,229 per tonne on Tuesday. U.S. steel futures closed at $677 per ton (0.91 metric tonnes). Republican U.S. President Donald Trump's administration is weighing whether to impose tariffs on imported steel and aluminum, which could push prices even higher. Ford gave a disappointing earnings estimate for 2017 and 2018 last week, saying the higher costs for steel, aluminum and other metals, as well as currency volatility, could cost the company $1.6 billion in 2018. Ford shares took a dive after the announcement. Ford Chief Financial Officer Bob Shanks told analysts at a conference in Detroit last week that while the company benefited from low commodity prices in 2016, rising steel prices were now the main cause of higher costs, followed by aluminum. Shanks said the automaker at times relies on foreign currencies as a "natural hedge" for some commodities but those are now going in the opposite direction, so they are not working. A Ford spokesman added that the automaker also uses a mix of contracts, hedges and indexed buying. Industry analysts point to the spike in aluminum versus steel prices as a plausible reason for Ford's problems, especially since it uses far more of the expensive metal than other major automakers. "When you look at Ford in the context of the other automakers, aluminum drives a lot of their volume and I think that is the cause" of their rising costs, said Jeff Schuster, senior vice president of forecasting at auto consultancy LMC Automotive. Other major automakers say rising commodity costs are not much of a problem. At last week's Detroit auto show, Fiat Chrysler Automobiles NV's Chief Executive Officer Sergio Marchionne reiterated its earnings guidance for 2018 and held forth on a number of topics, but did not mention metals prices. General Motors Co gave a well-received profit outlook last week and did not mention the subject. "We view changes in raw material costs as something that is manageable," a GM spokesman said in an email.

Why Ford's Alan Mulally would be right for Microsoft, or any company

That Mulally was seriously being considered says a great deal about Microsoft and Mulally.
It appears that the chatter about Ford CEO Alan Mulally possibly leaving early to take over as CEO of Microsoft is losing air pretty fast. What's pretty interesting is that it got any traction in the first place.

Ford Explorer, Expedition next to go aluminum?

Ford made some serious waves when it unveiled the latest F-150. Instead of making its bodywork out of steel, like just about every other truck on the market, Ford went with aluminum. And you can bet the F-150 won't be the last Ford model to go with the lightweight alloy construction, either.
Our compatriots at Edmunds report that Dearborn is considering replacing two of its most popular SUVs with aluminum versions. One candidate is the Expedition, which would make sense considering that the current model (like the two preceding generations and the fullsize Bronco before it) is based on the F-150's underpinnings. Another is the Explorer, which was traditionally based on the Ranger pickup but went with a car-like unibody chassis in its current iteration. If the Explorer does go the way of aluminum, don't expect it to be a part of its very next update, which is likely due too soon for such major changes.
It would stand to reason that, if the Expedition were to go aluminum, so would the next-generation Lincoln Navigator. Ditto the MKT together with the Explorer. But those aren't likely to be the only models in contention for aluminum construction. Like any other automaker, Ford is under pressure to steadily reduce its carbon emissions and improve its fuel economy figures, prompting it to look at a whole range of measures - including more efficient engines, lower rolling-resistance tires, active aerodynamics and lightweight construction. Expect aluminum to play a big part in that equation moving forward.