Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's kick it off, Jim.
Speaker 3: I mean.
Speaker 2: It is such an incredible feat.
Speaker 3: Not only coming back from the slide that you were
Speaker 3: in to take number one the number one spot, I
Speaker 3: mean number two or number three would have been impressive,
Speaker 3: but beating Toyota, beating Honda, their legendary for quality.
Speaker 2: How did you actually achieve that?
Speaker 1: Well, it took us four years of hard work to
Speaker 1: be an overnight success story.
Speaker 2: You know, it's been. It's been just an amazing culture change.
Speaker 1: It Ford, Literally, Matt, every one of our engineers has
Speaker 1: been in the plant, every one of our supply chain
Speaker 1: teams are in our suppliers. We are paying attention to
Speaker 1: every detail. It has taken a few years to get there.
Speaker 1: But I think it's really about the culture of putting
Speaker 1: quality before profits, before anything else. And that really is
Speaker 1: what's exciting about this because now what I'm seeing is
Speaker 1: the team really focusing on learn tern durability.
Speaker 3: So what was it your team? Was it an employee
Speaker 3: of labor issue? Was it you know technology? Did you
Speaker 3: use AI? Was it factory processes?
Speaker 1: Like?
Speaker 3: Can you get into specifics of how you did it?
Speaker 1: Yeah? If you if you were to visit today the
Speaker 1: Rouge plant where we make the F one fifty matt
Speaker 1: what you would see is a whole control center around
Speaker 1: data and quality data. So we measure the torque of
Speaker 1: every one of our fasteners. We have AI tools for
Speaker 1: vision systems, but most of all, it's just old fashioned
Speaker 1: hard work of our team members all working together to
Speaker 1: pay attention to the very small details that will make
Speaker 1: a difference between a perfectly built Forward and an okay
Speaker 1: built Toyota. It's just an incredible attention to every single detail.
Speaker 3: So, I mean, it's interesting now that we're in the
Speaker 3: age of AI and we're talking about this technology killing jobs,
Speaker 3: but it seems like in your case it's really experienced
Speaker 3: human workers that made the big difference it did.
Speaker 1: I have to say the process coaches, the area coaches,
Speaker 1: you know, they get up every morning, they look at
Speaker 1: the last shifts, quality data, We look at how many
Speaker 1: vehicles are repaired, and we work that process every moment
Speaker 1: of every day. Every employee walks into anyone on our plants,
Speaker 1: they know exactly are we winning, are we losing yesterday?
Speaker 1: And today. Everyone is fully aware of where we stand.
Speaker 1: We know exactly where Toyota is we know exactly how
Speaker 1: to you know where we need to get to beat
Speaker 1: Tundra and Super Duty better than any of the other
Speaker 1: domestic competitors. And so everyone is aware exactly the quality
Speaker 1: is coming out of our plant in any particular shift
Speaker 1: every fifty seconds. And that is that human motivation to
Speaker 1: pay attention to everyone.
Speaker 2: Everything is amazing.
Speaker 1: Look, we make eighty five percent of our vehicles in
Speaker 1: the US, Matt. That means these are US factory workers
Speaker 1: versus even our domestic competitors. They're some of the biggest
Speaker 1: importers in the US. We're not building these vehicles in
Speaker 1: South Korea or Japan. These are American workers beating Toyota
Speaker 1: and Hyundai and our domestics who import their vehicles. We
Speaker 1: beat them all with the American workers, with the attention
Speaker 1: to detail.
Speaker 3: It's an incredibly compelling narrative. I agree, of course, being
Speaker 3: at Bloomberg, we're focused on the numbers and quality issues.
Speaker 3: Recalls and the like had dragged down profits and margins
Speaker 3: to some extent over the past few years. Can you
Speaker 3: quantify in dollar terms how much this will contribute to
Speaker 3: your recovery?
Speaker 1: This year, one hundreds of millions of improvement we're seeing
Speaker 1: our warranty coverages come down, We're seeing our costs come down.
Speaker 2: These are all contributing.
Speaker 1: To literally hundreds and hundreds of millions of dollars of
Speaker 1: a tailwind for Ford on costs.
Speaker 2: But we didn't stop there.
Speaker 1: We also negotiated our parts costs with our suppliers. We've
Speaker 1: looked at all of our bill material and even our
Speaker 1: manufacturing inventory and our plants and all our manufacturing logistics costs.
Speaker 3: Imagine for Ford Pro it's the most important. You've got
Speaker 3: incredible growth there, you've got double digit margins, You've got
Speaker 3: thirty percent subscription growth. Correct me if I'm wrong on
Speaker 3: any of those numbers. How important is this for Ford
Speaker 3: Pro And does it change the picture at all?
Speaker 1: Well, good question, I would say for Ford Pro, really,
Speaker 1: what this means Bill Ford Tough really means something to
Speaker 1: our Pro.
Speaker 2: Customers on the vehicle side.
Speaker 1: But what we're really seeing there is an obsession with
Speaker 1: long term powertrained durability. We're testing every engine two to
Speaker 1: three hundred thousand miles with transmissions, axles, everything. So those
Speaker 1: Pro customers who use their vehicles little ninety percent of
Speaker 1: the day to run their business, they can not only
Speaker 1: be happy with ninety day quality, but also five to
Speaker 1: ten year quality. That's what it means for our pro customers.
Speaker 3: In the pro business. I'm really interested in the subscription
Speaker 3: growth that you've seen. Can you give us targets there?
Speaker 3: Are you looking at even stronger growth as that business grows.
Speaker 1: We are seeing quarter over quarter, as you said, between
Speaker 1: thirty and forty percent growth. The margins are over eighty
Speaker 1: percent on our growth margin side. Here's what people are buying.
Speaker 1: They're buying productivity. These vehicles, you know, they run their business. Plumbers, electricians,
Speaker 1: ambulance police, you know these customers.
Speaker 2: They use the date off the vehicles.
Speaker 1: They teach the drivers how to be easier on the brakes,
Speaker 1: to accelerate better, not to go past the speed limit,
Speaker 1: you know, to do telematics and route the vehicles efficiently
Speaker 1: to their next job. All these productivity software tools that
Speaker 1: we offer customers allows them to reduce their cost and
Speaker 1: improve their uptime so the vehicles never off the road.
Speaker 1: We're now able to send them prognostics or predictive failure
Speaker 1: of vehicle components so that their vehicles are never off
Speaker 1: the road. They can do that predictive maintenance before a
Speaker 1: problem happens, and they absolutely. We're approaching a million subscriptions
Speaker 1: now for pro So and.
Speaker 3: At a time when we see you know, eight hundred
Speaker 3: billion dollars of Hyperscaler capex this year alone to build
Speaker 3: out US infrastructure, tell us what kind of opportunity this
Speaker 3: is for Forden and how much you're able to participate
Speaker 3: in that data center build out.
Speaker 1: Well, I have to say, in the old days we
Speaker 1: used to look at housing. Today what we look at
Speaker 1: is construction. The construction trades are booming, super duty transit,
Speaker 1: exportable power to the job site. This is what customers want.
Speaker 1: They want new vehicles that are efficient with software. But
Speaker 1: also what they want is storage batteries. We're now going
Speaker 1: to be one of the biggest domestic makers of energy
Speaker 1: storage batteries.
Speaker 2: Now we're scaling up that plant. We actually have two plants.
Speaker 1: We'll have twenty gigawant hours of energy storage and not
Speaker 1: only for sustainable grid and the grid reliance, but also Hyperscalers.
Speaker 1: They're going to use our battery electric storage batteries to
Speaker 1: really run our country, help run our country. Between pro
Speaker 1: and Best our energy storage business, we're very well positioned.
Speaker 2: Have you got.
Speaker 3: Contracts with any of these big hyperscalers, Microsoft, Amazon, Google,
Speaker 3: Meta that you can tell us about.
Speaker 2: Jim. Yeah, good question.
Speaker 1: Well, we're in the middle of building out and converting
Speaker 1: these batteries from vehicle batteries to energy storage batteries, which
Speaker 1: are actually very different chemistry wise, format wise, Matt. To
Speaker 1: your point, we've had literally hundreds of customers now in
Speaker 1: the contracting phase. We announced one large one edf and
Speaker 1: they've committed about five gigwad hours over the course of
Speaker 1: several years now, and we're in the process of contracting many,
Speaker 1: many customers.
Speaker 2: It's a mixed Matt.
Speaker 1: We see sustainable grid you know, Win and solar. We
Speaker 1: also see hyperscalers building out. They want that one hundred
Speaker 1: percent up time on their facility.
Speaker 2: The Ford batteries are really useful for that. So it's
Speaker 2: a mix of customers so far.
Speaker 3: If I mean, since we're on Bloomberg, you're talking to
Speaker 3: every single investor on the planet, so you can share
Speaker 3: financial information with us that's material. Is this the right
Speaker 3: time to boost your EBIT target for the year?
Speaker 1: Great question, because we're right about right about a quarter
Speaker 1: or two earnings.
Speaker 2: I don't want to give a preview.
Speaker 1: I would love to love to give everyone insight into
Speaker 1: where we're running. But I would say, you know, good
Speaker 1: solid progress at Ford in our base business but also
Speaker 1: our non vehicle business.
Speaker 2: We're just seeing growth across the board.
Speaker 1: Boy, I got to tell you, I love American consumers.
Speaker 2: They absolutely love our Ford trucks.
Speaker 1: So you know, on the sales side, you've seen two
Speaker 1: months of sales, very strong results so far.
Speaker 2: We got out of the.
Speaker 1: Escape business, but still our sales are growing and actually
Speaker 1: I really believe June could be a breakthrough year a
Speaker 1: month for Ford sales, so we'll see how it ends.
Speaker 3: I have to say that I love watching Max firs
Speaker 3: stapp in and it's been frustrating in some races, but
Speaker 3: he's been incredible to watch. I'm rooting for you and
Speaker 3: Hajar getting a podium was amazing. Can you confirm that
Speaker 3: they're going to drive for you next year as well?
Speaker 2: Well?
Speaker 1: Max has I think Isaac were in good shape. Max
Speaker 1: does have a specific in his contract around around the
Speaker 1: car being competitive, but I think you know he's world
Speaker 1: multiple world champion, as you said, Matt, he'll have the
Speaker 1: option to choose that. What I'm most confident and it's
Speaker 1: a bit of a dilemma for us, but the FA
Speaker 1: the Formula One said that the Red Bull Ford powertrain
Speaker 1: was the most powerful powertrain in the paddock. Unfortunately that
Speaker 1: doesn't allow us to make as many changes as our
Speaker 1: competitors who are behind us. But I am really proud
Speaker 1: of the four team that a brand new powertrain that
Speaker 1: all the competitors are struggling with. That we at Ford
Speaker 1: were able to partner with Red Bull and give Max,
Speaker 1: multiple world champion, such a great powertrain, But we got
Speaker 1: to put the whole package together. We've got a big
Speaker 1: race coming up this weekend and we're going to do
Speaker 1: everything we can to give Max world championship caliber powertrain
Speaker 1: power unit, and then the rest of the team has
Speaker 1: to do the work. Boy, if we give it to Max,
Speaker 1: he will definitely deliver. How about some of those qualifying
Speaker 1: efforts this year. He is just amazing.
Speaker 2: He is amazing.
Speaker 3: And you know I was with you and Lamar last
Speaker 3: year when you announced here coming back to the hyper
Speaker 3: Sport class in twenty twenty seven, will you get Max
Speaker 3: behind the wheel of that car?
Speaker 1: Well, yeah, Max have been driving a Mercedes at the
Speaker 1: ring and you know, sure would be great to see
Speaker 1: him in a Ford. You know, look, we won four
Speaker 1: years in a row. We're the first American company win Lamar.
Speaker 1: We're the only Ford American company that had a chassis
Speaker 1: driver and an engine by an American company win Lamar.
Speaker 1: We're still the only one, and we're going back next
Speaker 1: year to win. It would be great to have Max
Speaker 1: in the Ford hypercar. You know, I'm going to have
Speaker 1: to really put on my charm school act to get
Speaker 1: him in that car, though.
Speaker 2: I think you can do it, Jim. I think you
Speaker 2: can pull that one off. If anybody can, it's you.