Ford Invests $200M in Ohio - Analyst Blog

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Ford Motor Co. ( F ) announced that it will invest $200 million in the Cleveland Engine Plant, Ohio for developing 2.0-liter EcoBoost engines, due to their increased demand.

EcoBoost engines are 20% more fuel efficient than the larger-displacement engines. These smaller-sized engines use turbo charging, gasoline direct injection and variable valve timing. Thus, it provides customer with outstanding performance with fuel efficiency. They are available in Ford Explorer, Edge, all-new Escape and all-new Fusion, Focus ST, Taurus and new Lincoln MKZ and MKT Livery vehicles.

The 2.0-liter EcoBoost engine for North America is currently produced in Valencia, Spain. But with this investment, the production will be shifted to Ohio. Meanwhile, the Valencia Engine Plant will continue to produce 2.0-liter EcoBoost engines for Ford Europe-built vehicles. This move is a part of the company's strategy to develop engines regionally. It also plans to optimize production capabilities globally.

The company stated that there will be no job cut in the Valencia plant, only some of the employees will be shifted to Valencia Assembly Plant for supporting the increased production for C-MAX, Kuga, Transit Connect and Tourneo Connect.

The Ohio plant currently employs around 1,300 people and manufactures 3.5-liter EcoBoost and 3.7-liter V6 engines. The production of 2.0-liter EcoBoost engine will start late 2014.

Ford also announced that it will create 450 new jobs in the Cleveland Engine Plant. The company plans to employ 12,000 hourly jobs in the U.S. by 2015. With this addition of workers, the company has created 8,100 salaried and hourly jobs in the U.S. Recently, Ford also announced that it plans to hire 2,200 salaried workers in the U.S. in 2013 for product development, manufacturing and IT.

Currently, Ford retains a Zacks Rank #4 (Sell). The automaker posted a robust 55.0% rise in earnings per share to 31 cents in the fourth quarter of 2012 from 20 cents in the same quarter of 2011 (all excluding special items). With this, the company has beaten the Zacks Consensus Estimate of 26 cents.

Net profit surged 55.7% to $1.2 billion from $797 million a year ago, driven by the impressive North American results and, to some extent, solid improvements in Asia Pacific Africa operations.

Total revenue grew 5.5% to $36.5 billion on a 7.5% rise in wholesale volumes to 1.5 million units. It was higher than the Zacks Consensus Estimate of $33.2 billion.

Few stocks that are performing well in the industry where Ford operates include Oshkosh Corporation ( OSK ), Strattec Security ( STRT ) and Magna International Inc. ( MGA ). Oshkosh and Strattec Security are Zacks Rank #1 (Strong Buy) stocks while Magna International carries a Zacks Rank #2 (Buy).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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