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Ford OKs Engine Program To Combat Chrysler Hemi -Sources

Sunday March 26, 10:44 PM EST

DETROIT -(Dow Jones)- Ford Motor Co. (F) (F) has given a critical future-engine program code-named "Hurricane" a green light following at least two years of on- again-off-again deliberation over whether to produce the beefed up engine.

The No.2 U.S. car company, in the midst of a wide restructuring of its struggling North American auto operations, is developing the V-8 Hurricane engine that will be capable of competing with the popular "Hemi" V-8 engine built by DaimlerChrysler AG's (DCX) (DCX) Chrysler Group, multiple sources at Ford said on Sunday.

Ford will have the new engine, which will trump its current engine offerings, in its lineup by the time the redesigned version of its best-selling F-Series large pickup hits the market in late 2008 as a 2009 model year vehicle, one of the sources said. The engine will be built in Romeo, Mich., according to a separate source, and Ford is in talks with parts suppliers concerning sourcing components for the engine.

Ford spokesman Said Deep declined to comment on whether Ford is developing the Hurricane engine.

The latest development in Ford's plans was initially reported by the Detroit News on Sunday. The paper cited unnamed sources and said the program was recently given the go-ahead by Mark Fields, who runs Ford's Americas operation and is the chief architect of the company's 'Way Forward' restructuring plan. The decision to pull the trigger on the program comes more than a year after Ford pulled the plug on the deal for a variety of reasons, including cost concerns.

The move to create an engine capable of taking on Chrysler's Hemi comes as Ford searches for ways to overhaul its domestic product line. While the Hurricane would debut in Ford's large pickups, according to one of the sources, it eventually could migrate to other vehicles, including hot-rod versions of traditional passenger cars and SUVs.

While the Way Forward plan includes closing or idling 14 manufacturing plants and cutting at least 25,000 jobs in coming years in an effort to remove more than 1 million vehicles worth of production capacity in North America, it also aims to push as many new vehicles as possible into the company's pipeline in coming years. The company said in January it is mulling at least three new products for its Ford and Lincoln brands. The potential vehicles include a small car and a boxy minivan dubbed "Fairlane" for Ford and a flagship sedan intended to compete with Toyota Motor Corp.'s (TM) (TM) Lexus brand.

Fields, the 45-year-old executive appointed last year to pull Ford's U.S. auto operations back to profitability by 2008, is known internally as a turnaround artist who lives by a "Yes, no and seldom maybe" management philosophy intended to push people to make decisions.

Ford has been roundly criticized by analysts for having an insufficient amount of product, including engine options and other vehicle innovations, coming out in future years to keep pace with Asian and U.S. competitors. Ford lost $1.6 billion in North American auto operations in 2005 even as it turned a profit on a global basis. It expects to again lose money at home this year.

The company's U.S. market share has been falling during the current decade and the company has been forced to rely heavily on sales to fleet customers, such as government agencies and rental car firms, to hold its sales decline to a minimum thus far in 2006. During the ongoing market share slide, Ford - like its crosstown rivals Chrysler and General Motors Corp. (GM) (GM) - has relied at times on heavy incentives to move its vehicles.

-By John D. Stoll, Dow Jones Newswires; (313) 226-1249; john.stoll@ dowjones.com

(END) Dow Jones Newswires
03-26-06 2244ET
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