Ford’s Epic Gamble: The inside story

July 24, 2014, 11:30 AM UTC

The Baja 1,000 is considered one of the world’s most grueling off-road races, and the engineers at Ford figured the 2013 running was just what they needed to shake down their new, aluminum F-series pickup truck. Getting ready involved more than just filling the gas tank. Ford assembled a small army of 63 people, including two doctors and two EMTs; 17 support vehicles; and a nine-man camera team equipped with a helicopter and a drone for aerial shots. Some creative camouflage was also required. Fearing that competitors would get an advance peek at the design of the 2015-model truck, they built a new truck with aluminum body panels that looked exactly like an old one.

Last year’s race loop was one of the toughest in years, taking contestants over 882 miles of rocky desert tracks, dicey mountain passes, and the occasional paved road around Mexico’s Baja Peninsula. Of some 300 entrants, nearly half failed to finish—among them several specially built race trucks. The disguised F-150, however, completed the course in just over 36 hours, its sole casualty a broken computer module that was stepped on by a crew member. After the race the truck was driven back to Dearborn, Mich., without incident. The only parts replaced were the air filters that kept Baja’s dirt and dust out of the engine.

That’s a lot of effort to put in for a lowly pickup, a vehicle that spends most of its days on construction sites and farms and lacks the sex appeal of a Mustang or even a Fusion. But it is not misplaced. While a lot of attention has focused on outgoing CEO Alan Mulally’s One Ford plan to unify the global manufacturer, the automaker’s profits largely depend on a beefy truck that is sold only in North America and will never find a market in Asia or Europe. Not that it needs to. The F-series has outsold every other car and truck in the U.S. for more than three decades, a record of longevity that ranks in the hierarchy of superbrands like Coke and Marlboro. Some 33 million have been sold since the F-150 was introduced in 1950, twice as many as the Model T. If the revenue from the nearly 765,000 F-series Fords sold in 2013—$31.1 billion—were that of a standalone business, it would rank around 100 on this year’s Fortune 500 list. Ranked by profits, such an F-series business would place even higher.

The F-series has been the biggest beneficiary of the revolution in the pickup business. The increasing popularity of personal-use trucks has pushed average transaction prices to $40,000, and some high-end models—with luxury touches like stitched leather, heated and cooled seats, and LED interior lights—sell for more than $50,000. Vehicles that are mechanically simple, rarely reengineered, and sold in huge volumes, such as pickups, are automotive cash cows. Analysts figure that F-series trucks, with top-shelf trim lines like King Ranch and Platinum, generate gross profits of 40% per unit, or $12,000. In some years—say, when Ford (F) broke even in passenger cars and lost money overseas—profits from the F-series exceeded the company’s reported net income from the auto business. It is no wonder that CEO Mark Fields refers to the F-series as the company’s “crown jewels.” As London analyst Max Warburton of Bernstein Research wrote, “Thanks to modest investments and huge volumes, there has been no greater profit machine in the history of the industry than the F-series.” (A word about nomenclature: The F-series includes light-and medium-duty trucks built with a variety of engines and body configurations with designations like F-250 and F-350. The most popular model by far is the light-duty F-150 with four doors, which accounts for 69% of F-series sales.)

What all this means is that when Ford decided in 2009 to fundamentally change the product it advertises as “Built Ford tough” by making it with a lightweight aluminum body, it was messing with a uniquely valuable franchise. Ford figured the change could reduce the weight of the F-series by 700 pounds, significantly improving its fuel economy. But aluminum is more expensive than steel, more complicated to assemble, and more difficult to repair. Customers used to crushing aluminum beer cans on their foreheads might perceive that a truck built from the same material is not as rugged as the one it replaced.

Indeed, the changeover from steel would mean alterations to nearly every phase of the truck business. Aluminum can’t be easily welded and must be riveted and bonded with adhesives. New suppliers would have to be found and validated, plants refitted, production techniques changed, repair technicians hired and trained. Importantly, the changeover to the 2015 models would have to be extended, slowing production and denting profits. Ford, which has stumbled launching new models in the recent past, would be confronting the most complex and highest-volume launch in its history.

Competitors would be waiting to pounce. Like lions sharing an antelope on the Serengeti, the Detroit Three feast on the pickup-truck business. Fancier models have pushed truck transaction prices up 29% since 2005, while prices for the industry as a whole have risen only 13%, according to GM, smarting from criticism that it had been too conservative when it redesigned its Chevrolet Silverado and GMC Sierra trucks for the 2014 model year, was offering incentives as high as $8,000 per vehicle earlier this year. With Ford carefully managing its inventory of old-style 2014 models, Fiat Chrysler put its marketing muscle behind the Ram pickup and pushed its sales up 20% in the first six months.

Around the industry, second-guessing about Ford’s aluminum truck—to be launched in the fourth quarter of this year, at a price that hasn’t been announced—is unusually widespread. There were smirks about Ford’s use of the terms “high-strength steel” and “military grade” aluminum to describe relatively ordinary materials. “It will be magic or tragic,” Mike Jackson, CEO of AutoNation, tells Fortune. “Ford is going to have to build with aluminum at a volume that has never been done in the history of the automobile business.” In observation of an unwritten rule in Detroit not to speak ill of competitors, most of the chatter has been sotto voce, but Fiat Chrysler CEO Sergio Marchionne broke the silence in May, saying, “We internally have reservations about whether aluminum is the way to go on the truck side. I think the use of aluminum in our world is better used on products other than the pickup.” To use a marine metaphor, Ford was sailing into uncharted waters, and the whole industry was watching to see if it would hit any rocks.


Though he was born in Brooklyn, where pickups are rarer than grass and trees, Mark Fields, who took over as Ford’s CEO on July 1, is the father of the new F-series. He supervised its development from the beginning, and he will get the credit—or blame—for its performance in the marketplace. It is a venerable franchise to inherit. Henry Ford introduced the “Model T Runabout With Pickup Body” in 1925. Pickups first found work on farms, ranches, and job sites, but by the 1960s they had increasingly come to be used for personal transportation as well, playing featured roles in movies such as Hud and The Last Picture Show. The combination of simple construction, minimal changes, and long production runs created the industry’s fattest profits.

When Ford’s product-development engineers started preprogram work in 2009 on what would become the 13th-generation F-series, two big considerations loomed in their planning: how to deliver more power and towing capability—a key truck selling point—while substantially increasing fuel economy. Says Fields: “We had a strong point of view on fuel prices, and we had three alternatives: make incremental changes to the existing truck, add more aluminum parts [the existing truck already had an aluminum hood], or make it all aluminum.” Every manufacturer, Ford included, was racing to meet rising fuel-economy standards that required a fleetwide average of 54.5 miles per gallon by 2025. Ford had already engineered one historic change by offering a turbocharged V-6 engine called EcoBoost in its truck as a gas-saving alternative to the traditional V-8. Now it was planning to upset the status quo again.


Over the next 18 months Ford explored its ability to supply, build, and repair a truck with an all-aluminum body and studied customer perceptions about such a change. It created four work teams to investigate what it saw as the big unknowns surrounding aluminum: availability, manufacturability, serviceability, and likability. Scale alone made the new truck program daunting. Audi and Jaguar are using aluminum extensively, but only in low-volume, top-shelf luxury cars. Says Joe Hinrichs, the no-nonsense head of the Americas who is responsible for getting the plants ready to build the new truck: “Nobody has ever done 60 jobs an hour, seven days a week, with an aluminum truck.”

Ford is a leader in computer simulation, having pioneered its use in 1997, but the demands of the new program caused the company to rely on expensive, custom-built prototypes at each stage of development. “There was more testing for compliance and validation than we have ever done,” says Mulally. As early as 2009, Ford built two rounds of prototypes as proof of concept and to gain confidence in aluminum usage. The first four vehicles were known as X0s. Like the Baja truck, they had aluminum bodies disguised to look like the 2009 production model. The next seven, called X1s, were more weight-efficient, but there were questions about their strength. So the 11th X1 prototype was subjected to the same accelerated durability tests as the steel model: a series of rocky, gouged surfaces that simulate in a few weeks 150,000 miles of wear, plus another 75,000 miles to evaluate the aluminum body.

To its battery of standard tests, Ford added some imaginative variations. It substituted aluminum cargo boxes for steel ones on six 2010 models and gave them to three unknowing customers for blind testing: Barrick Gold, a Toronto mining company with operations in Nevada; Duke Energy; and Oregon-based Walsh Construction. The testing would continue through 2014. Ford discovered that the first aluminum gauge used for the bed was too thin to stand up to 30-to 40-pound trailer hitches tossed inside, so it increased the thickness by 50%, from 0.95 millimeters to 1.4 millimeters. Even with the thicker floor, the new box was still several hundred pounds lighter.

As the tests were underway, top executives were getting comfortable with the idea of an aluminum truck. Mulally was an easy sell. He had led the engineering team at Boeing that had developed the aluminum-bodied 777 airliner, and his attitude was basically, “What took you so long?” Fields, then president of the Americas, had a steeper learning curve. He spent time with the advance-research team to learn how aluminum could be pierced and bonded, and quickly learned to appreciate the impact of its lighter weight. At one meeting on manufacturability, he picked up a new inner door for the first time and discovered he could lift it with two fingers. His reaction: “Wow!”

After nearly two years of upfront work, the 2015 F-series program leaders went to Ford’s board of directors in October 2010 for approval to officially begin development work. A cross-functional program team was formed, the program scope defined, and initial marketing strategy approved. Stylists and engineers began work on exterior and interior design themes, while other engineers focused on chassis and powertrain development. Fields kicked off what was destined to be the biggest and costliest new-product program in Ford’s 111-year history with an inspirational talk: “Remember this day. This is what leaders do.”

In November 2012 the Ford board approved the spending for the remainder of the program: assembly-plant renovation, dealer training, and marketing and advertising expenditures. It was the last decision point; from here there would be no turning back.

Now the team began to tackle the hundreds of individual details that require the adjustment of physical parts. First, 100 mechanical prototypes known as M1s were produced for durability and performance tests and to make sure supplier quality was in line with Ford specifications. Like the others, they were disguised as older models to fool spy photographers during road tests. Then came some 100 verification prototype (VP) trucks, built on a special assembly line. The VPs were the first units assembled with the new body, chassis, and powertrain components to test interior and exterior appearance and general performance.

Ford was about to become a huge buyer of aluminum, and there were worries about whether supplies would be adequate. Accurately judging production volume was crucial. A few years back Ford had guessed wrong on customer demand for its small-displacement turbocharged EcoBoost engines. When the engines were introduced in 2011, it initially expected them to account for 20% of truck volume and was caught off-guard when it reached 30% after two months and eventually settled at 47% today. Fields wasn’t taking any chances. In September 2013 he made a visit to Alcoa’s plant in Davenport, Iowa, to see the aluminum rolls being formed. With his concerns alleviated, the program team proceeded to sign off on all engineering design validations in December 2013.

The public got its first look at the new truck when Atlas, a thinly disguised design concept for the new truck, was unveiled in a pyrotechnic display at the Detroit auto show in January 2013. With bulging wheel arches and an in-your-face three-bar chrome grille, it practically snarled “Ford tough.” But time was growing short, and attention shifted from the product to the plants. Three development assembly milestones approached: pre-launch, launch readiness, and mass-production start. Workers began to gain experience with rivets by using them as fasteners on the current truck, and Ford continued to roll out more prototypes. With production due to begin late this year at the Dearborn plant, within sight of Ford World headquarters, the company recently started building more than 100 tooling test (TT) trucks for tooling validation and manufacturing training. Sometime later this summer, 100-plus preproduction (PP) trucks will be assembled for final prototype validations and training. Like all unregistered vehicles used in development, they will eventually be crushed and recycled.

25th annual North American International Auto Show in Detroit, Michigan. New CEO Mark Fields (right) with predecessor Alan Mulally (left) and executive chairman Bill Ford.PHOTO BY TANNEN MAURY—EPA/CORBIS

Not all the action was in Detroit. As far back as 2008, Ford began work to ensure that 90% of its customers would be no more than a two-hour drive from a collision-repair specialist who knew how to work with aluminum. “Joe Customer who lives in a small town in Oklahoma has to know where he goes to get it fixed,” says Jim Farley, head of marketing, sales, and service. When there were no dealers nearby, Ford reached out to independent body shops. Naturally, the training program was conducted in total secrecy. Participants were told to expect to spend $30,000 to $50,000 on new equipment.

Early in the development process, marketers had been figuring out how to sell a more expensive truck made out of this lightweight new metal. The thrust became clear early on: Ignore the improved efficiency, and convince customers it was more capable than the old truck. Truck buyers, in Ford’s view, care mostly about towing and payload. Hence the tag line “The future of tough.” Ford figures that 20% of its potential customers are skeptical and will need to be convinced.

At the Dearborn Truck Plant, one of two assembly plants where the F-150 will be built—the other one is just outside Kansas City—the company is spending hundreds of millions of dollars to build and install new stamping presses and dies to produce the aluminum panels and replace today’s spot welders with rivet guns, advanced welders, and adhesive machinery in the body shop. With both plants currently producing the 2014 F-150, they will have to be taken down one at a time for a total of 13 weeks for refitting, depriving Ford of perhaps $2 billion in revenue.

Ford has guessed wrong on a new truck before. When the 1997 F-150 was redesigned from the ground up for the first time since 1980, it got uncharacteristic rounded styling—a “jellybean look”—that allowed for improved aerodynamics, a larger interior, and better fuel economy. Designed to “hit the hot buttons” of baby boomers, it sold quickly at first (1.1 million in 2001), but the style didn’t catch on, and Ford retreated back to a chiseled box look in 2004.

There are three big questions yet to be answered about the new F-series: how close did Ford come to its 700-pound weight-reduction target? How great is the impact on performance and fuel economy? And how much more will Ford be able to charge customers? Analysts warn that Ford’s outsize profits may be a thing of the past. Says Bernstein’s Warburton: “The need to fit more expensive powertrains and use lightweight materials to meet fuel-economy regulations [the next F-series may have to shed 700 pounds] will permanently dent F-series profitability.” Pickup owners’ loyalty is legendary, so the F-series’ three decades of sales leadership most likely aren’t in jeopardy. But nobody wants to be known as the person who lost—or even tarnished—the crown jewels.

View the evolution of the F-Series in the Fortune gallery below:

This story is from the August 11, 2014 issue of Fortune.