Bright and early this morning, Ford (NYSE: F) announced that it is going to invest $550 million to transform its Michigan Truck Plant to a more modern small-car plant. The plant will produce a new Ford Focus, which will be available next year.
In 2011 the automaker will begin producing its battery-electric Focus in an effort to meet its promise to deliver four new electric vehicles in America by 2012. The plant was originally used to produce the Ford Expedition and Lincoln Navigator, both massive SUVs. It was one of the most prolific and profitable Ford operation during the SUV explosion of the late 90s, and the move symbolizes a strategic shift by the American icon.
Ford's President and CEO noted, "This is about investing in modern, efficient and flexible American manufacturing. It is about fuel economy and the electrification of vehicles. It is about leveraging our expertise and vehicle platforms around the world and partnering with the UAW to deliver best-in-class global small cars. It is about skilled and motivated teams working together in new ways to create the future of automobile manufacturing in the United States."
Will this decision help the company's stock at all? It may not immediately, but it is a start. What is surprising is that shares of the automaker are in the midst of a rather nice intermediate-term uptrend. The stock is fighting overhead resistance at the $6 level, which acted as support in the past.
As for the longer term, it is difficult to find anything positive -- but there is something there. The shares are currently perched atop their 10- and 20-month moving averages, a bullish development. However, the stock faces a hurdle in the form of its 50-month moving average.
Despite this hurdle, the equity's 10-month moving average has turned higher and is taking a bullish path. This has not happened in quite a while, and is often a precursor of a bullish run. Let's see if the overall economy will throw up a roadblock for Ford or if the automaker will be able to accelerate further.
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