Ford's Ambitious Make-Over - Autoline on Autoblog with John McElroy
The urgency conveyed by this development (the company will not yet officially confirm it) is due to the surge in gasoline and diesel prices that have decimated truck sales. Never has there been seen such a dramatic shift in customer demand in such a short period of time. Last month sales for the Detroit Three absolutely collapsed, and when sales are tallied for this month, the carnage is going to be worse.
Realizing that any delay could permanently cripple the company, Ford's CEO Alan Mullaly decided to embark on a bold effort to achieve a rapid change over. Hence, the unprecedented call to bring all the plant managers and top union reps together for an emergency meeting.
John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.
The fastest way for Ford to revamp its North American line-up of vehicles is to tap into the fuel-efficient products it already makes overseas, particularly in Europe. But rather than import those vehicles, which would be too expensive due to the strong Euro and weak dollar, Ford wants to manufacture them in the U.S. All it has to do is duplicate the dies, fixtures, tools and jigs needed to make those cars. That still represents a massive financial commitment, but it's a lot cheaper and faster than any other alternative.
Ford already planned to build the next generation of European Focus and Mondeo models here, but undoubtedly it's looking at other products, as well. The Kuga and S-Max would seem to be logical candidates, and possibly the Fusion (which bears no resemblance to the Fusion sold in North America). There are also plans to drop the Econoline van altogether and replace it with the Transit.
The big challenge Ford faces is sourcing all the parts and components it needs to make those vehicles in North America. It simply won't do to import those parts from Europe, as that would be too expensive. So it has to make them here, which is going to be a bonanza for suppliers who already produce parts for those vehicles. They're going to see their volumes soar, which means both they, and Ford, will achieve greater economies of scale.
But at the same time it will be a catastrophe for those suppliers who produce parts for the trucks and SUVs that are going to get cut. Moreover, this change will undoubtedly lead to new cuts in the design and engineering staffs in Dearborn who were working on those vehicles.
Ford isn't going to drop all its trucks and SUVs. The Explorer will be redesigned as a unit-body vehicle in 2010. The company is also working on a smaller, lighter body-on-frame program for future pick-ups and SUVs. It will even revive the F-100 nameplate for this smaller pick-up. But the plan is clear, Ford must re-tool its entire line-up as fast as it can to deal with surging fuel prices.
This sounds very reminiscent of the war-time conversion effort that Detroit went through in early 1942, when peace-time production of automobiles came to a screeching halt and factories were quickly retooled to produce military material. But most people are unaware that the planning for that conversion had been in the works for years. Billy Mitchell, the famous bomber pilot, was assigned to Detroit to help the auto industry lay the groundwork for conversion as early as 1939. So when the U.S. finally entered the war, it all went very quickly.
But the effort wasn't without its problems. There were all kinds of problems with corruption and cost overruns. Indeed, then-Senator Harry Truman made quite a name for himself running around the country exposing waste and mismanagement.
There's a great story involving him and the Ford Motor Company. The company was building the Willow Run plant to make B-24 bombers and so much was going wrong early on that the plant actually earned the nick name Willit Run?
Truman got whiff of a rumor that the bathrooms in the plant were all made of marble and, outraged at the extravagance, he flew to Detroit to personally investigate the situation. On the way in to the factory he asked his driver about the rumors. "Oh it's true, Mr. Truman," the driver reportedly told him. "We need every scrap of wood and metal for the war effort, but we don't need marble and that's why we used it in the bathrooms."
"Well, then you turn this car right around and take me back to my airplane," Truman is said to have told the driver, "I just learned everything I need to know."
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