“We remained focused on our plan to return the North American automotive business to profitability,” said Mark Fields, Ford’s president of the Americas, in an announcement made March 3. Which is certainly a laudable goal. For too long Ford has been mired in red ink. The issue that is fundamentally at hand for the company—one that’s been chronic—is that in addition to all manner of economic pressures coming to bear on consumers (think only of the rising gas prices that have been experienced during the past 12 months), the company positioned itself to make money on the types of vehicles that aren’t selling as well as had been anticipated. So now Fields says that Ford is working to “align our capacity and product mix to meet real customer demand.” What does this mean? Well, something rather significant if you’re at a Ford facility in Chicago, Louisville, or Cleveland.
Chicago Assembly is where the Ford Taurus, Taurus X, Mercury Sable, and forthcoming 2009 Lincoln MKS are produced. Louisville Assembly manufactures the Ford Explorer, Explorer Sport Trac, and Mercury Mountaineer. Cleveland is the site of two engine plants: Plant #1 had produced the 3.5-liter Duratec before it was idled in May 2007. Plant #2 produces a 3.0-liter engine.
The alignment that Fields refers to puts Chicago and Louisville on one shift starting this summer; Cleveland Engine Plant #2 will start on one shift in April; the restart of production at Engine Plant #1 is being postponed until the fourth quarter instead of the second.
All of this is in light of Ford offering all of its U.S. hourly workers the opportunity to receive retirement and buyout packages.
The products made at the Chicago plant are all first-rate in terms of their competitiveness vis-à-vis cars built by any other manufacturer. The biggest problem, perhaps, is that the styling of the Ford and Mercury products were far too bland when introduced, particularly when put up against something like the Chrysler 300 and Dodge Magnum (although like the Freestyle-cum-Taurus X, the Magnum didn’t resonate well with the market, and it, unlike the Taurus X, is going completely out of production). It seems to be a rule that if you don’t get the product right at launch, it rarely recovers, even if you add some chrome and change the name. While I haven’t had the opportunity to drive the MKS yet, I do know that it doesn’t suffer from the innocuous problem of its platform mates, and I anticipate that its build quality will be better than good.
The problems with the Explorer not only have roots in the Firestone tire debacle of a few years back, but there is a decided shift in the market away from body-on-frame SUVs to unibody crossover vehicles. Trucks, once the darlings of the vehicle manufacturers, are now far less attractive, and when you have capacity to build lots of trucks, as Ford does, and when the “real customer demand” doesn’t include them, well therein lays a problem.
As for the truck plants, it is simply a case that if the cars and trucks don’t sell, the engines don’t need to be built.
This is hard medicine. No one likes it. But there is something that I certainly hope Ford executives and their UAW partners understand going forward. This is not just about reducing models and cutting production. It is about having the wherewithal to make product adjustments quickly and cost effectively, about having the production flexibility to make the products that people want to buy. This may necessitate enduring additional costs early on. But later on, when the flexibility is deployed, aligning capacity and product mix doesn’t necessarily lead to shift reductions.
