Ford eyes U.S. for low-cost plant
Automaker says cost, not geography will decide where new factory will be located
Bryce G. Hoffman / The Detroit News
NEW YORK -- Now that Ford Motor Co. has announced its promised second round of plant closings, attention has turned to the company's plan to build a new, low-cost manufacturing facility somewhere in North America.
Just where the new factory will be has been the subject of much speculation since the plan was announced as part of the company's broader restructuring strategy in January. Initially, most bets were on Mexico.
Mark Fields, president of Ford's Americas group, told The Detroit News that the location of the new plants will be decided by money, not politics. "The criterion is low cost," Fields said. "The criterion is not geography."
Behind the scenes, other Ford officials say the company prefers to build the new factory in the United States, but only if it can be fully competitive with those operated by Asian rivals such as Toyota and Hyundai. That will require major flexibility on the part of the United Auto Workers. Otherwise, Ford will not hesitate to put the plant in Mexico or Canada.
"The union is really interested in cooperating on this," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, adding that he expects the new plant to be the jewel in Ford's manufacturing crown. "This is all very doable."
In recent years, both General Motors Corp. and DaimlerChrysler AG's Chrysler Group have had some success building efficient and cost-effective manufacturing facilities in the United States.
GM's highly automated Grand River Assembly Plant in Lansing has become a model for the domestic automotive industry.
Most factories organized by the UAW divide the labor of automotive assembly into dozens of job classifications, and workers are rarely allowed to do anything not covered in their job description.
There are fewer job classifications at Grand River, and workers there are organized into teams. Each team member -- including the team leader -- knows how to perform each task that the team is responsible for. That means workers can be rotated and fill in for each other as needed. This approach allows for more flexibility on the factory floor and allows the plant to meet production targets with fewer workers. Union officials say it also translates into better quality and fewer ergonomic injuries.
GM's Lansing plant also embodies the flexible manufacturing ideal. It produces the Cadillac CTS, SRX and STS on the same line.
Chrysler's Belvidere Assembly Plant is another example of flexible manufacturing coupled with a modern operating agreement. With more automation and fewer workers, the plant produces the new Dodge Caliber and will be responsible for assembling the Jeep Compass and Patriot later this year. Much of the subassembly work at Belvidere is outsourced to suppliers, making for a more cost-effective operation.
However, Cole said the best model for modern manufacturing -- and a modern manufacturing agreement -- is the Global Engine Manufacturing Alliance World Engine Plant, which opened last year in Dundee. The plant is a part of a global joint venture between DaimlerChrysler, Hyundai Motor Co. Ltd. and Mitsubishi Motors Corp.
There are only two job classifications at the plant, which requires extensive cross-training for all workers. To make sure they are up to the challenge, all applicants are required to have at least some college education. Much of the nonmanufacturing work at the Dundee factory is outsourced, meaning the company does not have to give UAW wages and benefits to the people who mow the lawn and clean the bathrooms.
UAW officials say these success stories demonstrate the union's willingness to embrace more flexible work arrangements. "If (Ford) could get a contract like (Dundee), that would be absolutely critical," Cole said. "A modern, 21st-century plant with a 20th-century labor agreement just doesn't make sense."
Given that Ford plans to close more than a dozen plants in North America over the next six years, some may wonder why the company needs another factory. But Cole said it makes sense for Ford to start from scratch. Ford's existing factories were built before the company got the religion of lean manufacturing, and previous attempts to apply this science have involved shoe-horning new assembly lines into outdated buildings.
"If you don't lay out your new building efficiently, you are just trading one plant for another and you are not really saving anything," said Rebecca McCarter, a benchmarking expert for the Michigan Manufacturing Technology Center in Plymouth. "(And) if they are looking at a green manufacturing plants, it's way easier to start fresh than do it with an existing plant."
Moreover, building a new factory allows Ford to set up a bidding war between the states. Asian manufacturers like Toyota Motor Corp. and Hyundai have received hundreds of millions of dollars in tax incentives for their American plants, and Ford could expect similar incentives.
"I don't think there's any way this plant will be done outside of the UAW," Cole said, though he said the competing Canadian Auto Workers union also will make a big play for the plant. "It would be a real slap in the face to the union."
Besides, he expects the new plant will be a valuable bargaining chip for Ford when its contract with the UAW expires next year.
