On Aug. 10, Ford Motor Co. (F) executives and local dignitaries will descend on an 80-year-old manufacturing plant on Chicago's South Side. As TV cameras roll and workers applaud, Ford's first new midsize cars will roll off the line. Why all the hoopla? Because a revolution is under way at Ford. The company is turning its back on the mass-manufacturing model pioneered by founder Henry Ford. The Chicago assembly plant, refurbished at a cost of $400 million, is capable of making as many as eight models on two different chassis. Ford's aim is to better meet rapidly changing consumer tastes in a fragmented car market.
While industry experts say the new strategy is long overdue, it's a challenge for Ford to pull off so much at once. Combining the flexible-manufacturing revamp, a new $250 million supplier park next door, a $150 million overhaul of the adjacent stamping plant, all on top of launching three vehicles, will require a serious juggling act. "It's complicated because you've got all these different things coming together," says North America product creation chief Philip R. Martens.
Whether Ford can run its new system profitably -- and at full tilt -- will depend on the new cars' popularity. Too bad then that the early buzz on the Ford Five Hundred and Mercury Montego sedans and Ford Freestyle sport wagon is lukewarm. Word is that the cars suffer from meager power and style.
Fortunately for Ford, the new plant can quickly switch to building more popular autos if one or more of its new models falters. That's all part of Chief Executive William C. Ford Jr.'s vision of a 21st century manufacturing complex. The plan: flexible factories with lean inventories and just-in-time parts deliveries -- the kind the Japanese have been perfecting for the past decade.
To help make it happen, Ford persuaded 11 major component makers to set up shop on their own campus near the plant. Their proximity streamlines the flow of components to Ford's assembly line and cuts transportation costs. Lear Corp. (LEA), for example, will go from shipping assembled interior ceilings from 350 miles away to a mere half mile.
Shortening the pipeline means Ford can cut parts inventories from a one- to two-day supply to just eight hours, saving big bucks. The proximity also lets engineers shuttle back and forth to fix glitches at the supplier plant. Says Lou Salvatore, head of Lear's Ford business: "If you can pull it off, like Ford is doing in Chicago, it's beneficial for suppliers as well as for the manufacturers."
Still, a supplier industry watcher says some Chicago component makers are nervous. They had to invest heavily to build plants dedicated to supply the Chicago factory, tying their returns to a car whose success is uncertain.
It doesn't help that the three new cars are generating yawns. Sure, the cars, based on chasis made by partner Volvo, get high marks for smooth handling, comfortable ride, and roomy, easily reconfigured interiors. Yet their heavy weight makes them feel sluggish, say those who have driven the cars. Ford takes issue with the characterization. "We deliver better acceleration, better fuel economy, and half the emissions of some of our competitors," says a company spokesman.
Still, at a time when Chrysler Group (DCX) is wowing buyers with its brashly styled, 300C sedan, Ford is bringing out a crop of bland cars. Ford execs point out that the Honda (HMC) Accord and Toyota (TM) Camry, both top rivals, aren't exactly sexy. But they are well-established contenders. To lure buyers away from Accords or Camrys, says Wesley R. Brown, an analyst at consultants Iceology, "you have to do something extraordinary."
Ford has gone to great lengths to pull off its manufacturing transformation in Chicago. The ultimate payoff will hinge on how buyers judge the new cars.
By Kathleen Kerwin in Detroit