When Ford Motor Company opened its doors in 1903 to begin mass assembling automobiles, not only did the company usher in a new era that suddenly made cars affordable to everyday citizens, but it also changed the US’s industrial landscape and engineered social change. By founding a company based on innovation, Henry Ford implemented the moving assembly line and began paying workers $5 per day versus the standard $2 a day wage. In essence, he altered the paradigm for manufacturing forever.

Long an icon among the US’s Big Three auto manufacturers (Ford, General Motors and DaimlerChrysler), Ford Motor Company has faced tough competition in recent years accentuated by a period of poor management, plummeting stock value and diminishing market share. In 2001, it experienced massive losses of $5.45bn followed by losses totalling $980m in 2002. Approaching its 100th anniversary in 2003, the company appeared on the edge of losing its leading world status to Japanese competitors.

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New vision

That year, William Clay Ford Jr, Ford chairman, CEO and great grandson of Henry Ford, outlined his vision for the company: “Build great products, a strong business and a better world.” He also declared: “We want to have an even bigger impact in our next 100 years.”

A number of factors are putting pressure on US auto makers, not least of which are the rapidly rising gasoline prices, which are putting the brakes on consumers purchasing large automobiles such as sport utility vehicles (SUVs). The high gas prices underline the importance of innovation in engine design.

But perhaps of greater concern is the growing dominance of Toyota Motor Company. Mr Ford acknowledges Toyota as a formidable rival. The Japanese car manufacturer has been on the war path for some time with a multibillion-dollar investment in US production facilities. None of the Big Three has the margins or the cash to keep up with Toyota’s accelerated pace of investments.

“I don’t want to compete with Toyota,” Mr Ford says emphatically. “I am sick of playing defence – I want to win. For too many years I have seen what they’ve been up to in our heartland. We are going to their turf and growing our business in Asia. We are taking the fight to their backyard.”

Asian beachhead

Mr Ford says he is establishing the Asian beachhead with Ford’s Fusion, a fuel-efficient, mid-sized sedan that is challenging Toyota’s signature products. “Although Asia is a tough market place, we will not sit back,” he says.

In January, Ford, Mazda and Changan Automotive Group jointly announced the Chinese central government’s approval for a $1bn joint venture manufacturing facility in the Jiangning Economic & Technological Development Zone (NJDZ) near Nanjing, in eastern China’s Jiangsu province. The all-new vehicle manufacturing facility will be the first in China for all three companies. At 190,000 square metres, the facility will have an initial manufacturing capacity of 160,000 units a year and could be expanded to as many as 200,000 units annually.

Key to the facility is its ability to manufacture a number of different Ford and Mazda vehicles. The new plant will be fully integrated to support stamping, body assembly, paint, trim and final assembly. Using the Mazda manufacturing process as a blueprint, the jointly developed facility will feature the latest safety and environmental standards to ensure the plant is not damaging to either people and the surrounding ecosystem.

Later in April, the three companies also announced a joint venture contract for a new engine plant in the NJDZ. The project is central to Ford’s expansion plans in China. The new engine site will be about 1km west of the Changan Ford vehicle assembly plant, which is currently under construction. It will be built on 290,000 square metres of land and will have the capacity to produce 350,000 engines annually. It is being designed with flexibility for future expansions.

Thai potential

 

Thailand has recently adopted an open automotive policy for attracting foreign investment to develop a sustainable automotive industry. Ford already operates a major plant there – Auto Alliance Thailand (ATT) in Rayong – and recently invested an additional $500m to support new vehicle programmes and capacity expansion there. In the first quarter of 2005, ATT became the number-one vehicle exporter for completely built-up (CBU) vehicles that are exported to more than 130 countries worldwide.

Ford executives see Thailand as offering great potential for significant automotive growth in the future, in line with the country’s nickname ‘the Detroit of Asia’. Ford has chosen Bangkok as its regional headquarters for Asia Pacific and Africa operations. While Ford will not miss the opportunities offered by China’s economic growth, the company views the Association of South-East Asian Nations as equally important. “We will grow our footprint in Asia,” Mr Ford says. “Asia is like a clean sheet of paper. We plan to grow our market share each year.”

Ford Motor Company has faced tough competition before. One hundred years earlier, Ford was among 88 companies building cars in the US, including 15 in Detroit alone.

Speaking to an audience recognising ‘Spirit of Innovation’ award winners in Chattanooga, Tennessee in July, and afterwards to fDi magazine, Mr Ford stressed that to achieve status as a leading world producer of automobiles, Ford plans to expand globally to retain market share and keep innovation at the forefront of everything that the company does. To the environmentally-conscientious Mr Ford, that means making a major commitment to developing electric-drive technology, including hybrids and hydrogen-powered.

Going green

Mr Ford has always been a big proponent of the environment. Early in his career, Ford executives told him to tone down his green rhetoric. Yet in 2000, under his leadership, the company published its first corporate citizenship report outlining the economic, environmental and social impact of company products and operations around the world. Today, Mr Ford is committed to increasing shareholder value by developing products that please customers and benefit society.

By producing hydrogen-powered engines and five new hybrid models, Mr Ford asserts: “We are building our future right here in America. Today, the US auto industry is responsible for 6.5 million jobs,” he says.

“The Big Three are responsible for 90% of automobile employment in America, 75% of cars purchased and 85% of total investment. The average US-made content in US-made cars is 80% and 30% of aluminum, iron and stainless steel used in US-manufactured cars comes from the US. Auto manufacturers buy more leading-edge technology than any other industry, since there are 30% more electronic components in cars today. American car manufacturers spend $16bn per year on research and development.”

R&D in Europe

But Mr Ford’s effort to create a sustainable socially and environmentally sound business extends beyond the US border. Last year, Ford joined several companies in a £1.2m UK-government funded research project to develop the first medium-sized hybrid commercial vehicle in Europe. The goal of the one-year programme was to demonstrate the potential environmental benefits and fuel economy of using a new type of micro-hybrid technology in a commercial vehicle application. Today, the HyTrans vehicle is being built at Ford’s Southampton Transit van assembly plant.

In Aachen, Germany, engineers at the Ford Research Center equipped the Ford Focus C-MAX with a prototype hydrogen internal combustion engine (H2 ICE), an achievement that moves automobiles a step closer to using fuel cells that deliver clean electric power. Also in Aachen, Ford engineers have developed a micro-hybrid Ford Fiesta capable of improving fuel economy by a minimum of 5%. In heavy traffic with frequent stops, this figure could rise to as much as 15%. Although still in research, the Fiesta micro hybrid could be in production by next year. Ford’s partner in the development of the system is Valeo, a supplier for electrical car systems from France.

Clean energy

In another important project leading towards a sustainable hydrogen-based future is the Clean Energy Partnership (CEP) in Berlin, funded by the German government. Ford is one of nine partners participating in the three-year project. It is responsible for providing three fuel cell vehicles for fleet customers. The objective of the CEP is to prove the suitability of the mobile application of hydrogen for everyday use. Hydrogen is considered an environmentally-friendly energy source because it can be generated from renewable energy sources. Compared with the hydrogen ICE, the fuel cell achieves higher efficiency and does not emit greenhouse or other exhaust gases.

This year in Sweden, Ford introduced its new-generation bio-ethanol powered automobiles, the Focus Flexi-Fuel, plus a Flexi-Fuel version of the Ford Focus C-MAX. The ethanol-powered cars are the result of close co-operation between Ford, the bio-fuel industry and the Swedish government.

Ford remains the leading manufacturer of ethanol-powered vehicles in Europe and is also in partnership with the Somerset Biofuel Project in the UK to develop the cars. In July, it began negotiating with Somerset County Council, Wessex Water, Avon and Somerset Constabulary and Wessex Grain to introduce the Focus Flexi-Fuel vehicles on their fleets. The scheme is subject to EU approval.

Global view

“Investment is the key element,” Mr Ford says. “With our global presence, we must care about the entire world. We are applying principles of sustainable mobility to everything we do.”

He notes that Ford Motor Company now applies “clean, sustainable” forms of alternative energy – including solar, wind and even paint fumes – to power its plants around the world. The sustainable measures “are saving us a fortune”, he says. “We use 20% less energy. And through the reduced use of water, we are saving five billion gallons a year. We are making all of our facilities sustainable and environmentally friendly. We are applying the same goal for automobile manufacturing.”

The interior door paneling of the Ford Mondeo, for example, is manufactured from fibres from kenaf plants grown in Bangladesh. Kenaf is related to cotton and okra. After harvesting, the stalks are worked into fibres and packed into bundles weighing about 140 kilograms. It is shipped to Europe where it is processed and combined with polypropylene fibres. The materials undergo several more steps and are eventually formed into multi-layered mats that are heated and eventually formed into a three-dimensional inner door panel.

Last year, Ford’s European products used 267 different vehicle parts made from renewable and sustainable sources.

Pioneering work

Today, Mr Ford points out, the company is the only auto manufacturer in the world that is engaged in developing all four types of sustainable energy schemes for engines used in cars: clean diesel, hybrid (gas, electricity and hydrogen powered), hydrogen internal combustion, and fuel cell.

“Innovation is the key to success. We are now launching more new products than anyone else in the world,” says Mr Ford. “We are the first to introduce a hybrid SUV in the world.”

That SUV is the Ford Escape Hybrid, the 2005 North American Truck of the Year, which combines the fuel economy and emissions benefits of a full hybrid and features a high electrification of propulsion. The Escape Hybrid is the first hybrid vehicle to offer four-wheel-drive and towing capability of up to 1000 pounds when properly equipped. Its gasoline engine and electric motor work in concert, providing performance similar to that of a V-6 engine.

No US expansion

Speaking to fDi, Mr Ford is clear that Ford Motor Company has no expansion plans in the US, even in the south, a region that has attracted a great deal of automotive investment in recent years. “We are struggling with overcapacity in the US right now,” he says. “In the past, car manufacturers operated with one model per plant. Now we can assemble multiple models in one plant. Consequently, we are trying to figure out our plans.”

Automobile sales in the US are depressed and Mr Ford says: “There has never been a straight line in our sales. We need to monitor our sales and capacity, and not go into a panic mode.”

Some relief may be on the way via tax credits from the US government. Ford Motor Company applauds the energy bill passed by the US Congress this summer. “By incorporating national conservation initiatives, renewable fuels and consumer tax credits for fuel-efficient advanced technology vehicles, Congress has provided critical incentives to accelerate the expansion of advanced technology vehicles and to achieve the volumes needed to make them more affordable,” an official company statement reads. “We also applaud the Congress’s approach to address climate change through market-based incentives. Congress’s bold actions will support US jobs and encourage the development of greenhouse gas intensity reducing technologies and fuels.”

Mr Ford believes that government support for research and development and an educated workforce are critical to any manufacturer. “A company is only as good as its employees,” he says. Ultimately, however, he believes that the key to his company’s success remains innovation.

“There are no longer any lousy manufacturers of cars or trucks,” he says. “Therefore, we need to differentiate our products, and with that, we are focusing on innovation.”

In Thailand alone, Ford Motor Company offers a strong portfolio of products: Ford Ranger, Everest, Explorer, Escape and Laser Tierra. In addition, Mr Ford emphasises that the company – whose brands include Lincoln, Mercury, Mazda, Land Rover, Aston Martin and Volvo – is taking advantage of brand strengths to reinforce all Ford models.

 

 

 

ROUGE PLANT RISES FROM THE ASHES:

When Henry Ford built his manufacturing complex on the banks of the Rouge River in Dearborn, Michigan between 1917 and 1925, the factory was a marvel of engineering. Not only did it build cars from start to finish, but also raw materials and every conceivable part were stored in the one location, thereby making the plant self sufficient. By being able to transform these raw materials into completed automobiles at one site, Mr Ford introduced his ‘vertically integrated’ approach to manufacturing – the most innovative production model in the industrial revolution. By the mid 1940s, the 1100-acre Rouge complex became the world’s largest auto manufacturing facility, employing 100,000 people. About 50 years later, in 1999, the plant lay in ruins, the result of a boiler fire. At the time, Ford Motor Company claimed 25% of the US car market and was on its way to record profits of more than $7bn.

While the destroyed factory symbolised the passing of an era of auto production, it also magnified the difficult competitive situation that Ford had found itself in. Facing keen competition from foreign auto manufacturers that were producing cars on US soil as well as internal strife at the corporation itself, Ford looked like a company headed for rock bottom — unless new leadership was implemented that offered a fresh vision.

That vision came from William ‘Bill’ Clay Ford Jr, great grandson of the founder. In early 1999, Bill Ford had little to offer as chairman of the board of the company bearing his name other than heritage. But like his great grandfather, he had a passion for innovation as well as the environment.

“The company thought about tearing the Rouge factory down. But I could not stand the thought,” Mr Ford says. Before long, the horrendous eyesore became one of the largest brown field development sites in the world and the Rouge Center went on to inspire Mr Ford to use its restoration as a symbol of rebirth for the company itself.

“Now we have world’s largest living roof that conserves energy, creates oxygen and reduces storm water run-off,” he says. The ecologically inspired 500,000-square-foot roof dramatically affects the Rouge area watershed by holding several inches of rainfall. “Consequently, we use 20% less energy. And through the reduced use of water, we are saving five billion gallons a year,” he explains.

Construction

of the new $2bn project began in November 2000. To turn the development into reality, Ford Motor Company assembled a dream team of specialists and recruited a noted sustainability architect. Their redevelopment plan incorporated a number of lean manufacturing and environmental features intended to make the Rouge site a healthy, productive, supportive work environment. Soon the new Rouge Center became the factory of the future, one that features world-class flexibility, with assembly lines capable of handling three different vehicle platforms and nine different models. Finished vehicle storage space is reduced by 50% inside and outside the plant; and 90% of the vehicles produced are shipped the same day.

Other features to the centre include: phytoremediation (the use of natural plants throughout the grounds that rid soil of contaminants); swales (shallow green ditches seeded with indigenous plants that will improve storm-water management); porous paving that filters water through retention beds with two to three feet of compacted stones, helping to manage storm water run-off; trellises for flowering vines and other plants to shade and help cool the Rouge office building and the new assembly plant; renewable energy sources, such as solar cells and fuel cells; and the planting of more than 1500 trees and thousands of other plants to attract songbirds and create habitats.

“The Ford Rouge Center is one of the enduring symbols of the industrial age,” Mr Ford says. “We have transformed the icon of 20th century integrated manufacturing into a model of 21st century lean, flexible and environmentally-sensitive manufacturing. We are excited about creating a new role model for industrial facilities everywhere.”