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Betting on Ford

Ward's AutoWorld, Jul 1, 2002 12:00 PM

That sound coming from the future site of Ford Motor Co.'s $250 million supplier park in Chicago isn't excavation. It's the echo of rolling dice.

At the table are nine suppliers. But the buzz is that up to six more could join the game, inking long-term leases on plants dedicated to serving Ford's Chicago assembly operations — soon to feature a highly flexible body shop.

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From there in 2004, the auto maker launches two all-new vehicles in an aggressive play for the growing CUV market and ever-resilient sedan segment.

Also wagering are the state of Illinois, city of Chicago — contributors of incentives worth more than $110 million — and plant site developer Centerpoint.

What are the stakes? For the likes of ZF Lemforder Corp., locked in to a 9-year lease on one of six buildings: $17 million. In return, the suspension maker — like its campus neighbors — hopes to become the odds-on favorite to supply D219 (tentatively dubbed CrossTrainer) and D258 (Ford Five Hundred) throughout their lives. But there's no sure bet.

No matter, says Kurt Mueller, the company's general manager-axle systems — even though lease terms do not prohibit Ford from sudden price reduction demands. “There's never any protection from that,” Mueller says.

However, Ford winks at the suppliers as if to say the deck is stacked in their favor.

“When you think about the suppliers' commitment … that's a real commitment,” says Roman Krygier, group vice president-manufacturing and quality. “We're going to work with suppliers.”

The second part of Krygier's portfolio will be the primary yardstick to determine which companies retain contracts and which will not, Ford says.

“Along with any partnership, there's a certain element of trust,” Mueller adds. “We have to trust that we're going to be on this vehicle for the life of the program. And we have to trust that if there are legitimate cost issues, we can sit down face to face with Ford and talk about them.”

Jan Kowal, president of Brose North America Inc. — door systems supplier, $5 million investor and another 9-year lessee — says his company should be able to stay competitive “as long as we control our costs.”

Meanwhile, the United Auto Workers union — with no financial stake in the 1,000-job project — appears to be the clear winner. Ford has not limited the 1.5 million-sq.-ft. (139,000-sq.-m) campus to unionized shops, but suppliers have been told to be “union friendly.”

A UAW official offers a bold prediction about Ford's supplier park: “We know they're going to be unionized.”

Chicago supplier park

The nine vendors with leases for the new supplier park at Ford's Chicago assembly plant:

  • Sanderson (stampings)
  • Tower Automotive Inc. (stampings)
  • ZF-Lemforder (suspensions)
  • Visteon Corp. (instrument panels, fuel tanks, engine coolant components)
  • S-Y Systems (wiring)
  • Summit Polymers Inc. (console-injected plastics)
  • Plastech Engineered Products (injected and blow-molded plastics)
  • Brose Technik fur Automobile (door components)
  • Pico (manufacturing equipment)



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