LOUISVILLE — Consumer demand for the new Lincoln Navigator and Ford Expedition have so exceeded expectations that the automaker has increased its production targets by 25% while also investing an additional $25 million in factory improvements.
“Seconds matter,” said Joe Hinrichs, president of global operations at Ford Motor Co.
While the new SUVs aren’t among the industry's bestsellers, they are increasingly popular and highly profitable.
The Navigator and Expedition, rolling out of dealerships as quickly as they can be delivered, represent a bright spot in a bumpy stretch for Ford (F), which has made headlines in recent weeks for disappointing profits, falling stock prices and investor concern.
Hinrichs invited a handful of journalists to fly with him from Detroit to Louisville on Friday, despite a snowstorm, where he led a tour through the Kentucky Truck Plant, which is bigger than 100 football fields.
He explained new strategies that included using on-site 3-D printing to replace broken tool or manufacturing parts in hours rather than weeks. New computer screens and data analytics on the plant floor track productivity and potential challenges as they're unfolding, also flagging parts replacement needs in advance rather than waiting and requiring work stoppage.
Hinrichs, 51, talked one on one and with teams of reporters pretty much non-stop from 7:30 a.m. until 4:30 p.m. He shared thoughts on manufacturing operations, evolving labor demands and industry challenges.
"The revenue of what's generated at the Kentucky Truck Plant alone would be a Fortune 500 company," Hinrichs said.
Tool maker Wayne McKinney showed how a 3-D printer allows him to respond to time-sensitive situations as well as looking for creative ways to save money. He pointed to a pile of what appeared to be plastic grains of rice used for manufacturing. The tiny items once cost Ford $7 each; now they’re made in-house, saving hundreds of thousands of dollars.
McKinney downloads designs for parts, such as a recipe, and produces what's needed without stressing about the delivery of a replacement order. He also has line workers bring him challenges, such as the idea of creating a tool that guides a robot to better perform a task. (He did. It does.)
McKinney can go from concept to design to printing in two hours.
Ford employs 8,400 workers at the plant.
"This is like a big orchestra, and everybody has to come together to make the music beautiful," Hinrichs said. "This is not an easy environment. The whole blue-collar, white-collar thing we do? It's wrong. We rely on these people to solve our problems all day long."
Ford initially made production projections in the fall, which have been revised. The Dearborn, Mich.-based company declined to provide specific numbers.
"We're a challenger in this segment," Hinrichs said. "We don't want the competition to know our production plans."
The Expedition is part of a market segment dominated by Chevy Tahoe, Toyota Land Cruiser and Nissan Armada. The Lincoln Navigator is part of a market segment dominated by Cadillac Escalade, GMC Yukon XL, Lexus LX, Mercedes GL-Class and Infiniti QX 80.
Getting the SUVs to market as quickly as possible is Ford's top priority. While the industry average is 60 days on a dealer lot, new Lincolns and Expeditions are going home within a week.
"It's a good problem to have," Hinrichs said.
Nearly 85% of all Navigator buyers chose high-end Black Label and Reserve models in January 2018, which drove up the transaction price $21,000 from a year earlier to $77,400. Sales are driven primarily by Texans, Floridians and Californians. They're trading in competitor vehicles — known in the industry as a "conquest" — at a rate of 40%.
The pricey Platinum version of Expedition accounted for 29% of sales, pushing the average transaction price up $7,800 in January 2018 to $57,700.
Ford's average SUV transaction price jumped $2,700 in January 2018 to $34,200, ahead of the industry average of a $100 increase to $33,100, Ford noted.
Consumers are trading in their Mercedes, Lexus and Land Rovers, Hinrichs said. "I've been hearing these stories and have notes from dealers. I can't believe the customers we're getting."
Factory workers are working overtime and voluntary weekend shifts.
The latest $25 million from Ford is part of a $925 million investment at the Kentucky Truck Plant, which also builds Super Duty pickups. The money is meant to increase manufacturing speed, having included 400 new robots, the 3-D printer and enhanced data analytics.
More robotic help
Robots were added mostly in the body shop, increasing line speed while keeping employees from getting repetitive motion injuries. Workers in the robot lab troubleshoot software issues. Ford emphasized the high-tech training of its workforce, pulling jobs in-house rather than counting on external expertise.
Chuck Billingsley, a fourth-generation Ford employee whose family helped produce the Model T, works in the robotics lab. "We find ways to make things faster. We used to run five times a week. Now we go six or seven days a week, sometimes 24 hours a day."
The scene is a balance between artistry and chaos.
Brad Steward, an SUV body area manager, said employees used to walk around with stopwatches. Now computers analyze every action in real time. "We have thousands of lines of code just to run a single riveter."
He oversees 591 of the 1,600 robots in the factory. The sound of bells is constant, along with metal against metal and the hum of big machinery.
These SUVs will spend less than a day in the manufacturing plant.
A command center with seven big-screen TVs provides minute-by-minute updates of production goals, output and problems. New technology identifies parts by bar code, selects them from a 10,000-part "vending machine" and then gets them to the right area of Ford's largest factory.
The 3-D printer is a big deal because manufacturing a prototype for a part or tool using traditional methods can take up to four months and cost more than $250,000 in tooling alone.
A giant robot known in the plant as "Kong" lifts SUV bodies. It arrived in September 2017. Steward nodded toward the machine and said, "This thing will run all day long with a little bit of grease. It replaced 24 cylinders that had to be changed every six months and rebuilt. We no longer have breakdown issues."
Ford is applying 114 years of making mistakes, learning and knowledge, Hinrichs said. "There are things you don't know you don't know. It's not easy to keep this place running like it runs."
All of this adds up, simply, to improved "fitness," Hinrichs said, echoing a term emphasized by Ford CEO Jim Hackett and used in all investor calls.
Recent plant updates reflect plans put in place two to three years ago, not a response to current political decisions, Hinrichs said. He noted that consumer optimism and a healthy economy directly impacts sales.
While robotics and technology are essential, he said walking through the factory, "the eyes and ears and expertise of people out there help us. They're not just laborers. There's a human element to this that's really important."
The plant manufactured 400,000 vehicles in 2017.
Hinrichs, an electrical engineer, is responsible for overseeing Ford's global product development; manufacturing and labor affairs; purchasing; and sustainability, environmental and safety engineering.
At 29, he led the General Motors Powertrain Plant in Fredericksburg, Va. Turnaround of that plant was the subject of a Harvard Business School case study.
But it's not something Hinrichs highlights on a day that's all about Ford.
At the end of nine hours with reporters, Hinrichs climbed into a Lincoln Navigator, his vehicle of choice for 14 years. He had noted that his wife was hit by a red-light runner and credits her Navigator's steel frame for "keeping her safe."
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