Ford F-150 pickup trucks are on a sales lot on May 10, 2018, in Miami.
(Photo: Joe Raedle, Getty Images)
What if Facebook or Nike couldn’t do business for more than a week?
“The whole world would shut down,” said Joe Hinrichs, president of global operations for Ford.
So, when production of the F-Series pickup line halted — with annual revenue of $40 billion, exceeding that of Facebook, Nike and most other modern corporate rock stars — leaders of the iconic automaker got creative.
Ford restarts assembly lines Friday for the F-150, the nation’s best-selling vehicle and the company’s financial lifeline, after a two-week disruption. Hinrichs expected it to be much longer.
The story of the recovery involves Ford crews sleeping in tents at the site of a fire at a key supplier’s factory in rural Michigan as they waited to retrieve critical tools. They strapped together a new supply chain involving five countries — what one analyst called the equivalent of “hitting a grand slam in the World Series.”
The Dearborn-based automaker needed to stem the bleeding caused by a parts disruption that would lead to layoffs of 7,600 workers in Michigan, Kentucky and Missouri.
F-Series trucks generate more than $100 million a day in revenue. Nearly $4.2 million an hour.
“We were highly motivated,” Hinrichs said Thursday.
The crisis for Ford was such that the company secured the pricey services of the world’s largest cargo plane, previously used to transport skimmer boats from France to the Gulf of Mexico during the Deepwater Horizon oil spill in 2010 and airlift a pump from Germany to Japan to help cool reactors damaged in the Fukushima nuclear disaster in 2011.
Ford won’t disclose what it spent. Whatever the bill, it had no choice.
A crew member walks in front of the airplane during the 30th anniversary of the maiden flight of the world’s largest serially manufactured cargo airplane Antonov An124 Ruslan in Leipzig, central Germany, Monday, April 8, 2013.
(Photo: JENS MEYER, AP)
“The Antonov An124 was a military transport built for the Soviet armed forces. The aircraft is huge and would be very, very expensive to use,” said Bob van der Linden, curator of air transportation for the Smithsonian National Air and Space Museum.
“But it’s worth it for Ford to get that F-150 assembly line running again,” he said. “That’s the nation’s best-selling vehicle and you can’t have it come to a screeching halt.”
Ford pulled together a team that arrived within hours of the fire May 2 at Meridian Magnesium of America south of Lansing. They watched the flames rise, since water can’t be used to put out fire at a magnesium plant. Water only fuels the flame.
Emergency personnel work at the scene of a fire at Meridian Magnesium Products of America in Eaton Rapids, Wednesday morning, May 2, 2018.
(Photo: Matthew Dae Smith, Lansing State Journal)
The blaze dramatically disrupted the North American auto industry by creating a parts shortage for Ford, General Motors, Fiat Chrysler and Mercedes. It triggered unplanned layoffs throughout the U.S. On May 9, it shut down F-150 pickup production completely.
Earlier:
Ford was most affected, relying on the factory for highly specialized parts used in the F-Series, Expedition, Explorer and Navigator, as well as Lincoln vehicles.
Plant workers described Thursday how Ford executives and others waited impatiently as the site smoldered.
“We had people in a tent outside the facility waiting for the minute the fire marshal would grant access,” Hinrichs said.
‘Everybody is your friend’
Ford, Meridian and others worked to get tools out and find manufacturing alternatives by coordinating with partners and competitors in the U.S., Canada, the United Kingdom, Germany and China.
“When something happens and there’s a disruption in supply, at that point, all hands are on deck. Everybody is your friend. Even your competitors are your friends,” said Eric Showalter of Troy, the former CEO of Meridian, who left the company after it was acquired in 2013 by China’s Wanfeng Auto Holdings Group.
Meridian, which is nonunion and takes pride in how workers are treated, set up grills to make hot dogs, hamburgers and tacos in the days after the fire. Gatorade deliveries were made. And a local golf course dropped off carts to assist the team after the ankles of one worker swelled from being on his feet so long.
The plant site is about 10 acres, Meridian workers said. They watched with pride as the global company worked with Ford to build Plan A, Plan B and Plan C.
“Meridian is the biggest supplier of these types of components, which limits the options,” Showalter said. “If the large machines had been extensively damaged or the tools extensively damaged, this would have been a longer process.”
Wind created challenges immediately after the fire and explosion. Emergency workers were navigating a torn roof with hanging parts that prevented entry into the building. Meanwhile, Ford had teams working at its world headquarters in Dearborn at 3 a.m.
“Our biggest concern was capacity for magnesium products,” Hinrichs said. “It’s a highly specialized metal. Can we get magnesium capacity quickly?”
The plant is the only site in North America capable of supplying Ford at the rate needed. Parts built there include the front bolster that reinforces the engine where the radiator is attached, the third-row seat cushion pan and the crossbar beam known as the instrument panel.
Ford worked to line up trucks, cranes and the aircraft. The Russian aircraft landed in Columbus, Ohio, Hinrichs said. “They needed a specific airport. It took quite the coordination. Time was of the essence. You can make any one of these things happen, but making all of it happen at once within 24 hours? That was remarkable.”
He said, “The word was out. This is the F-Series. There was nothing we couldn’t overcome.”
Hundreds of Ford workers coordinated worldwide to remove tools from Eaton Rapids, test their integrity and send them to new locations to get parts made.
“Ford deserves credit here for managing this situation,” said Dave Sullivan, manager of product analysis at AutoPacific Inc. “To be able to rescue the dies, move and fill the supply chain in such a small time frame is nothing short of hitting a grand slam in the World Series. Ford was able to triage the situation quickly, perform a logistics operation with surgical precision, and then get the dies in a healthy place for production in record time.”
Ford announced Wednesday that F-150 production resumes Friday in Dearborn and Monday in Kansas City. The Super Duty truck line starts Monday in Kentucky.
But the situation remains volatile.
Parts are being made in Nottingham, U.K., and being flown back to the U.S. on 747 aircraft every day, Hinrichs said.
“One thing I’m most proud of? We secured magnesium capacity across the globe. We had first move advantage,” Hinrichs added.
Still, the company needs to bring back production to the U.S. Meridian is working to rebuild.
A case study
Magnesium is used by automakers now because lightweighting is a key part of the fuel economy strategy. Analysts said they wondered about the impact this crisis will have on the industry.
“This could be a good case study to learn when sourcing to a single supplier makes sense, and when it does not, for a high-volume vehicle. The industry would be remiss if they didn’t use this unfortunate incident as a case study,” said Abhay (Abe) Vadhavkar, director of manufacturing, engineering and technology at the Center for Automotive Research in Ann Arbor.
“The message is pretty clear,” Hinrichs said. “The F-Series is the foundation of our business at Ford and we’ll do whatever it takes to keep producing the best-selling vehicles in America.”
In April alone, Ford built 29, 572 trucks in Kansas City and 31,482 trucks in Dearborn.F-150
In 2017, Ford built 1,052,658 F-Series trucks that sold for an average of $46,500.
While Ford is celebrating progress in fixing a high-profile problem, other automakers are making gains. Mercedes said Thursday its teams worldwide is working to re-establish parts flow for its Alabama plant that builds SUVs. The company hopes to gradually resume its production next week after total shutdown
Albert Tochet, 82, a Ford shareholder from Bloomfield Hills, said he has watched Ford in recent days with concern.
“They are and have been a great American company,” he said. “Magnesium is a very dangerous material to process. It is lighter than aluminum, which makes it attractive to designers when lighter weight for government EPA standards is required. It is, however, a more expensive and dangerous alloy and has the potential for spontaneous combustion, explosion and fires.”
Tochet, a retired engineer, said responsible designers would have components designed in both aluminum and magnesium, giving the purchasing people the option of using different materials and suppliers. “There are very few magnesium die casters and many, many more aluminum die casters.”
Contact Phoebe Wall Howard: phoward@freepress.com or 313-222-6512. Follow her on Twitter @phoebesaid.
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