When Ford Motor Co. begins making the all-new 2020 Escape in Louisville next year, it will reduce the number of available vehicle configurations — which number in the thousands today — to just 25.
Ford already has begun reducing the manufacturing complexity in some of its vehicles, including Fusion and Explorer, as part of an $11 billion restructuring overhaul about which the company has released few details.
Recent workforce changes in Detroit and Louisville, which involved moving 500 union workers from Louisville Assembly Plant to Kentucky Truck Plant, realigned production with demand, but had nothing to do with the overhaul.
And while Morgan Stanley analysts suggested this week that Ford’s restructuring could eliminate 25,000 mostly salaried jobs, recent comments by one of Ford’s executives indicated that most of the automaker’s problems lie outside of U.S.
North America remains Ford’s biggest business and where it generates the most profit.
“The North American business continues to stay at a pretty healthy level,” Joe Hinrichs, Ford’s executive vice president, who oversees global operations, said at a recent conference.
Hinrichs said the overhaul is “more fundamental … than any time I’ve been at the company in 18 years.”
Some of the restructuring will focus on reducing manufacturing complexity, he said. For North America, that means Ford will reduce the number of available vehicle configurations by 80 percent for the next-generation of vehicles.
The Ford Explorer, for example, comes with 139 side mirror configurations, with options including blind spot monitoring and skull-cap color. For the next generation, however, Ford will make blind spot monitoring standard, and it will paint all side mirror skull caps gloss black. Those changes reduce the number of side mirror configurations to 25.
“And we’d go part by part by part, and we’d go product by product to attack all this complexity in our business,” Hinrichs said.
Some of those changes have hit North America already: The Ford Fusion, which the company makes in Hermosillo, Mexico, used to come in 2,000 orderable configurations. Ford cut that to about 30 for the last few months, and 12 of those constituted about 85 percent of what dealers ordered.
Reducing the complexity means that manufacturing plants can produce the vehicles faster: Hinrichs said the steps in Mexico allowed Ford to cut the days it takes to deliver the vehicle to dealerships in the U.S. by 63 percent, from an average of more than 80 days, to near 30.
Ford will take a similar approach for the 2020 Escape, made exclusively at Louisville Assembly Plant. The Escape currently comes in thousands of configurations, he said, but that number will be reduced to about 25.
“That allows us to then batch build, which is much more efficient for paint,” he said. “It’s also much more efficient for sequencing, because you’re sequencing in kits of 60 as opposed to one by one.”
Hinrichs said the all-new Escape will be built in batches of 60, and reducing the complexity at LAP will save Ford about $70 per vehicle in sequencing and labor costs.
Ford makes about 300,000 Escapes annually, which means a production cost reduction of $70 per vehicle would save the automaker about $21 million a year.
Lower complexity has allowed Ford to keep its structural costs basically flat this year, “which has not been the trend over the last several years,” Hinrichs said.
“So we’re starting to already see some of those benefits,” he said.