Ford's Hybrid Transmission Plant Uses Flexibility to Beat Outsourcing
August 6, 2012 11:54 AM
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New plant will produce transmissions for hybrid C-Max, Fusion, and more, as well as six speed auto
had the privilege of touring Ford Motor Comp.'s (
) new hybrid transmission flex-line assembly plant in Sterling Heights, MI last Thursday. Located on Van Dyke Rd., roughly 20 min. northeast of the city of Detroit, the Van Dyke Transmission plant has been opened since 1968.
Long in the tooth, some feared the long-standing facility could become the latest casualty of a fading American manufacturing empire. But Ford was determined not to let that happen.
The company has injected $220M USD in capital to revamp the plant, turning it into a flexible line capable of fulfilling the demand for hybrid transmissions domestically. The plant will build the mixed transmissions of the
Ford C-MAX Hybrid
C-MAX Energi plug-in hybrid
, Fusion Energi plug-in hybrid and
Lincoln MKZ Hybrid
Jim Tetreaulter, Ford's North American manufacturing chief
Ford's vice president of North American manufacturing, James "Jim" Tetreault lead off the unveil, praising the United Auto Workers union for making the painful compromises and deep commitments necessary to produce the transmission at a lower cost than it could have been overseas, keeping jobs in America.
He commented, "I'd like to recognize the UAW for your efforts and thank you very much for your support."
The plant will be taking over manufacturing duties from Aisin-Warner -- the joint venture between Japan's Aisin Seiki Comp., Ltd. (
) and Michigan-based BorgWarner, Inc. (
). The Fusion hybrid's transmission was previously produced at a Japanese plant in the greater Tokyo area.
Mr. Tetreautler motions over a finished hybrid motor.
Despite a transition from non-unionized Japanese laborers to UAW workers, Ford says it will actually save on manufacturing costs for hybrid transmission.
Ford says many of its peers fail to look at the full cost of outsourcing. Between shipping costs, "currency fluctuation", and communications overhead, whatever cost advantage overseas non-unionized manufacturing holds quickly evaporates.
Some may wonder why Ford is forced to choose between relatively expensive U.S. and Japanese labor. One factor is that cheaper labor regions like China present a hostile intellectual property environment and human rights issues. Again, the true cost at the end of the day is often far higher than the quick and dirty figures that have led some to jump at outsourcing bids.
Mr. Tetreault estimates that an assembly that cost $77 USD to produce and ship from Japan will be produced at the plant for only $58 USD, a nearly 25 percent cost reduction, and a blow to those who have villainized American trade unions in recent years.
Space-age plastics cuts the weight of the hybrid transmission while
maintaining rigidity and mechanical integrity.
Richard Notte, mayor of Sterling Heights praised Ford's revitalization of the
. A UAW veteran, Mayor Notte started work in 1959 at the local Ford Axle Plant, working as a skilled welder. He retired in 2004 and became active politically. Now he was ecstatic to see his hometown recommit to American manufacturing.
He said that Sterling Heights would like to welcome "one of the biggest plants in American for Building hybrid transmissions."
Sterling Heights Mayor Richard Notte
The new plant will add 225 new manufacturing jobs, a notch towards Ford's goal of 12,000 new hourly jobs by 2015. Ford plans to spend an addition $412M USD to grow the remaining domestic manufacturing jobs over the next three years.
Mayor Notte comments, "The auto industry is never going to be as big as it once was, but It's still going to maintain its mark on the world."
A finished transmission assembly, with the engine.
130 new workers are already on the job at the plant's assembly line. The line now employs 1,350 workers. The remaining 95 new workers will start before the end of the month.
Ford says it received 10 times the number of applications as it had jobs to fill -- a sign of just how untapped America's supply of skilled laborers is.
We did inquire to Mr. Tetreault whether it was difficult for Ford to keep cost-competitive with its domestic rivals -- the Chrysler Group and General Motors Comp. (
) -- since they continue to enjoy the fortune of being practically
exempt from state and federal taxes
He commented, "I'm not going to go there. It's all water under the bridge, as they say."
But Ford clearly is determined it can overcome both a heavily pro-outsourcing recessionary climate and its domestic peers' special-interest advantages, delivering the "best product they can at the best price" as a local union rep put it.
Gears gleam under the bright lights on the plant floor.
Ford says that in additional to the jobs at the plant there's typically a 10-to-1 multiplier in terms of for every job created at a major manufacturer's line, there's ten jobs created at suppliers' facilities.
Valves tower over a finished engine/transmission assembly.
Out on the floor Ford showed us the line that activated six weeks ago (in June). The line has been producing prototypes on the line since 2011.
The "secret sauce" that helps keep costs so low at the transmission plant is its flexible design. Capable of producing either the 6F -- a conventional six-speed automatic -- or the HF35 -- a hybrid transmission, the plant can compensate for lulls in hybrid demand by producing conventional transmissions.
Ford engineer Donald Iaquinta shows off transmission blocks.
Given the variability observed in demand for electrified vehicles, this seems a wise strategy.
Ford engineers in a post-tour discussion said that there are many difficulties facing the electrified market. One issue is payoff. Ford says its market research shows that customers want their electric vehicles to pay off the cost difference (via savings in gasoline expenses) within four years.
Given the cost of batteries and the soaring fuel efficiency of both traditional gasoline and diesel vehicles, that's a tough target to hit.
Another complicating factor are driving habits. Optimizing hybrid savings requires the driver to know when and how to brake, in order to recover the most kinetic energy. Brake too hard and the kinetic energy goes to waste.
Ford engineers estimate that drivers will see a 15 to 20 percent increase in fuel economy once they learn to optimize their driving habits to the hybrid.
Stators -- the stationary component of the EV motor/generator.
As complex as they are, the hybrid transmissions don't take that long to produce. Mr. Iaquinta estimates that the average time at a workstation is approximately 25 seconds, with the entire transmission taking around 2 hours to produce.
Rotors with pumps to maintain line pressure.
The components are sourced to a variety of domestic and foreign manufacturers. For example, Toshiba Corp. (
) supplies the control stators seen above. Other parts come from literally down the road in the local Detroit area.
The hybrid and conventional transmissions have some parts in common. For example, the pump to maintain line pressure for
start/stop in the conventional engine
is recycled as a lubrication and cooling pump in the plug-in variant.
The RTV robot applies liquid gaskets.
Much of the assembly process still requires a high degree of human interaction. However, the humans get a boost by some robotic line workers. One of the most impressive of the robots was the RTV. Featuring a hulking robotic arm, this robot was capable of lifting the entire transmission assembly and applies liquid gaskets using a smaller arm, curing the polymer into a finished gasket. The process replaces older paper-gasket assembly methods.
Kits are key to fast switches between the two transmission types.
Other than the blocks, virtually all the parts are kitted and tagged with QR tags for quality control purposes. This saves on assembly time on the line.
It also helps the line be able to switch faster between transmission types. To switch from the hybrid transmission to the conventional one, or vice versa, the line simply has to pick the proper kits and change the tooling on the human-operated power tooling and robots. The net result is that a switch can be accomplished in minutes, allowing uninterrupted production all day long.
A line worker applies parts to an in-progress transmission.
The proof is in the product, as they say. Ford's finished transmission is 20 percent lighter than its foreign predecessor. And thanks in part to its confidence in the in-house assembly; along with engineering improvements, Ford has been able to bump the hybrid operation speed from 47 miles per hour in the previous Fusion to an impressive 62 miles per hour.
Given the flexible nature of its plant, it's hard to see how Ford's new line could be anything other than a terrific story of domestic manufacturing success, regardless of how many buyers choose to go electric.
(All images © Jason Mick/DailyTech LLC, may be used with attribution, click any image to enlarge.)
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RE: They are completely right.
8/7/2012 1:33:57 AM
Ford has been one of the fortune 500 that has been outsourcing like crazy. I'm glad to see them reversing the trend but wonder what is the main motivator is. I'm pretty sure they don't really care about the American labor market.
RE: They are completely right.
8/7/2012 5:18:15 PM
Ford understands that the best way to sell cars is by there being a strong economy in the USA. The best way to improve the economy is to boost jobs in the USA. If reducing costs while improving the economy can be done at the same time, then that is a BIG win overall.
Remember also that those who work for a company do tend to buy products that the company produces, which also is a plus. There are greater losses if products get recalled as well, so better quality is also a plus.
RE: They are completely right.
8/16/2012 5:39:58 PM
I'm sure that's not true, they do care. But their first order of business, their legal obligation is to their shareholders. Most companies do not want to outsource, for all the reasons mentioned, loss of control, theft, inefficiencies etc.
But, the government needs to stop treating business like they're the enemy. It's shocking how many people have no clue about business or economics.
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