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Ford Converts Plant From SUVs to Electric Cars

Call it a fork in the road for America’s second-largest automaker.

This morning, Ford announced that it is pouring $550 million into the ongoing conversion of a Michigan truck plant into a facility that will produce the Ford Focus compact — including a zero-emissions electric version of the Focus.

For 51 years, the Michigan Truck Plant in Wayne, Mich., just west of Detroit, cranked out Ford Bronco SUVs and the classic Ford F-series pickup truck.

For years, the Ford F-150 was America’s best-selling vehicle and the metaphorical backbone of a working nation. The plant also produced the three-ton, 14 m.p.g. Lincoln Navigator and Ford Expedition — among the biggest SUVs on the road, 300-horsepower monsters built to tow powerboats and give eco-warriors something to hate.

Now, however, the facility — today renamed the Michigan Assembly Plant — is retooling so it can build the 2,588-pound Focus, a 35-m.p.g. fuel-sipper that pulls Ford’s hopes with its little 140-horsepower engine.

Those will begin rolling off the line in late 2010. The electric Focus, a year later.

Today’s announcement is the next step of a process that was set in motion by Ford chief executive Alan Mulally last July, when he said that Ford would revamp the plant and begin producing one of Ford’s small foreign cars at the Michigan plant, though at the time he did not identify the Focus.

In August, Ford committed $75 million to the conversion. The plant shut down in September and has been under construction since. So far, Ford has received none of the $25 billion approved by Congress last fall to help the Big Three retool to make more fuel-efficient vehicles.

The recession has turned out to be not as bad for Ford as it has been for GM and Chrysler. From January to April of this year, Ford's share of the U.S. market has grown from 14.2 percent to 16.3 percent.

Ford is the only one of the Big Three automakers to refuse federal emergency loans.

At its peak in the 1990s, the Michigan Truck Plant had three shifts working around the clock to produce the highly profitable SUVs, which carried Detroit’s Big Three during that time — and allowed them to ignore innovation on small cars, a mistake that would come to haunt not only Ford, but GM and Chrysler.

“This was one of the most profitable plants in the world,” Ford vice president of global manufacturing Joseph Hinrichs told The Ticker earlier today. “Now, in stark contrast to that, we’re going with a more balanced portfolio” of vehicles.

Indeed, Ford will continue to make the big SUVs, but has moved their manufacture from the Michigan plant to a heavy truck plant in Kentucky. Despite the ongoing recession and gas prices that spike above $4 per gallon last summer, Ford is making about as many $40,000 Expeditions and Navigators as it did this time last year, Hinrichs said.

People still have boats and horse trailers to tow, apparently.

Ford and other Big Three automakers gave their small cars less attention in recent decades simply because they could not make profits on them. High U.S. production costs — spurred by high union wages and benefit expenses — combined with low sales prices to make the little cars loss-leaders.

Meanwhile, Asian automakers — unburdened by such union demands — devoted their brainpower to making high-value small cars and captured the U.S. market.

Today, however, thanks to big concessions from the United Auto Workers: “We can make money on cars made in the U.S. for the first time,” Mulally said on CNBC this afternoon.

This time last year, massive, gasoline-burning Ford Expeditions steamed off the assembly lines of the Michigan Truck Plant.

Two years from now, if all goes according to plan, silent-engined electric Ford Focus sedans will roll off the lines of the Michigan Assembly Plant.

The conversion marks more than a change in one company’s business plan. It marks a cultural shift in what it will mean to be an American auto buyer.

-- Frank Ahrens
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By Frank Ahrens  |  May 6, 2009; 2:03 PM ET
Categories:  The Ticker  | Tags: Alan Mulally, Chrysler, Ford, GM, SUV, automakers, bailout  
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