Ford's resurgence in Louisville
By Trisha Ostrowski
A massive retooling of Ford's plants in Louisville, Ky., has made them models of efficiency and flexibility. The reality is that it could have been a sad story.
Ford had been going strong in Louisville for a century. Then, a few years ago, as the economy fell into recession, the future of the entire U.S. auto industry was in turmoil. U.S. automakers everywhere were forced to streamline and cut costs, and survival of Ford's two facilities in Louisville was in doubt.
Kentucky, however, was not willing to give up on its 100-year relationship with Ford. The state made a strong case for keeping the plants open with a combination of teamwork and economic development incentives.
The result has been major new investment and job creation by Ford in Kentucky, a happier ending to the story than perhaps anyone could have imagined. As Ford marked 100 years of doing business in the Commonwealth in 2013, it celebrated the tremendous growth of its manufacturing facilities there.
Rather than closing its two Louisville facilities, Ford chose to reinvest and transform them. One of its plants, known as the Louisville Assembly Plant or "LAP," saw the biggest change.
In late 2010, Ford announced an investment of $600 million to make LAP its most flexible high-volume plant in the world. . .meaning that Ford can produce many different vehicles in the same plant, allowing the company to better and more quickly respond to the market. The decision to transform the plant preserved existing jobs and required a second shift, creating 1,800 new ones.
With the auto industry leading manufacturing's recovery, the second wave of investment in LAP came when Ford announced in 2011 that it would bring a third shift to the plant, adding another 1,300 jobs.
The growth appeared to be just in time. As the economy started to rebound, orders for new cars began pouring in to Ford.
During the recession, a time when many plants were at risk, why did Ford choose to transform LAP? As Manufacturing Communications Manager Kristina Adamski from Ford explained, "Flexible manufacturing plays a key role in Ford's strategy. We believe strongly in the future of LAP and invested over $600 million into the plant to turn it into a flexible manufacturing facility. LAP now has the capability to produce six different vehicles on three different platforms."
"Louisville has been a big part of Ford's success," Jim Tetreault, vice president of North American manufacturing for Ford told a group of Louisville business leaders about the transformation. "Manufacturing an automobile takes so much labor and capital. Our new paradigm is to run assets 24-7; one factory with multiple products and multiple platforms. We want to build cars in very flexible facilities. The most flexible one is in Louisville.
"When sales of the Escape, which we are sold out of now, drop, we'll just make another model and we won't miss a beat," Tetreault continued. "We won't shut the plant down. We won't retool it. We'll just reprogram to build Escape and product x and product y and product z. This allows us to respond to market demand and have stable employment."
With the new investment, LAP was gutted and almost completely re-engineered. More than 1,000 robots, most of which are reprogrammable to handle a variety of parts and vehicles, help make the plant state-of-the-art. Perhaps the biggest advantage is that no downtime for retooling is needed because the robots are almost immediately re-trainable. This allows them to quickly meet changing market demands and keep the plant busy, avoiding downtime.
Along with LAP, Ford also chose to invest $600 million to modernize its second Louisville facility, the Kentucky Truck Plant, for next-generation F-Series Super Duty trucks and Expedition/Lincoln Navigator SUVs.
"Ford has always had a strong presence in Louisville. We started out in 1913 with 17 employees building 12 vehicles a day. To put that in perspective, our two Louisville plants now turn out 12 vehicles in 4.5 seconds," Tetreault said. "Our two plants that employ 8,500 workers build more than 2,000 vehicles a day. We are running at full utilization. Escape is sold out and we're trying to figure out how to make more." International sales are strong as well, he noted. Expedition, another of the vehicles made in Louisville, is being shipped to 37 countries around the world.
Kentucky's role in the deal
As Ford chose to reinvent its plants, Kentucky showed its strong commitment to the company. Kentucky Cabinet for Economic Development (KCED) worked in tandem with local economic development group, Greater Louisville, Inc.
According to Eileen Picket, executive vice president for Greater Louisville, Inc., the community has fully embraced Ford and its expansion, contributing to success. "You can't overstate the benefits of having a large OEM and the Greater Louisville area recognizes that fact," Pickett said. She added that along with automotive, the bigger picture is that Louisville is well-positioned for manufacturing growth in other areas as well. General Electric has reinvested in the Louisville Appliance Park, for example, reshoring some of its work and hiring about as many people as Ford. "Manufacturing jobs are very different than they used to be," Pickett continued. "Louisville understands the requirements of the workforce."
Louisville Mayor Greg Fischer echoed the idea that workforce was critical to Ford's decision to retool. "Louisville and Ford have 100 years of history – and we have a trained and educated workforce to help Ford become the dominate industry leader."
Fischer adds that the city worked with the state on tax rebates and incentives to encourage Ford's investment. For example, at the state level, Kentucky was able to offer Ford incentives through the Kentucky Jobs Retention Act (KJRA), a state program launched in 2007 to spur investment in the state by automotive manufacturers and suppliers.
Both Ford and Kentucky point to a strong relationship as being paramount to the company's ongoing growth. "We are very committed to Kentucky. We have had a good and solid relationship with local and state governments for many, many years," said Teterault.
"I am confident that if you ask Ford leaders about the company's presence in Kentucky, 'relationship' would be one of the first words out of their mouths," echoed Secretary for the Kentucky Cabinet for Economic Development Larry Hayes. "It's been a wonderful relationship for 100 years. I'm confident the strength of our relationship came into play when decisions were being made (by Ford) in 2007 and 2008 about where to keep investments and where to back out."
Hayes also notes that, though long-standing, Kentucky refused to take its relationship with Ford for granted. "Ford went through a period of becoming almost a different company. In their process of becoming leaner and meaner, we honed our relationship with them and made sure we understood their challenges. Whether it involved resources, financials or permitting, we learned to move at business speed, as they were."
Along with relationship, both Ford and state officials point to Kentucky's workforce and training programs as major factors behind the resurgence. "Our employees are what make us successful. We have found top-quality employees in Kentucky," Tetreault said.
In the end, it was Kentucky's strength as an automotive location that gave Ford's story a happy ending. "Ford has found Kentucky to be a great state for automobile manufacturing since we opened our first facility in Louisville," Adamski said. "Kentucky benefits from its geographic location, a workforce experienced in manufacturing, and a large number of automobile-related industries. Not only does Ford have a long history in the state, but our recent investment of over $1.2 billion in our Louisville plants shows our commitment to the future as well."
Along with Ford's two plants, Toyota operates its largest plant outside Japan in Georgetown, Ky., where it makes Camry, Avalon, Venza, and soon the Lexus ES 350. It also bases its North American manufacturing operations in Northern Kentucky. In total, the Bluegrass state auto-related industries employ around 80,000.
Does Kentucky have room for another OEM?
"Absolutely. We have several megasites that are ready to go. In fact, the state owns one megasite right on I-65, the Glendale Megasite, which was a close contender for the Hyundai project. This site has specifically been set aside for another OEM and is located between Louisville and Nashville, right in the heart of our base of 450 automotive suppliers."
--Larry Hayes, secretary for the Kentucky Cabinet for Economic Development
New 2014 Corvettes: Made in Kentucky
A facility in Bowling Green, Ky., has the distinction of being the only General Motors facility that builds Corvettes. Currently, the plant is preparing for the next generation of the sports car, a complete overhaul, for which only two parts will stay the same. The company announced in 2011 that it will invest $131 million and add 250 jobs at its Kentucky facility to be prepared.