The article mentioned how this could hurt Ford dealers. That seems unlikely - they’ll just tack on a 20% premium because the trucks are in short supply.
In reply to Pete Gossett :
It could still hurt them. If their trucks are 20% more expensive than a Chevy, the customer will buy the Chevy. Most buyers have a brand loyalty, but it has its limits.
Wow.
1988RedT2 said:In reply to Pete Gossett :
It could still hurt them. If their trucks are 20% more expensive than a Chevy, the customer will buy the Chevy. Most buyers have a brand loyalty, but it has its limits.
Fords are already more expensive than Chevys.
Yeah, this is going to sting a little. F-series is their cash cow. But such is life in the world of just-in-time. It bit them back in 2011 when the Fukushima incident took one of their paint suppliers down, too.
go buy your f-150 now! it will be more rare than 2017 and 2019 models
the plant that burned was fairly local to my hometown where I grew up. Magnesium fires can be quite a mess. Apparently it started in a scrap tunnel/trench where scraps would get shuttled out on a conveyor under the plant to be melted down.
There was an initial explosion then a series of subsequent explosions. Firefighters had to let it just smolder and more or less burn out because water and magnesium fires is a no go.
Can't verify that the news always gets it right, but one local news attributed some of the subsequent explosions to the building sprinkler system: "The explosion at the plant erupted from magnesium coming in contact with water from overhead sprinklers. Asher says he's going to leave it to investigators to figure out the details of what triggered the fire." Michigan OSHA still investigating.
http://www.wlns.com/news/meridian-magnesium-employees-wonder-what-happens-next/1158108125
It would seem they may have some underlying issues... they had this trailer fire earlier this year: 
Burning magnesium is not pleasant.
Just in time...more efficient, but more fragile.
Maybe it is time to buy a ram, provided they don't get stolen from holding lots.
I was thinking that this was part of the "no more cars" plan as well and thought maybe this was their CEO's thoughts
I understand the concept of just-in-time.
I don't understand being completely dependent on a single vendor for any component at all.
SVreX said:I understand the concept of just-in-time.
I don't understand being completely dependent on a single vendor for any component at all.
It’s probably because they’ve been squeezing vendors so tight that in order to make a profit, they need to centralize production at one location in order to make a profit...
SVreX said:I understand the concept of just-in-time.
I don't understand being completely dependent on a single vendor for any component at all.
I'm puzzled, as well.
Our shop had a fire, completely destroying our electrical system and making it impossible for us to supply Harley Davidson with vital engine and transmission parts. Yet, in the weeks it took us to get temporary service going, the flow of parts never stopped. We found a way to get them processed, through other sources.
Can they not find another way to get things done?
eastsideTim said:SVreX said:I understand the concept of just-in-time.
I don't understand being completely dependent on a single vendor for any component at all.
It’s probably because they’ve been squeezing vendors so tight that in order to make a profit, they need to centralize production at one location in order to make a profit...
That doesn't explain why Ford would do that.
They build 74,000 trucks every month. That's a lot of revenue to put at risk by failing to do some basic risk management.
SVreX said:eastsideTim said:SVreX said:I understand the concept of just-in-time.
I don't understand being completely dependent on a single vendor for any component at all.
It’s probably because they’ve been squeezing vendors so tight that in order to make a profit, they need to centralize production at one location in order to make a profit...
That doesn't explain why Ford would do that.
They build 74,000 trucks every month. That's a lot of revenue to put at risk by failing to do some basic risk management.
I’ve noticed (first hand in some cases) willful blindness to risk management, even in big companies, when profit and convenience are in the line. When I worked for a telco, I found out out we had some serious issues with not-so-diverse geographic diversity for telephone/data lines.
I’m guessing building magnesium dash beams is a fairly dirty process, so not the cheapest/easiest to do in a country with first world environmental rules, thus reducing the number of willing suppliers in the first place. However, I’d think if they have any other US supplier who can do the job, they’d be calling them up immediately. F-series production has got to trump almost anything else they build.
SVreX said:They build 74,000 trucks every month. That's a lot of revenue to put at risk by failing to do some basic risk management.
It is, but I betcha that's been factored in to the process. Ford probably has teams of actuaries working out the risks of every scenario. They know that this kind of thing can happen, but they also have a pretty good idea of how likely and often it is, and the benefits of this single-supplier JIT approach outweigh the possible risks. In other words, once they get up and running again, the savings from their production system will make up for whatever they lost at some point. At least, that's what their numbers are telling them.
SVreX said:eastsideTim said:SVreX said:I understand the concept of just-in-time.
I don't understand being completely dependent on a single vendor for any component at all.
It’s probably because they’ve been squeezing vendors so tight that in order to make a profit, they need to centralize production at one location in order to make a profit...
That doesn't explain why Ford would do that.
They build 74,000 trucks every month. That's a lot of revenue to put at risk by failing to do some basic risk management.
I'd imagine that before they made the decision to halt production, they looked at their other alternatives and decided that ultimately this was the best one for brand strategy.
I used to work for State Farm, and part of my role had business continuity. We had a general policy of having at least 2 vendors for everything, and another vendor was usually ready to back them up. We sent cars to Mannheim and Adessa auto auctions. We had numerous collection agencies. Things like that. There was one company that simply could not be replaced and backed up. This company had essentially already bought the competition/put them out of business. Our alternatives were to go to India, which would be a real headache as we were dealing with a lot of NPI (think OFAC and things like that), build the capability on our own (possible, but silly), or to take the risk. We took the risk.
If the supplier has proprietary tech. There is no other source.
What I hear people saying is the army should have more than one source for blackhawks. It’d dont work that way.
In reply to mtn :
Part of the difference in manufacturing though is that it's so damn capital intensive. You have tooling costs, development costs, PPAP/first article verification, ect that is all pretty well fixed and going to have to be multiplied out over the number of suppliers you have building the component, and then on top of that the additional overhead of managing multiple suppliers on an ongoing basis. Multiply that out over the thousands of individual components in a car and that's a huge amount of money, even when you can amortize it over millions of vehicles.
JIT is always going to have some level of risk associated, but it's risk that can be managed. You buffer based on severity and likelihood of an issue. As a supplier, the last think you ever want to do is shut your customer's line down, but hey, E36 M3 happens sometimes and you've got to scramble to react. I can guarantee Ford has put their full weight behind getting their most profitable product back up and running and someone will be producing this part again within a few weeks. I do NOT envy the project manager responsible for that task.
Fueled by Caffeine said:If the supplier has proprietary tech. There is no other source.
What I hear people saying is the army should have more than one source for blackhawks. It’d dont work that way.
That's a good point, but I am not sure I agree.
The Army does not manufacture Blackhawks. They buy them. They approach many vendors and manufacturers.
Secondly, why would a manufacturer incorporate a proprietary component product into THEIR product that could not be replaced? Sounds like corporate Hari Kari.
It's much more than I can get my feeble little mind around.
I'd guess that there aren't very many vendors that have the capability to supply cast magnesium parts in the quantity, quality and cost that is necessary here. Sounds like FCA and BMW might be affected by the same supplier issue, so this supplier seems like a predominant magnesium parts supplier in the industry. If the parts could be made from aluminum, steel, or a composite, then there'd likely be quite a few more suppliers
There will only be one set of tooling, and if that was damaged in the fire, or is not compatible with process equipment at a second supplier they have no choice but shut down. If an OEM doesn't have a 2nd source set up, and PPAPed they're shutting down. I worked in the auto industry for most of my career and this isn't an unusual circumstance at all. The OEM's best scenario is if they buy similar parts from multiple factories of the same supplier. Then they have a chance of getting production moved a little quicker.
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