Raze 1,000-acres of farmland to build an automobile factory, and somebody is going to protest. Even in India. The automaker is Tata, and the protesters numbered at least 1,000 strong as they went head-to-head against police in eastern India yesterday at the future manufacturing site of the Tata Nano (rumored to be the world's cheapest car at just $2,380). The protests are rooted deeper than just "open space" issues. In fact, the real tension is between India's ruling party, and the communist-run government in West Bengal where the plant is to be located. The farmers are unwilling to part with their agricultural livelihood, while the government continues to promote industry. After blocking a highway for a few hours, the stick-wielding protesters were dispersed without injuries. Once again, progress wins out over pastures.
Ford has finally begun production of the all-new 2009 Ford Fiesta in Cologne, Germany, today. After an investment of 455 million Euros (about $674 million) to restructure and modernize the plant, Ford is expecting its 4,000 employees will be able to roll out 148,000 Fiestas by the end of the year, which is an impressive 1,900 cars each day). In January 2009, the Valencia plant in Spain will also begin building the Fiesta. There are also production plants in China, Thailand, and Mexico that are tooling up for the newest small Ford in order to meet worldwide demand, which finally includes the U.S. where it will also be sold in both sedan and hatchback configurations around 2010. Based on the Verve concept, the new compact is exactly what the automaker needs in today's efficiency-conscious marketplace, and its stylish enough not to be considered a cheapskate or eco-geek while driving.
Taking a lesson from BMW, who have been successfully manufacturing cars and SUVs in Spartanburg, South Carolina for more than a decade, Audi may seek manufacturing capabilities for their A4 sedan and Q5 SUV in the States. The new Volkswagen factory in Chattanooga, Tennessee, just announced last week, may be tasked with building upwards of 200,000 vehicles per year -- including the two Audis. Estimated to cost $973.5 million, the 1,359 acre plant is large enough to handle the domestic production for VW, Audi, and even shareholder Porsche... although the proud automaker from Stuttgart vehemently denies even considering it.
To feed the insatiable demand for fuel-efficient vehicles, and follow the striking success of the Toyota Prius, the Japanese automaker will introduce a second hybrid-only vehicle in 2009. The all-new model will have a 2- to 2.5-liter engine, suggesting it will be larger than their current popular four-door hybrid (the Prius uses a 1.5-liter gasoline powerplant). The new model will be sold side-by-side with the Prius, Camry Hybrid and Highlander Hybrid. Toyota will also sell a rebadged version under the upscale Lexus brand, where it will join the LS Hybrid, GS Hybrid, and RX Hybrid. Toyota's master plan is to sell 1 million hybrid vehicles annually throughout the world, and considering the market, there's little doubt that the automaker can pull it off. Toyota's next hybrid debut is scheduled for Detroit in January, and we'll be there to cover it.
Following-up on last week's announcement that Volkswagen was looking at Alabama for a new manufacturing facility, the German automaker's management board is expected to make their final recommendation today. Following that announcement, Volkswagen's supervisory board, headed by former VW group CEO Ferdinand Piech, will make its decision by tomorrow. Whether Huntsville, Alabama, or second-choice Chattanooga, Tennessee, gets the nod, the move is key for Volkswagen as they attempt to increase sales in the United States with more targeted, and lower priced, vehicles. In addition to the Volkswagen Jetta (itself being redesigned to better compete with the Honda Civic) the new facility will produce an all-new Passat-sized sedan with a base price of about $20,000. Larger, in order to compete with the Toyota Camry, the new sedan would undercut the current Volkswagen Passat's pricing by about $5,000--a significant margin. The plant would open in late 2010 with an annual production capacity of nearly 250,000 vehicles.
Volkswagen's management will meet tomorrow to refine plans to expand automobile production into the United States. While a final recommendation isn't expected until July 15, Alabama appears to be the front runner (over second-choice Tennessee) to receive the $788 million plant that will initially build the Volkswagen Jetta sedan and an all-new Passat-sized sedan. VW is also rumored to be considering production of a long-wheelbase version of the Volkswagen Tiguan and the Audi's Q5 on our shores. Volkswagen isn't the only German automaker to announce manufacturing expansion in the United States this year. The falling value of the dollar has also encouraged BMW to increase U.S. production in Spartanburg, South Carolina.
Porsche has announced that production of its Boxster and Cayman models is to shift to component supplier Magna Steyr's facility in Austria beginning in 2012. Last year the contract with Finland's Valmet to assemble the two associated mid-engined models was extended through 2012, after which the terms will expire and Magna will take over.
Porsche CFO and deputy chairman Holger P. Harter stressed that the decision was not a vote against Valmet – which has to date built over 200,000 vehicles for Porsche – but rather the result of several elements that Magna brought to the table: firstly, Magna's production is scalable so that it will only manufacture what Porsche's own factory in Zuffenhausen (where the rear-engined 911 series is made) cannot handle. Secondly, Magna is able to assume some development responsibilities along with the final assembly. Thirdly, Magna's proposal was more financially attractive (read: cheaper) than Valmet's. And finally, Magna already supplies various components to Porsche – including convertible roofs and body panels – creating the opportunity for future synergies between Porsche and various Magna subsidiaries.
Several months ahead of its scheduled debut at this fall's Paris auto salon, production of the new Ferrari California has already begun at the Ferrari factory in Maranello. The news comes after previous speculation suggested that the California might have to be assembled off-site – potentially at sister-company Maserati's nearby facility in Modena – because the existing Ferrari assembly lines were already at full capacity. However, having now unveiled its newly-retooled manufacturing facility under the Formula Uomo program, the company has apparently increased production capacity to accommodate the assembly of the California, thus securing its legitimacy in the eyes of enthusiasts and potential customers alike.
Ford's recent announcement to reduce its white collar workforce costs by 15% shows that Mulally & Co. are dead-serious about turning around the Dearborn, MI automaker. The newest twist in the FoMoCo saga takes the situation from serious to near desperate, as plant managers and union leadership are convening in Dearborn to discuss switching factories from truck to car production. Such a move is much easier to make in one of Toyota or Honda's flexible manufacturing plants, but Ford has plenty of facilities that are hardwired to build only one or two products. Analysts say that costs could be $250 million a year or more, which would make for a huge dent in Ford's already shrinking bank account.
The good news is that Ford is looking at its European products as the vehicles it needs to build State-side. We enthusiasts have been drooling over the Euro Focus, Fiesta, Mondeo, S-Max and Kuga for quite a while, but their fuel-efficient ways will have the masses finally thinking Ford first if they come here.
Ford won't announce its plans until July, and some details will be held back for months more, but The Detroit News has it on good authority that the Michigan Truck and Louisville plants will be part of the shift away from gas guzzlers. Louisville, which currently produces the Explorer, would shift to a unibody facility that produces cars and CUVs. Michigan Truck, which produces the Navigator and Expedition, will make room for the F-100, which will be smaller and likely more efficient than the F-150 on which it's based.
It's amazing what $4 per gallon gasoline can do to U.S. manufacturing, no? Ford just may be on the verge of the largest shift in the company's 105-year history, and we're all here to witness it. Here's hoping the plan works.
The Harbour Report released today reveals that the Big 3 gained major ground in closing the productivity gap with Japanese automakers building vehicles in North America last year. The report found that Chrysler had actually improved enough to tie Toyota as the most productive multi-plant manufacturer on the continent, with both automakers spending an average of 30.37 hours to build a vehicle. The most productive single plant in North America also belongs to Chrysler, as the once experimental Toledo Supplier Park takes just 13.57 labor hours to build a Jeep. For their parts, General Motors plants averaged 32.29 hours per vehicle and Ford plants averaged 33.88 hours per vehicle, both an improvement over last year's numbers.
The news was not all good, however, as the report found that despite improving their productivity, the Big 3 are still unable to match the Japanese in profit made per vehicle. While Honda and Nissan earned $1,641 per vehicle built in North American last year and Toyota earned $922, Chrysler lost $412 per vehicle and GM and Ford lost $729 and $1,467 per vehicle, respectively. Much of those losses come from high health care costs and profit-shrinking incentives required to move less popular vehicles like trucks and SUVs. The Harbour Report suggests, however, that employee buyouts and those new contracts with the UAW that get them off the hook for retiree health care will improve the Big 3's profit per vehicle dramatically.
