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A 64-mpg Ford? Only in Europe

For years, U. S. makers offered fuel-efficient cars only abroad. Now they're racing to retool for the home market.

October 18, 2008|Ken Bensinger | Times Staff Writer

WAYNE, MICH. — Next month in Britain, Ford Motor Co. will begin selling a diesel hatchback that gets 64 miles per gallon. Across the channel, Parisians can buy a new gas-powered compact made by General Motors Corp. that gets a nifty 47 mpg.

On these shores, neither carmaker sells anything that thrifty. Yet with Americans clamoring for fuel-efficient cars and Detroit automakers on the ropes thanks to crashing sales of gas-guzzling trucks, the question is, why aren't these vehicles here now?

Ford and GM say that importing them from Europe isn't an option because of unfavorable currency exchange rates. Instead, they're racing to convert U.S. plants to produce them here. One of the first is the Michigan Truck Factory, home to the Lincoln Navigator and Ford Expedition, which both get about 14 mpg.

Ford will shut down this half-century-old plant next month and begin the arduous process of converting it to a factory in which the current European version of the Focus will be built in 2010. Ford is also preparing to retool truck factories in Louisville, Ky., and Cuautitlan, Mexico, to make five more European-style compact cars for the U.S. market.

"This is critical for us," said Bill Russo, Ford's head of manufacturing, walking past rows of roof assemblies in the Michigan Truck Plant's body shop. "We absolutely need to make more smaller vehicles as soon as possible."

It's a hugely ambitious logistical and engineering challenge. To switch from trucks to cars, Ford will have to replace thousands of tools on the line, recalibrate a massive production process, establish new supply chains with hundreds of part makers and negotiate with the United Auto Workers union. Even with help coming in the form of federally backed loans, the financial burden will be tremendous.

The payoff is a chance to regain the market share lost to imports like Toyota and Honda -- this year, for the first time, fewer than half of the cars sold in the U.S. have been American brands. But if the Big Three are unable to deliver, experts say, the consequences could be disastrous.

"There is no going back to 2004," said David Healey, auto industry analyst at Burnham Securities. "The American automakers need to make small cars and they need to make profits on small cars or they simply can't continue."

For Ford, that starts in Wayne, half an hour's drive west of Detroit. The Michigan Truck Plant once ran three full shifts, 24 hours a day, 3,000 union men building trucks. Today, only one shift toils.

In a few weeks, that shift will hear its last whistle. The 1,000 remaining workers will join Ford's U.S. Focus plant across the street. Then the company will begin dismantling much of the assembly line and send the tooling to its truck plant in Kentucky. In Wayne, Ford will recalibrate the machinery, build new tooling, reprogram the paint shop and reformat the assembly line.

A complete makeover can cost up to $250 million per plant -- and this is one of Ford's most agile factories, meaning that the changes required to switch it over to producing a new vehicle are relatively minor. According to Ron Harbour, an industry consultant at the Oliver Wyman Group, retooling older, non-flexible plants involves "driving a bulldozer from one side of the factory to the other, clearing everything out" at much greater expense.

But before the robots are powered down, Detroit execs have had to update their thinking about what Americans want to buy.

For years, Ford and GM have been building high-end compact cars for Europe, routinely winning awards for such models as Ford's Mondeo and GM's Vauxhall Corsa. The cars emphasized high-end detailing and offered options reserved on these shores for premium brands. They cost more, but consumers happily paid because in Europe, Ford and GM are premium brands.

At home, meanwhile, Detroit kept outfitting fuel-efficient cars with crank windows and cheap upholstery. In Germany, a Focus starts at 15,250 euros, or about $20,500. In Germantown, Pa., the less-refined U.S. Focus starts at $14,995. That $5,000 gap, experts say, is the difference between profit and loss on a smaller car.

Until recently, the Big Three were willing to produce unprofitable small cars just to draw customers to dealerships, where they would often upgrade to larger sedans, or highly profitable trucks or sport utility vehicles. When truck sales slipped, Detroit still resisted bringing in European cars because they felt that the weak dollar and differing consumer expectations, not to mention the expense of altering them to comply with U.S. safety and emission standards, made them untenable here.

"I wish I could bring the European Focus to the U.S.," Jim Farley, Ford's head of sales and marketing, said in January. "But it'll never work in this market."

But $4-a-gallon gas, plummeting truck sales and billions in quarterly losses changed Farley's tune. In July, Ford said it would bring six of its European cars across the pond.

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