On Friday, August 7, 2015 in Detroit, Michigan, reports surfaced that indicate Ford Motor Company has plans to sublet steel frame manufacturing duties for 2015 and 2016 F-150s to Tower International Manufacturing of Lavonia, Michigan. Ford has struggled with a supply shortage of steel frames and other components for the 2015 F-150 since the latest redesign that features lighter aluminum body panels. “Whenever you have launches, you have issues that you have to deal with in the supply base,” Ford CFO Bob Shanks said June 5 when questioned about the frame shortage during a conference call with analysts. “We’re always working closely with suppliers if there’s an issue – to sort it out. If that were the case, that’s what we’d be doing.”
Up until now, Ford has taken to shipping small batches of the highly sought-after frames via truck from a frame manufacturing plant in Kentucky to assembly plants in Michigan and Missouri, just to keep the plants operational. Normally, the steel frames would fill train cars for the journey of hundreds of miles, but with the trickling supply of frames, there are just not enough to warrant using the railways.
If quality doesn’t become an issue, the move to involve a second frame manufacturer should resolve a longstanding conundrum for Ford. The 2015 Ford F-150 has proven to be a highly profitable truck, there are just not enough available to meet the high volume of sales. Both GM and Dodge (RAM) have gotten a leg-up on Ford in annual sales (through July) because Ford dealers haven’t been able to meet the high demand for the lighter F-150.
Tower International Manufacturing should prove to be a good fit for producing the steel frames since they already manufacture body structures for the F-Series and several other Ford models. It is widely believed that Tower International’s second quarter earnings report (filed last week) may reflect the new agreement with Ford. It lists a $140-million “major follow-on new business award” that financial experts agree is probably the new steel frame contract. Nevertheless, a Tower spokesman would not confirm that Ford was the customer referred to in the report.
Tower International’s Bellevue, Ohio plant used to make frames for the Ford Ranger pickup and the Ford Econoline van. An article that appeared last month in the Sandusky Register said that Tower was adding two new assembly lines that would be responsible for producing “high-tech frames for one of the big North American auto manufacturers” but the article failed to name the automaker. They also noted that there were already approximately 70 employees working in the Bellevue plant and that the new lines would require 364 robots to help build the frames. Furthermore, in June, the Ohio Tax Credit Authority approved a tax credit for an upcoming project at the Bellevue, Ohio plant that is expected to create 138 new full-time jobs. Tower International has also recently posted numerous job openings in their Bellevue, Ohio plant (which is a good thing). You can do the math for yourself, but it sounds to me like Ford is definitely subletting F-150 frames. How will it turn out? Time will tell but – what the heck it’s only the frame – the foundation of the structural integrity of the best-selling vehicle in the world for the last four-decades.
“We anticipate having full availability of F-150s by the end of the third quarter,” Ford said in a statement today. “We are at full production now, we are building stock at dealers, and we continue to roll out additional derivatives. As with all vehicle launches, we are working closely with our suppliers to meet customer demand for the truck.”