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Super Duty spurs supplier rush to Ky.

Ford investment, central location lure foreign parts makers

Ford's $1.3 billion renovation of its Kentucky Truck Plant, above and below, has helped give suppliers confidence to expand in the region.
What stirred Ford's Kentucky supply base
  • Ford is spending $1.3 billion to retool its Kentucky Truck Plant.

  • Large amounts of aluminum are needed to make the Super Duty's new body.

  • SUVs built in the same plant are expected to get aluminum bodies in 2017.

  • Demand for the newly freshened, Louisville-built Escape crossover is surging.

  • Proximity to auto plants across the South makes for ideal location.

Suppliers from Thailand, Spain and France are among those putting down roots in a region known as much for bourbon and horses as auto manufacturing, as Ford Motor Co. launches the next generation of its F-series Super Duty pickups in Louisville, Ky.

The newcomers from the parts industry say Kentucky is an ideal location to supply not only Ford but the Japanese, Korean and German plants that have sprung up across the Southeast.

The $1.3 billion renovation of Ford's massive Kentucky Truck Plant for the Super Duty, which follows the F-150 in switching from steel body panels to aluminum, is rippling across Louisville and well beyond. Many of the investments and new jobs have come from foreign companies that have been reticent to expand elsewhere in the U.S. but see Ford's Louisville plants as solid long-term bets.

"We are engaging our suppliers very early," said Birgit Behrendt, Ford's vice president of global programs and purchasing operations. "We really share with our suppliers very early our product-cycle plans and the manufacturing footprint that goes with that, so they have the ability to look at the region in its entirety."

Thai Summit America Corp. broke ground in May on a $110 million plant in Bards-town, Ky., to supply Ford with aluminum sheet-metal stampings and welded parts. It's expected to create 216 jobs and will be Thai Summit's second U.S. location, after a factory in Michigan that makes some parts for the aluminum-bodied F-150, among other vehicles.

Grupo Antolin, which makes doors, seats, lighting and instrument panels, is investing $13.7 million in two new plants in Louisville. The Spanish company hasn't said which automakers it will supply, but one of the plants is located just outside Ford's Super Duty plant. They're expected to have 200 employees within four years.

Faurecia SA in June opened a plant to make seats for the Super Duty and for Ford chassis-cab trucks built in Ohio. It will employ more than 500 people in a fringe suburb of Louisville.

"The irony is we're a French company," Nik Endrud, president of Faurecia Automotive North America, told Automotive News in June. "France isn't known as the land of the pickup truck. But we're developing a really good position in pickup trucks."

Regional momentum

Those companies join other foreign suppliers that have come to Kentucky over the last decade, including Mexico-based Metalsa, which builds high-strength steel frames for the F-150; Germany-based Mubea, Webasto and Bosch Automotive Steering; and INFAC Corp. of South Korea.

Kentucky has a well-established base of Japanese suppliers clustered around the 30-year-old Toyota Motor Manufacturing plant in Georgetown, about 60 miles east of Louisville. The influx of investment from other parts of the world is a newer phenomenon linked in part to Ford's growth.

Though some companies were drawn to sites in greater Louisville, others have set up in more rural areas just off the six major interstates crisscrossing Kentucky.

Louisville was well south of the country's automotive manufacturing hub when Ford opened two large plants there in 1955 and 1969, but the industry's southern migration has put Kentucky in the heart of the action. Ford's growth there in recent years -- and the Super Duty project in particular -- has ignited a flurry of investment.

Auto suppliers announced about $900 million worth of investment in Kentucky last year, according to the Kentucky Cabinet for Economic Development. Through April, the state had learned of commitments for 2016 totaling another $155 million.

"Kentucky is extraordinarily well-positioned," said Dave Tatman, former manager of General Motors' Corvette plant in Bowling Green, Ky., and now executive director of the 2-year-old Kentucky Auto Industry Association. "You can do a lot of things legislatively and with regulation to attract businesses, but we also have to thank our God-given gift of being centrally located between Michigan and Ohio and everything way down to Mexico."

Behrendt: Ford shares product plans early.

Super Duty redesign

Ford employs 12,500 people in Louisville working on more than 9 million square feet of factory floors. Louisville Assembly, on the city's south side, is running full bore to keep up with demand for the Escape and Lincoln MKC small crossovers, while the Super Duty and Ford's biggest SUVs, the Expedition and Lincoln Navigator, are made across town at Kentucky Truck, which added 2,000 jobs this year.

The Louisville plants each built more vehicles last year than any of Ford's other U.S. plants, accounting for more than a quarter of its North American production, according to the Automotive News Data Center. The products they make are among the automaker's most popular and profitable nameplates, which company officials say makes suppliers more willing to build or expand nearby.

"When suppliers look at making investment, and they have choices as they look across their customer base, this is a very attractive product portfolio and a very attractive region for them," Behrendt said.

The Super Duty's aluminum redesign, which hits the market this fall, provided an opportunity to make the parts-buying process for it more efficient, but Behrendt said Ford wanted significant continuity rather than an all-new network of suppliers. Where changes were needed, it sought to expand its relationships with businesses that already had made commitments to Ford on other recently overhauled products.

"We were looking at suppliers that had already come and made investments for the Escape or for the F-150 and to benefit from the synergies," she said.

Many of the new and expanded supplier plants around the Louisville operations are the result of Ford providing those companies a path to a lasting relationship with the automaker rather than bringing them on just to support a single vehicle program, Behrendt said.

"When they make investments, they have choices, they have finite capital resources. They are very conscientious and look not just at today but also to the future," she said.

"We want to make sure that our suppliers have a long-term planning horizon."

Several aluminum parts producers have expanded or announced plans to do so in anticipation of the redesigned Super Duty as well as other vehicles that are likely to use more of the lightweight metal. Ford is expected to overhaul the Expedition and Navigator in 2017 to have aluminum bodies, though it hasn't confirmed plans for them beyond showing a Navigator concept this year.

"We've seen a lot of development with companies that are involved with aluminum in the past year or so," reported Jack Mazurak, communications director for the Kentucky Cabinet for Economic Development.

Logan Aluminum, a joint venture of Novelis Corp. and Tri-Arrows Aluminum Corp. that makes rolled sheets for beverage cans, began a $240 million expansion in Russell-ville, Ky., last fall. The company said it plans to add 190 jobs and start making heavier-gauge aluminum for automotive uses. Novelis also supplies aluminum for the F-150.

One of Logan's customers, Quiver Ventures, built a $150 million plant in Bowling Green, saying it will supply automakers across the U.S. Also in Bowling Green, Kobe Aluminum Automotive Products announced a $57 million expansion last fall. Those followed a $350 million expansion in Lewisport, Ky., west of Louisville, by Aleris, a Belgian company, to add heat-treatment and finishing capabilities for wide aluminum auto-body sheet.

State officials cite U.S. Geological Survey data to claim that Kentucky has the nation's top aluminum-producing capacity and that the metal accounts for $2 billion of the state's gross domestic product. One quarter of all the aluminum made in the U.S. comes from a pair of large smelters in Kentucky.

With the U.S. industry running at record pace, Kentucky officials are appealing to suppliers around the world to consider the logistics of the area when considering North American investment.

Ford operates two of the four auto assembly plants in Kentucky, they point out. Ford's Louisville output alone makes Kentucky the nation's No. 2 producer of light trucks, the state says. GM makes Corvettes in Bowling Green, 100 miles south of Louisville.

Beyond that, in Tennessee, are GM's Spring Hill assembly plant, Nissan North America in Smyrna and Volkswagen Group of America in Chattanooga, all within 300 miles of Louisville.

In the opposite direction, American Honda and Toyota have plants in southern Indiana and central Ohio. And Louisville puts suppliers in the middle of those plants, with easy access to the heavily trafficked Ohio River and UPS' global air hub known as Worldport.

This is the message Kentucky officials are broadcasting to suppliers around the world these days:

"If you want to ship your part to anywhere in the world within 48 hours," said John Gant, director of economic development for the community development agency Louisville Forward, "Louisville is where you need to be."

What stirred Ford's Kentucky supply base
  • Ford is spending $1.3 billion to retool its Kentucky Truck Plant.

  • Large amounts of aluminum are needed to make the Super Duty's new body.

  • SUVs built in the same plant are expected to get aluminum bodies in 2017.

  • Demand for the newly freshened, Louisville-built Escape crossover is surging.

  • Proximity to auto plants across the South makes for ideal location.
You can reach Nick Bunkley at nbunkley@crain.com -- Follow Nick on Twitter: @nickbunkley

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