Ford Motor Co. plans to build an innovative assembly plant in Brazil - code-named Project Amazon - apparently to produce a small sedan and a hybrid sport-utility.
The plant will be a manufacturing laboratory. Some suppliers will be located inside the main assembly plant.
And one supplier will assemble the entire 'rolling chassis,' which would include the powertrain, steering, brakes, suspension, wheels and tires. Ford will add the interiors and body.
The plant will be located near the city of Porto Alegre in the state of Rio Grande do Sul, spokeswoman Carolyn Burke said last week. Ford expects to begin construction this summer.
Volkswagen AG and Daimler-Benz AG have allowed suppliers to work inside their assembly plants in Brazil. Now Ford is joining the vanguard, and North American suppliers with global aspirations are scrambling to get on board.
'This is going to be Ford's prototype for how they do business in emerging markets,' said one supplier bidding on the project. 'This will be their flagship.'
To seal the deal, Antonio Britto - the governor of Rio Grande do Sul - visited Ford's headquarters in Dearborn, Mich., last week to meet with Ford Chairman Alex Trotman. Project Amazon will produce 150,000 to 250,000 vehicles annually, Burke said. She declined to indicate what type of vehicles Ford plans to make.
But two suppliers bidding on the project say Ford will build the next-generation Fiesta plus a small hybrid sport-utility based on the Fiesta platform. Ford will spend $500 million to $750 million, and suppliers are expected to invest $300 million, Burke said.
Suppliers say Ford originally intended to begin production in 2001 but now might begin in 2002.
Only a small number of primary suppliers will be involved. Vendors say Ford will divide the vehicle into 15 to 20 modules, which suggests that about that many primary suppliers will be involved.
Some suppliers will be housed inside the assembly plant, Burke said. If so, Project Amazon will be similar to Volkswagen's experimental truck plant in Resende, Brazil. The VW facility houses eight suppliers that handle the entire assembly process.
General Motors is launching its own experimental plant, called Blue Macaw, not far from Ford's planned site in Rio Grande do Sul. GM has lined up a small group of suppliers to help it build a low-cost variant of the Opel Corsa.
ROLLING CHASSIS CONTEST
For participants in Ford's Project Amazon, the key assignment will be production of the rolling chassis. Both Visteon Automotive Systems, Ford's in-house parts maker, and Dana Corp. of Toledo, Ohio, are vying for that honor.
The concept of allowing a supplier to assemble an entire rolling chassis is catching on quickly in South America. In Brazil, Dana will produce rolling chassis for the Dodge Dakota and is bidding to build a chassis for a GM pickup to be built in Argentina. A Dana spokesman declined to comment on Project Amazon.
But two Visteon executives confirmed last week that Ford's $17 billion parts division hopes to produce Project Amazon's rolling chassis. If Visteon wins, the project would showcase its ability to assemble entire vehicle systems -the parts that make up major groups of parts, such as the suspension, brakes, axles and exhaust system.
Currently, non-Ford customers account for 9 percent of Visteon's sales. Visteon wants to boost non-Ford sales to 20 percent. It plans to use its skill at 'systems integration' as a marketing tool aimed at potential non-Ford customers.
The project also underlines Ford's plan to be a major player in South America. Following the breakup of the Autolatina joint venture with Volkswagen in 1994, Ford was left without a viable small car. The automaker's South Amer-ican operation lost $642 million in 1996. But new vehicles and severe cost cutting helped Ford earn $40 million last year.
The new investment comes amid rising fears that automakers are building too much production capacity. Over the next three years, automakers are expected to invest $12 billion in Brazil.
On the other hand, Brazil is a good laboratory for innovative production techniques because automakers and suppliers can build new factories and assembly plants.
'In an emerging market, you start with a clean sheet of paper,' said Jim Agnew, director of Visteon's chassis systems unit. 'We see South America as a high priority.'