After three frenetic years overseeing Ford's ambitious Asia Pacific expansion plans, including the construction of nine plants, Joe Hinrichs returned to the Dearborn, Mich., world headquarters in December to take over as president of the company's most profitable region: the Americas.
Hinrichs found Ford's North American operations in the midst of a major growth spurt. Last year, Ford launched redesigned versions of the Ford Escape and Fusion and the Lincoln MKZ. Hinrichs, 46, is known for his manufacturing expertise. He has worked to help fix nagging problems that dogged the three launches.
Hinrichs spoke with Publisher Jason Stein, News Editor James B. Treece and Staff Reporter Bradford Wernle.
Q: The issue of MyFord Touch keeps coming up. What are you doing to make MyFord Touch easier for dealers and consumers?
A: There's a reason that when you walk in my office, you see that headline from the Detroit Free Press: "Quality? It's Ford." Everything to do with quality is without question of the highest priority to the North American team -- MyFord Touch specifically.
The great news is consumers want MyFord Touch and MyLincoln Touch. The take rates are going up. Satisfaction on our vehicles with MyFord Touch and MyLincoln Touch is greater than it is without them.
What we're doing is making software upgrades all the time to make it simpler, make it faster and also minimize any disruptions or problems. We're also continuing to look at our strategy that we use for knobs and the center stack. We're getting a lot of feedback that consumers want some knobs at key points, and we'll continue to introduce those back into the vehicles.
My teenage daughters say we're crazy for putting knobs in. But customers who have been buying vehicles for decades are used to knowing where that knob is. We've got to bridge that gap.
Can you give us an update on the issues you have had in Hermosillo, Mexico, with the Lincoln MKZ launch?
I think you have to first look at what the North American team has taken on in the last couple years. We launched new global platforms for not just new products but all new global platforms on Focus, Escape and Fusion -- all within a two-year time period. In a couple of those cases, we basically redid the whole plant at the same time. We learned a lot from that.
We are now incorporating a number of changes into our product development process and our new model launch process going forward based on what we've experienced and learned over the last couple years.
What would those be?
For example, on the MKZ, we had some finish issues we wanted to work through with our manufacturing capability and our supplier capability, as well as the design. [We're] looking at those more upfront, both digitally and visually, because we can do 3D visual technology today. You can put the goggles on and see: Is that really going to be acceptable? You can't build enough prototypes to see all the different variations we have in our vehicles.
We're having monthly launch reviews with all our major forward model programs. We always had launch reviews, but we're actually having them with the global skill team leaders on the major model programs, and we're doing it in the showroom with competitive vehicles and with our latest built vehicles. That's another example.
When did those start?
This year. It really started when we started seeing some of the issues we were experiencing on the MKZ launch.
What progress have you made on the MKZ?
Most of the MKZ issues have been resolved.
It wasn't the only issue, but we ran into a number of supplier issues. What we're seeing is with the pace of new-model introductions we're having, as well as the industry's growth, it's putting a lot of pressure on the supply base. So we're adding resources in our North American organization to support the site visits and what we call supplier technical assistance: engineers and resources to help our supply base both in the current model production but also importantly in the future with new models. On the engineering side, for example, we're adding new people as we speak. That's a step we've taken in the first quarter of this year.
So you're putting people on site with suppliers?
Yes, to help assess where the suppliers' capabilities are and also to assist them in any issues that are out there.
Stepping back, one of the things we're continually learning to deal with is that we have a much more frequent cadence of freshening of our vehicles than we historically had so we have more launches than we historically had. That means our suppliers and ourselves have to be ready to support a more frequent refresh rate. We're freshening the Fiesta right now, as an example, and we'll keep our product lineup fresh; the freshest in the industry over the next several years. That means more launches and more change, which has to be managed not only in our manufacturing plant or in our system but also in the supply base.
When you talk about the freshening, a lot of us still think of it as a four-year cycle or, for some vehicles, five. Do you see that shrinking?
Yeah, we do. It really comes down to: What are the critical elements to the consumers? You can't wait five years to introduce new technology to a vehicle. There need to be opportunities within that time frame to introduce the latest technologies for safety or telematics or infotainment or whatever. In addition to that, it's a very competitive market, and you need to keep the styling fresh, both interior and exterior.
It won't be a new platform every three years or five years, of course, but major changes to the vehicle to keep them fresh in the eyes of the consumer.
We have heard that the balance of power has shifted a bit, that suppliers now kind of hold the cards. In some cases, they are asking for capital investments from their automotive partners.
It's still the minority, but there are examples where, if there's significant investment required given a product or capacity-related issue, that the supply base wants to talk about how to insure the partnership for that investment. Not necessarily that we're investing in it, but there's an assurance that investment will have a good return to it.
Isn't it also the case that, back in 2008-09, there was a lot of intellectual capability that was lost in the supply base?
I think that's more pronounced in the supply base than for us. Even though we did take a number of resources out, especially in the 2008 time frame, we've been building back up. We're hiring 2,200 folks this year, and we do pretty well fulfilling our needs.
But as you said -- Tier 1s, Tier 2s, Tier 3s -- there's only so many engineers with experience, and so that's been an issue. I think also frankly the industry came back, especially last year, faster than people were anticipating.
Can you get to the federally mandated 54.5 mpg without diesels?
There are a number of contributors to getting to those kinds of numbers. I think the biggest contributor is the electrification of the fleet.
The consumers play a big role in this. The big question mark in the industry is really around what will be the acceptance level and capabilities of the electrified vehicles as we migrate up the fuel economy range.
We have the diesels for all of our global programs. We have some very strong diesels in Europe, whether it's a Focus or a Fiesta or a Fusion.
We just have not seen the [U.S.] market acceptance in passenger cars and small SUVs.
The EcoBoost, we believe, is a far better business case for the consumer. It's lower cost than a diesel and still gives you great driving dynamics.