TRAVERSE CITY, MICH. - Ford Motor Co., in the middle of a massive global reorganization, is moving aggressively to cut costs and thin its supplier ranks as it attempts to produce more world-class vehicles with less development time, a top executive said last week. ``We will be involving suppliers earlier in the development process and entrusting them with more design and engineering responsibilities,'' said Jacques Nasser, group vice president for product development in Ford's Automotive Operations. ``We will be enfranchising them in the development and production process.''
Nasser discussed supplier relations and offered an update on the automaker's reorganization plan, which it refers to as Ford 2000, at the University of Michi-gan Management Briefing Seminars in Traverse City on Aug. 9.
He said Ford will hold down costs aggressively while boosting production of higher-quality, technologically sophisticated vehicles through the ``global balancing act'' of product development.
Nasser said cost savings under Ford 2000 could amount to ``several billions'' while adding 50 percent more new vehicles in the next five years.
These efforts ``will enable us to keep the average cost of our vehicles in the year 2000 equal to or less than their cost in 1995, which means absorbing inflation, regulatory costs and other creepy, crawly costs by any other name,'' he said.
Ford also has set a target of reducing material costs by 5 percent each year from 1996-1999.
At the same time, the Ford 2000 plan calls for suppliers to improve quality by 25 percent on existing parts and 50 percent on newly designed parts, he said.
The supply base also will shrink. The number of first-tier suppliers, those that sell parts directly to Ford, will shrink from the current 2,300 to 1,150 by the year 2000. The surviving first-tier suppliers also will have responsibility for ensuring that subsuppliers meet all quality and cost requirements, Nasser said.
``Certainly, we recognize the enormous challenges facing our suppliers to meet these requirements but we know that top suppliers will not only meet but exceed these challenges,'' he said.
By meeting these goals, he promised, suppliers will achieve economies of scale, increase competitiveness, expand globally and gain more business from Ford.
Undertaking a ``painstaking'' analysis of every part, component and system in its vehicles, Ford and its suppliers have identified cost reductions of an average of $700 per vehicle, Nasser said. The automaker also is reducing the number of unique parts it makes and buys.
Ford, for example, is reducing the number of batteries it purchases from 40 to 14 and the number of steering wheels from 50 to 11. Nasser said supplier Donnelly Corp. of Holland, Mich., showed Ford how it could reduce the number of 50-plus dome lights it buys to just seven, and save 2 percent in cost.
Nasser, despite his enthusiasm for Ford 2000, added a note of caution.
``The moment any one of us, at Ford or anywhere, gets too caught up in our own perceived brilliance, we will be doomed to mediocrity,'' he said.