So just how does a downsizing company like Ford decide which of its many plants it is going to close? According to Mark Fields, president of Ford's Americas division and one of the principal architects of the plan, the decision was made using five criteria:
First, demand for the vehicle being made. That doomed the Atlanta operation, which makes the flagging Taurus, once among the best-selling cars in the nation but now an uninspired also-ran.
Second, manufacturing flexibility. Automakers used to crave making a single product and long production runs, because of the cost of tooling. Now they want just the oppositethe ability to switch vehicles on the assembly line quickly, if one model suddenly gets hot or cold, as happens more and more frequently in today's rapidly fragmenting market.
Third, material logistics, or more simply put, the closeness of suppliers and their ability to provide just-in-time parts. In the last two decades manufacturers have gotten closer to their suppliers, both conceptually and geographically. For instance,some glass making operations have been moved onto assembly sites.
Fourth, overall operating costs. Yup, some plants are just plain better than others. For instance, the St. Louis plant makes the Ford Explorer, but so does one in Louisville, Kentucky. Looks like Louisville won.
Fifth, return on investment. Every auto plant needs to invest major amounts of money for each new model. The ones marked for closure wouldn't generate a high enough return compared to other Ford plants.
The plant closures, of course, only answer Ford's cost problems. For the Way Forward to succeed, Ford has to figure out how to design and sell passenger cars that consumers really crave. And that's a metric Ford isn't likely to find on any spread sheet.