Question

Kansas City Ford Assembly Plant

You are the CFO (state treasurer) for the State Of Missouri.

CLAYCOMO, Mo. -- The Ford plant in Claycomo is considering adding a third shift to it's F-series pick-up truck production line to meet increased demand.

Ford Plant Manager Dan Jowiski says the third shift will mean two thousand new jobs for the Kansas City region, in addition to the thousand announced earlier with the expanded Ford transit line. He says the F series line is up 24 percent for April and 19 percent year-to-date. Jowiski says vehicle sales are climbing as the economy recovers, and truck sales are directly related to new-home construction as the housing market rebounds.

Governor Nixon, who was instrumental in working with Ford to expand its assembly line in the Kansas City area, is at the plant today. He says the expansion ensures that Missouri will continue to lead the rebirth of the American auto industry.

Jowiski says the new jobs will be both entry-level positions as well as skilled labor. He encourages people in the Kansas City region who are unemployed to apply for the positions. Ford is willing to hire most of the employees from the recently closed Harley-Davidson plant.

He says the full-size truck segment is growing three times faster than industry average and is fastest-growing segment this year.

Joe Hinrichs, Ford president of The Americas, says "Our Built Ford Tough F-150 is America's favorite pickup, and we are going to step up operations at Kansas City to ensure we have enough trucks to meet customer demand."

The Kansas City Assembly Plant produces the Ford F-150 regular, SuperCab and SuperCrew and will produce the Ford Transit. The plant currently has 2,450 hourly employees working on two shifts and will add a third crew in the third quarter.

Retooling and expanding the facility to accommodate the increase in production is estimated to cost $1.1 billion.

a. Using the data provided tell us how much (if anything) are you willing to offer the Ford Company to put these 2,000 jobs in Claycomo, MO.

b. If you offer anything, how long would you want this commitment?

c. What is the cost of your offer and how much would you expect to see in return?

d. Factor into your consideration the Harley-Davidson in Kansas City North plant is closing at the end of the year. 600 factory workers are now looking for employment and the State of Missouri gave H-D a HUGH tax break just a few years ago to build here.

Please provide a response to each area.

Answer 1

CFO (state treasurer) for the State Of Missouri.

CLAYCOMO, Mo. -- The Ford plant in Claycomo is considering adding a third shift- Why Third Shift – mainly due to F Series Pick up truck production lime to meet increased demand .

Ford Plant Manager Dan Jowiski says the third shift will mean two thousand new jobs for the Kansas City region

in addition to the thousand announced earlier with the expanded Ford transit line.

Information of F Series Start up stage : He says the F series line is up 24 percent for April and 19 percent year-to-date.

Our Built Ford Tough F-150 is America's favorite pickup, and we are going to step up operations at Kansas City to ensure we have enough trucks to meet customer demand."

Present Position :

The Kansas City Assembly Plant produces the Ford F-150 regular, SuperCab and SuperCrew and will produce the Ford Transit. The plant currently has 2,450 hourly employees working on two shifts and will add a third crew in the third quarter

Positive Point –

Jowiski says vehicle sales are climbing as the economy recovers

truck sales are directly related to new-home construction as the housing market rebounds.

He says the full-size truck segment is growing three times faster than industry average and is fastest-growing segment this year

Governor Nixon, who was instrumental in working with Ford to expand its assembly line in the Kansas City area-- the expansion ensures that Missouri will continue to lead the rebirth of the American auto industry.

Level of Labour- Jowiski says the new jobs will be both entry-level positions as well as skilled labor

He encourages people in the Kansas City region who are unemployed to apply for the positions

Another Chances - Ford is willing to hire most of the employees from the recently closed Harley-Davidson plant.

Fixed cost relates to Production :

Retooling and expanding the facility to accommodate the increase in production is estimated to cost $1.1 billion.

Answer a)Using the data provided tell us how much (if anything) are you willing to offer the Ford Company to put these 2,000 jobs in Claycomo, MO

Yes definitely offer 200 jobs on Claycomo .MO , mainly due to following factor :

1. F Series Pick up truck production lime to meet increased demand – Need to start work in Third shift
2. Production already started - F series line is up 24 percent for April and 19 percent year-to-date.
3. High expectation with positive vision - F-150 is America's favorite pickup, and we are going to step up operations at Kansas City to ensure we have enough trucks to meet customer demand

Kansas City area-- the expansion ensures that Missouri will continue to lead the rebirth of the American auto industry

4. Economy turnaround - sales are climbing as the economy recovers

Truck sales future - truck sales are directly related to new-home construction as the housing market rebounds. growing three times faster than industry average and is fastest-growing segment this year

Answer b )If you offer anything, how long would you want this commitment?- It must be long term commitment ,As mentioned above , Production just reached 19% as YTD level and future growth is very high . So to reach 100% capacity utilization , definitely it will be long project and good news for Unemployment Labour

Answer c )What is the cost of your offer and how much would you expect to see in return

From cost point of view – nothing as such mentioned in the Question but we have fixed cost around $ 1.1 Billion , At least we will ensure to recover cost with future revenue demand and market rebound

Answer d )Factor into your consideration the Harley-Davidson in Kansas City North plant is closing at the end of the year. 600 factory workers are now looking for employment and the State of Missouri gave H-D a HUGH tax break just a few years ago to build here

Harley Davidson – sudden unemployment already considered . - Ford is willing to hire most of the employees from the recently closed Harley-Davidson plant. With future growth , market bounce back plus clear high demand in Auto truck , F1 series . I think Ford can easily accommodate the same .