KANSAS CITY, MISSOURI—Kansas City, Missouri (not the one in Kansas) was once a famous stopover for shipping cattle back east, and its huge West Bottoms feedlots offered visitors quite a sight—and smell. Today, there are antique stores there. But Kansas City remains a great intermodal town, a place where five railroads have hubs, where there are air freight operations and straight highway shots from the geographic center of the country to, well, the rest of the planet.
Kansas City is home today to two major auto plants. The Ford assembly plant is in Claycomo (a/k/a Clay County, Missouri), which makes the bestselling vehicle in America, the all-aluminum F-150 pickup, plus the Transit van. And General Motors’ Fairfax Assembly on the Kansas side, is where the Buick LaCrosse is produced and the all-new Chevy Malibu, which is being supported with a new $174 investment from GM, is fast approaching. It was great to see energy-efficient trains moving cars out of the city—80 percent of the Transits reach new markets that way, Ford said. The rail cars actually had to be modified to accommodate the tall roofs on some of the vans.
“The history of Kansas City has always been about transportation,” I was told by Kansas City Star business reporter Diane Stafford. The key takeaway is not just about these two plants, but about the multitude of suppliers that circle them like pilot fish on a whale. For every automaker assembly job, at least nine other positions are created at suppliers, I was told by Kim Hill, a director at the Center for Automotive Research. The even bigger story is that today’s suppliers aren’t just in the proximity of those big whale plants, they’re literally next door. GM is talking about what it calls a “bullseye strategy” to take millions of dollars in transportation costs out of the supply chain.
You may not have heard of Inergy Automotive Systems, but Chevy couldn’t build the Malibu without the plastic gas tanks it delivers just in time. Fairfax Assembly literally looms over Inergy’s brand-new building. One thing I learned on my visit to the two Kansas Citys is that they call them “assembly” plants for a reason. Gone are the days when Henry Ford’s operations were proudly and vertically integrated, with raw materials going in one door and finished cars coming out another.
“They were trucking gas tanks in from the Detroit area,” said Chad Meyer, whose NorthPoint Development is leading GM’s effort to streamline the supply chain with close-in companies making everything from consoles with cupholders to complete rear assemblies. “When it snowed in Michigan they would have to shut down production. And we’re saving $1 million a month per plant in trucking costs.”
Ford’s Birgit Behrendt, the company’s global purchasing chief, said at the KC Velocity supplier conference in Kansas City that 70 percent of the value of the Ford F-150 comes from the suppliers whose parts pour into the plant—which now employs 7,400 and has received $1.2 billion in new investment. Building everything from infotainment systems to suspensions has become so specialized that these so-called "Tier 1" companies do much of the critical design work.
There are 11 new Tier 1 suppliers to the auto industry in and around Kansas City, I was told by Chris Gutierrez, president of the supply chain-centered KC SmartPort. The suppliers are from all over. I visited China-owned Yunfeng USA, where workers were assembling consoles for the Chevrolet Colorado and GMC Canyon trucks. The Malibu’s line is built and waiting for start of production in November.
Dan Walker, plant manager at Yunfeng, explained how so-called “cockpits” (the whole dash assembly) are made: the line gets “broadcasts” from Fairfax Assembly saying that a car with a particular bar code/VIN number is getting painted and needs a built-to-order cockpit. In 32 minutes that part is ready, complete with the correct radio, HVAC connections and wiring for the power seats (if it has them). Thirty-six cockpits fit into a truck, and then it’s off to be fitted to that newly painted Malibu.
Earlier, I had stood inside a giant plant in the Horizons Business Park in Riverside, Missouri, a tiny town that Mayor Kathy Rose (who succeeded her mother in office) told me has few people but lots of auto plants. The new tenant is U.S. Farathane, which makes injection-molded “widgets” for the Malibu. The company is spending more than $50 million in Riverside, and that brought out Governor Jay Nixon, a Democrat who has aggressively courted the auto industry and its suppliers.
“This is $51 million, 267 jobs, 267 families getting good paychecks,” Nixon said. “By October, a high-tech factory making auto parts and supplying both General Motors and Ford will be up and running.” Nixon came into office in 2009, just as the state was losing three auto plants, he said. I asked him for specifics.
“We saw the writing on the wall,” he said. “A lot of people told me directly that the plant would be eliminated, which is why I called the state legislature back into special session and we put together an auto job task force to pull our industry back from the brink. And now our auto comeback is just beginning. Cars are a significant part of our economy.” It's interesting the role automation and Big Data has in all of this. I watched robot welders assemble Ford Transit chassis at LMV Automotive Systems/Magma in Liberty, Missouri. If people were doing the welding, it would mean more jobs, but then LMV wouldn't be competitive in the marketplace. And most of the suppliers, such as Martinrea in Riverside, have big servers to store the huge volumes of data necessary to track parts through the labyrinth of automotive manufacture.
Andrew Greenlee, CEO of U.S. Farathane, said that a major focus for the industry is making cars lighter to comply with tough new federal fuel economy rules, and that’s why the plastic parts he’ll turn out—everything from “beauty shields” to underhood insulation—have to be as light as possible. Greenlee also told me that suppliers like his weigh quality of life before making a relocation decision, and that Kansas City passed muster.
I have to agree, because I was impressed with the efforts the city is making, including the imminent opening of a new 2.2-mile trolley line and impressive efforts to refurbish downtown buildings for new urban living space. Blake Miller, a partner in Think Big, which is helping entrepreneurs to grow companies in urban KC, told me that downtown rental properties have 100 percent occupancy. He himself gets around without a car, thanks to the city’s bike-sharing system. Meanwhile, Kansas City Power & Light, the local utility, is gearing up to install no less than 1,000 charging stations in the metropolitan region. Chuck Caisley, a vice president there, explained that the object is to put them everywhere--at workplaces, at movie theaters and grocery stores--so range anxiety doesn't even come up as an issue.
Think Big’s sleekly hip office is in a 112-year-old warehouse building. I enjoyed dinner at the Reiger Hotel, once home to the legendary Boss Tom Pendergast, where a sign in the men’s room says it was once a haunt of Al Capone. Now it’s a stylish restaurant. The Westport district overflows with monied diners and fresh food outlets such as the Local Pig.
The Center for Automotive Research's Hill told me that car plants are at 90 percent utilization today as a banner year in auto sales shapes up. Downtime represents big hits to lost sales. “The goal for auto companies is to be fully supported in the region they’re producing in,” Hill said. That was hugely evident in Kansas City, which is closely embracing the auto sector for mutual benefit.