Penske Logistics has been awarded a new contract with the Ford Motor Company to provide manufacturing support services at the carmaker’s Dearborn plant in Michigan, including sequencing, metering and container-management services. It is the second contract win that Penske Logistics has signed with Ford this year, and the company expects its business with the carmaker to grow by 20% by the end of 2010 compared to 2009.
The contract extends the number of locations where Penske Logistics provides manufacturing services to Ford in North America to five, including plants in Missouri, Kentucky, Texas and Mexico. It also carries out similar services for Ford at its UK Transit van factory in Southampton and the Dagenham engine plant, according to Terry Miller, executive vice president of operations at Penske Logistics.
The operation in Dearborn, which Miller reveals was won from a competing provider, will involve 150 Penske Logistics employees managing the services as well as running a 300,000ft2 (28,000m2) Ford-dedicated sequencing centre just outside of Dearborn. The material handled will include around 900 smaller parts, such as fasteners and mechanical pieces, commodities such as power steering pumps, connectors and wire harnesses, as well as around 100 bulk products, such as the door glass and larger products. The company is also responsible for returning empty containers for replenishment.
As Ford’s lead logistics provider, Penske Logistics already manages inbound logistics to Dearborn, through subcontracted providers, including the inbound transport of materials into the sequencing centre, as well as the sequenced material to the manufacturing plant.
Miller told Automotive Logistics News that such manufacturing services have been a growth area for Penske Logistics in North America, most notably among the domestic manufacturers. “We continue to focus on trying to drive the lean manufacturing supply chain processes for all of the OEMs,” he said.
It is the second contract that Penske Logistics has secured this year with Ford. The other was an aftermarket parts distribution service based out of Chicago that supplies Ford dealerships in the Midwest with parts for repairs and services. “With both of these awards if you combine the annual revenue, it would promote about a 20% increase with Ford in our current portfolio to where we will be at the end of 2010 compared to 2009,” said Miller.
Overall, Penske Logistics has seen stronger than expected results in the first half of 2010 across all verticals, but notably in automotive, according to Miller. He points to the successful profits recently reported as well as increased production by domestic manufacturers as well as the tier suppliers that survived the crunch. Most notable, however, have been European manufacturers with which Penske works. “The Europeans manufacturers [in North America] have been tremendous, knocking the ball out of the park,” he said, but would not disclose specific customers. He added that Penske Logistics remains cautiously optimistic about the second half of the year, expecting at least stable volumes.