Ford, ZF: No Bad Blood

For four years, Ford Motor Co. and ZF Friedrichshafen AG worked side by side in preparing Ford's Batavia, OH, powertrain plant to produce a completely new type of transmission that would improve fuel economy by at least 4%.

ZF purchased a majority 51% stake, while Ford retained the remaining 49% in the ZF Batavia LLC joint venture that would run the plant beginning in 1999.

In February, as the plant finally began ramping up volume production — two years late — of continuously variable transmissions, Ford assumed 100% ownership. Ford executives visited the plant, southeast of Cincinnati, to reassure workers the new ownership will not result in job losses.

Management also put a positive spin on the relationship between Ford and ZF, saying the ownership change was agreed upon mutually. “This is a decision we make jointly,” David Szczupak, Ford vice president-powertrain operations, tells Ward's.

“No one is bowing out of the relationship, and no one is taking over,” he says. “With any joint venture, when you start them they need to evolve. This has been a fantastic time developing the technology, the manufacturing.”

As production ramps up for CVTs at Batavia, Szczupak says both parties agreed the plant would be better served by Ford's “expertise” in high-volume manufacturing.

Szczupak says ZF's experience as a transmission specialist was “absolutely” vital in tooling up the plant for CVT production.

“Walk around this facility — it's filled with technology unique to CVT manufacturing,” he says. “It's a world-class facility that was created by the JV, with the lead coming from ZF technology.”

Szczupak insists there is “no bad blood” between Ford and ZF and says the actions in Batavia are not part of Ford's attempt to bring inhouse certain product-development functions that have been outsourced to suppliers over the past decade.

As evidence, Szczupak points to the ZF Transmission Technologies LLC joint venture that Ford and ZF will continue to maintain for developing next-generation CVTs. “By keeping this relationship with ZF, we show this is a strong partnership,” he says. “It is not an attempt to bring it in-house.”

A ZF spokesman agrees the decision to give Ford 100% ownership of the plant was mutual but admits the CVT volumes are lower than the 1 million units per year initially anticipated by 2005.

“The marketplace has changed from four years ago,” the ZF spokesman says. “The market wasn't as mature as we probably thought. The economy changed, and the market was not as ready as we had hoped.”

The spokesman adds, “What was good yesterday isn't necessarily good tomorrow.”

Current capacity for the first CVT production line at Batavia is 250,000 units annually. Output began in the fall to supply the European Ford Focus C-Max 5-door with the belt-driven CFT 23 CVT.

This spring, the same assembly line will produce the chain-driven CFT 30 CVT for several U.S. Ford products, including the '05 Freestyle cross/utility vehicle and the Five Hundred and Mercury Montego sedans.

Asked if Batavia has plans to add a second CVT production line, Szczupak says he hopes so. “We're committed to CVT, and that's why we've evolved the JV,” he says.

Fuel-economy gains from the CVT also have been scaled back. Four years ago, Ford and ZF said it would improve fuel economy by 10% to 15%. Today, Ford quantifies the gain at 4% to 8% over traditional 4-speed automatics. The technology offers wider gear ratios and eliminates the “step” sensation when shifting gears, optimizing engine performance and a smooth ride.

ZF won't say how much it invested in the Batavia manufacturing plant, which now will be known as Batavia Transmissions LLC under Ford ownership.

A handful of key ZF employees will return to the supplier. Otherwise, staffing will remain unchanged — about 1,100 hourly and 300 salaried workers.

Workers hired before the 1999 creation of ZF Batavia LLC have remained Ford employees the past four years, which will not change. Workers hired after 1999 were employees of the JV and now are considered employees of the new Batavia Transmissions.

The Batavia plant also produces CD4E 4-speed automatics for the Ford Escape and Mazda Tribute. Szczupak says there is no plan to discontinue that production at Batavia.