THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, October 22, 1996 TAG: 9610220280
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: 56 lines
Norfolk Southern Corp. will soon have a hand in the delivery of every Ford car and truck in North America.
Ford Motor Co. awarded Norfolk Southern a 12-year contract on Monday to coordinate distribution of all its new vehicles on the continent.
The contract is a coup for the Norfolk-based railroad because Ford now uses a number of other railroads and trucking companies to move its vehicles directly from assembly plants to dealers.
Soon all Fords, Lincolns and Mercurys shipped in North America will pass through one of four Norfolk Southern distribution centers.
Norfolk Southern expects the deal to boost its business with Ford by 60 percent by 1998.
Norfolk Southern will develop, own and manage the four ``mixing centers,'' which are to be in operation by 1998.
Ford will send about 3 million new cars and trucks a year from all 21 of its North American plants through the four centers. Each center will serve a different part of North America.
A Norfolk Southern spokesman declined to put a value on the contract or say how much the company was spending to buy the land and build the centers. A Ford spokeswoman also would not release any contract details.
Automobiles and car parts accounted for $454.1 million ofNorfolk Southern's $4.6 billion in revenues in 1995.
Norfolk Southern serves eight Ford plants as well as assembly plants for BMW, Chrysler, General Motors, Honda and Toyota. It also distributes vehicles for more than a half-dozen foreign car makers and parts for Chrysler, Ford, GM and Toyota. And it will serve the new Mercedes plant scheduled to open in Alabama in 1997.
Under the agreement with Ford, newly built Ford vehicles will be shipped to one of the four mixing centers, which will be located near Fostoria, Ohio; Shelbyville, Ky.; Kansas City, Mo.; and Chicago.
Thirteen Ford plants not on Norfolk Southern rail lines will ship to the centers via other railroads or by truck, said Robert Fort, Norfolk Southern's spokesman.
At the centers, new vehicles will be sorted by destination, loaded on to multilevel rail cars and organized into trains for final delivery. Norfolk Southern will coordinate deliveries where its lines don't run with other North American railroads.
``The mixing center concept is an important part of our effort to improve speed and predictability of new vehicles to our customers,'' said Raymond L. Pittman, Ford's executive director of material planning and logistics.
Ford wants to deliver a new vehicle 15 days after it is ordered by a dealer. The manufacturer also wants to reduce the time vehicles sit at assembly plants.
Norfolk Southern and Ford tested the mixing center concept with a pilot program in Kansas City that began in September 1995. Ford's success with a similar center in Germany prompted it to test the concept in North America. by CNB