Editor's Note: Outsourcing takes a (deserved) hit

The Automotive News recently reported that Ford Motor Co. has hired nearly 250 engineers and is redeploying 250 others to regain control over parts engineering and pricing—even as the company eliminates other jobs and cuts costs elsewhere (www.autonews.com). AN reports that this effort began about a year ago and is one of several programs aimed at solving quality problems that held back the launches of several models.

This is a great move, and one that's long overdue. It's one thing to outsource component manufacturing, but it's quite another to outsource engineering and system integration. After all, how can a company ensure that it is producing quality vehicles when it has laid off its engineers and outsourced all the design and test?

I've long thought that the auto companies are relying too much on suppliers. It's not that the suppliers don't know what they're doing; rather, they just don't have as much invested in a product as the manufacturer's employees do. It's an intangible that can't be easily quantified, but it's there. Over the long run, a company's employees are going to do a better job than those of a supplier.

The article was quick to point out that Ford isn't pulling everything in-house. The decision to pull something back hinges on whether having more design control will give Ford a competitive advantage.

I like this strategy, and I hope Ford executes it to a tee. If it does—and if the company benefits as much as I think it will—then we may see other automakers follow suit.

Contact Dan Romanchik at editor@aatr.net.