TESTIMONY OF HAROLD N. BOGART, DIRECTOR, NUMERICAL CONTROL OFFICE, MANUFACTURING STAFF, FORD MOTOR CO., DEARBORN, MICH.

Mr. BOGART. We have some men from Ford, but I will make the statement if I may, sir.

Mr. SMITH. Fine, proceed in your own way.

Mr. BOGART. Mr. Chairman, my name is Harold N. Bogart. I am director of the numerical control office on the manufacturing staff of Ford Motor Co. My responsibilities include the development of systems relating to the tooling process from clay model through the

finished die or tool.

We appreciate your invitation to appear before this subcommittee. As shown by the attachment to this statement, Ford Motor Co. relies primarily upon outside sources for its tooling. We, therefore, have a very real interest in outside tool and die firms and their continued ability to contribute importantly toward fulfilling our needs.

If I may inject one personal note, when I came to Ford 32 years ago our tooling requirements were comparatively simple. Through much of that period we were producing only three different cars-Ford, Lincoln, and Mercury, each in a limited number of models. Today we make 11 distinct car lines, of which seven have been added within the last 10 years and they come in a total of about 100 models. The truck side of our business has undergone similar proliferation.

All of this has been brought about by the changing nature of our marketplace. The demand for variety and more variety has forced the auto industry and its suppliers into a new way of life. To our traditional emphasis on production efficiency we have had to add new dimensions of production flexibility and production capacity.

This need for flexibility and capacity has made itself particularly apparent in our tooling requirements, which have grown dramatically over the years. But, during that time, we have maintained approximately the same degree of dependence upon outside suppliers, as shown by the attached data.

The first area of the subcommittee's request for information relates to the amount of tooling we purchased outside and that which we made in-house. Our attachment is based upon dollar costs, as we do not keep records of our total tooling in terms of construction hours. Our total U.S. automotive tooling expenditures in recent years have ranged from $211 million for the 1965 model year-when 86 percent of the business went outside-to a 1968 model year total of $290 million, of which 86 percent again was produced by our suppliers. In the other 3 years covered in the attachment, the percentage of purchased tooling was 87 percent in 1966, 84 percent in 1967, and 83 percent in 1969.

We are not providing dollar projections of our tooling requirements because, in our judgment, it could injure us competitively to disclose future programs. In any event, such estimates might well prove to be misleading owing to unforeseen changing conditions. However, in order to be responsive to the subcommittee in its investigations, I can advise you that we believe our outside tooling purchases during the 1970-73 model year period will remain in the area of 85 percent, as it has in the recent past, and that the total dollar volume of our outside tooling purchases in each of these years will exceed the average of the 1965-69 model year levels.

Turning now to the second area of the subcommittee's inquiry, relating to our tooling capacity and new installations, we have facilities in many of our plants for maintenance and repair of tools, but only two of our divisions produce any appreciable amount of new tooling. These facilities are at our Canton, Ohio, forge plant, which for years has produced all of its forging dies, and the plants of our metal stamping division.

The bulk of our tooling capacity is in the metal stamping division plants, where all our in-house body dies are made. We have tooling facilities at each of our five stamping plants, as well as in a separate metal stamping division tool and die plant in Dearborn.

The combined capacity of these facilities falls far short of meeting our requirements for body dies. The proportion of body die business placed with outside sources for model years 1965-69 has ranged from 59 to 70 percent.

Our tool and die capacity was increased about 10 percent in 1965 when a new stamping plant was phased in at Woodhaven, Mich. This new plant increased our metal stamping capability, in terms of major press lines, by 23 percent, more than twice the increase of tooling capacity. The Woodhaven toolroom has an area of approximately 57,000 square feed, employs 500 to 600 people and, in addition to maintenance and repair work, is capable of producing small and intermediate size dies, fixtures, and other production aids. Our overall effective tool and die capacity also has been increased somewhat in recent years through technological improvements.

We have no present plans for increases in our internal tooling capacity that would affect our present sourcing pattern. This assumes, of course, that outside tooling capabilities remain adequate to meet our needs, and we have every reason to believe they will.

The third major area of the subcommittee's request for information concerns the amount of tooling purchased as imports.

Ford Motor Co. imports of tooling are small, and in total have been substantially less than the purchase of tooling from independent U.S. suppliers by Ford subsidiaries outside of the United States. The Ford tooling imports are made up principally of fixtures from Ford of Mexico-about $5 million in 1969-and molds from Canada, about $3 million in 1969. Most of this latter expenditure was for taillamp lens molds, for which there are limited U.S. sources.

In past years, we have also purchased very small amounts of dies from our affiliated companies in Canada and Brazil. We have not in recent years purchased any tooling from Europe.

At the present time, our imports of tooling from outside sources represent less than 3 percent of our total U.S. annual tooling costs and there is nothing at this time to indicate that we will increase our foreign purchases.

Mr. Chairman, in conclusion, may I say again that we appreciate the opportunity to appear before your subcommittee and that we share your concern for maintaining the viability of our Nation's independent tool and die suppliers because, as we have shown, Ford Motor Co. depends upon them heavily.

Thank you.

(The attachment referred to follows:)

32-579-69- 8

Special tool costs:

FORD MOTOR CO.-SPECIAL TOOL COSTS, U.S. AUTOMOTIVE OPERATIONS

Amounts (millions):
Body dies:

Purchased outside 2.

Manufactured in-house.

20.6

19.7

27.1

31.3

31.9

1 Excludes cost of certain items classified as "special tools" in our accounting records but not supplied by "tool and die" shops. Such items include wood and metal patterns, castings, design, installation, in-plant tryout, plasters and prototype tooling.

* Includes special tools consigned to outside suppliers.

Mr. SMITH. Thank you, Mr. Bogart. Your statement is short and to the point. I want to ask just a few questions to make sure that I can interpret your tables 1 properly.

These tables are on a dollar basis covering the years 1965 through 1969. I assume that you have used the same accounting practices-in other words, the input into this dollar volume is the same through these 4 years?

Mr. BOGART. These are entirely consistent as to accounting practices; yes, sir.

Mr. SMITH. So, measured on a dollar basis, the in-house tool and die. capacity has increased considerably, but only to the same extent that your overall dollar volume has increased. The percentage remains about the same?

1 See above.

Mr. BOGART. This is correct.

Mr. SMITH. According to the last paragraph,2 you do, apparently, feel that it is very important to our economy and to the automobile industry that the tool and die industry continues to have a substantial capacity on its own?

Mr. BOGART. Yes, sir.

Mr. SMITH. I assume you are saying I think you did—that it is to your interest not to increase your in-house capacity to the extent that it would hurt the tool and die industry.

Mr. BOGART. Well, certainly, we will examine any change in sourcing pattern on the basis of what we consider good business judgment. As we talk to you today, it is quite apparent that we consider that our present sourcing pattern is about right.

Mr. SMITH. How far ahead, approximately, does the automobile industry project its policy in regard to a matter like this?

Mr. BOGART. As far as actually getting bids from vendors?

Mr. SMITH. No; I mean the general policy of whether you should increase in-house or competitive contracts.

Mr. BOGART. This is a decision whose leadtime is in the order of

3 to 4 years.

Mr. SMITH. You indicated that you expect the percentage in the 1970-73 period to remain about the same. That would be as far ahead as you would be projecting this policy at the present time?

Mr. BOGART. Yes, I think so. Yet, with all other conditions remaining the same over that period of time, we cannot see a major projection that would cause us to change our policy.

Mr. SMITH. Some statements were made 2 weeks ago in the hearings with regard to computer tapes. Claims are being made that the independent segment of the industry is at a considerable disadvantage because they do not have the computer tapes. This is a problem, apparently, because your in-house facilities do have computer tapes. Would you care to comment on this?

Mr. BOGART. Well, generally, this is true, that we have a slightly different capability in the sense that our contouring machines, the machines that form the elaborate contours of the fender and the roof and the rear deck and the like, on the outside of the automobile, are responsive to tape commands. This means that a certain amount of the normal machinery is changed from manual command to tape command. Yet, really, at this point in time, it is a substitution of a slightly different way of instructing a machine than we have previously usedmanual or manpower input to produce the tapes. It has been impossible for us up to this point in time to make the computer think like a man. We must tell the computer that prepares the tape the ground rules of our machining operation. When we do that, we are just changing the dials, if you will, that a man sets on the job and moving themthe dials-back closer to the planning function.

Mr. SMITH. I assume you make a cost analysis on a particular job to determine whether it should be contracted rather than performed in-house?

Mr. BOGART. No, our procedure is not to do this on a cost basis. It is based on our own in-house capability of making certain of the dies

2 See p. 109.

and the capability on the outside of making the dies, meeting our delivery, and otherwise fitting into our total schedule. We do not put the outside shops and our inside shops in direct competition.

Mr. SMITH. Well, in determining the ability of the outside contractors to perform, would they be automatically excluded if they did not have the tape?

Mr. BOGART. No, sir.

Mr. SMITH. They would not?

Mr. BOGART. No, sir.

I should amplify that just a wee bit, if I may. It is true that, if we have not provided models and templates for the machining operation, we would have to go back and provide those templates and models. But we do that far back enough in the planning operation so that when we get our information from the original clay model, and begin to move into the manufacturing process, we know by which process they will be manufactured.

Mr. SMITH. Do you ever furnish the tape?

Mr. BOGART. We have not yet furnished tape because of lack of capability in the industry. It is growing, and it is a possibility in the next few years.

Mr. POTVIN. Mr. Chairman.

Mr. Bogart, what we are talking about here, of course, is a situation in which you have the Big Three with utter market dominance on the one side, some rather small shops on the other, and the combined effect on these two of the so-called technological revolution that is about to happen in terms of numerical machines. Now, looking ahead to the day when you solve the technology problems of going, as they say. directly from clay to metal, at that moment in time, the tape will, in a sense, be the whole ball game, will it not?

Mr. BOGART. It will be another way of giving the information to our supplier. In the past, we have had two basic routes of giving engineering information relating to first the clay and, finally, interior parts. One has been by model, the other has been by engineering kinds of drawings, very specific drawings, for the body function. This will be just one additional way of describing the surface.

Mr. POTVIN. That is true, sir, but does that not understate the problem to this extent, that it involves a different kind of expertise; that is to say that the tool and die shops, the independents, do not, of course, presently have programing expertise. As you go in-house, you will build that into your plant, will you not?

Mr. BOGART. That is right.

Mr. POTVIN. Thus, if you give them the tapes, they have, so to speak, the advantage of your expertise without the necessity of either expanding or going, perhaps, to a service bureau computer-type operation.

Mr. BOGART. I am sure that there will be some such relationship established between our supplier and ourselves. The reason that I am not too specific on it is that if all of the preliminary work, including the processing-in other words, saying just exactly how the cutter will move over the surface, and at what speed it goes-if all of this work is done for our suppliers, we believe that we will have relieved them of some of the responsibilities and cheated them of some of the opportunities that go with good operations in their toolshop.