Ford likely to close five North American plants

[Marc]

From AP - Ford slimming down...

Ford likely to close five North American plants
DETROIT (AP) — Ford Motor is likely to close five North American plants as part of a restructuring plan still being developed for announcement next month, according to a newspaper report published Friday.

The Wall Street Journal reported that the nation's second biggest automaker is likely to close assembly plants in St. Louis, Atlanta and St. Paul, under the plan that is still evolving and is subject to change. It cited two unidentified people familiar with the automaker's product plans.

The newspaper said an engine-parts plant in Windsor, Ontario, and a truck-assembly plant in Cuautitlan, Mexico, are also slated for closure.

Together, the plants employ about 7,500 workers, or 6% of Ford's North American workforce.

The Highland Park plant in St. Paul employs about 2,000 people making small pickups for the North American market.

The plant has been operating below capacity as sales of Ranger and Mazda B-Series pickups have been falling. In the first seven months of 2005 it was idle for 12 weeks.

"If, in fact, it was true, it would be devastating to our workforce, but we don't know that it's true and we're not going to go with the assumption of scaring the **** out of our members until we hear something definite," Bob Killeen, treasurer of the United Auto Workers local representing the Minnesota plant, told WCCO-AM on Friday.

Minnesota's Commissioner of Employment and Economic Development, Matt Kramer, said he spoke with a Ford official on Friday morning about the report that the St. Paul facility is targeted for closure.

"He made the same comment that I did, which is that the (story) appears to be much ado about nothing," Kramer said.

He said Ford has promised to notify him in advance of any public announcement regarding the St. Paul plant — and he doesn't expect that to happen until January. Asked whether he has been given notice that such an announcement is pending, Kramer said, "none whatsoever."

Ford reported Thursday that overall truck sales were down 8% for the year. (Honda and Toyota were November winners.)

"Obviously, we've indicated we will address our excess capacity," Ford spokesman Oscar Suris told The Associated Press on Friday. "We've been pretty consistent in saying we'll share these plans in more detail in January. Nothing is finalized."

Danny Sparks, union chairman of the Ford plant in Hapeville, Ga., near Atlanta, said employees at the plant have not been informed that it will close. The plant employs around 1,900 people and produces the Ford Taurus, which is scheduled to be phased out next year.

"We have not been contacted whatsoever about that," Sparks said. "It's a big surprise. We're one of the most efficient plants Ford has. The Atlanta employees have a long history of stepping up to the task at hand."

In Hazelwood, Mo., Mayor T.R. Carr said he hadn't heard that the St. Louis plant, which employs around 1,400 people, was on the chopping block. The plant makes the Ford Explorer, Mercury Mountaineer and Lincoln Aviator sport-utility vehicles, which have seen severe sales declines in recent months.

"Ford has always made a commitment to us they would notify the governor and the city of Hazelwood prior to any formal announcement. We tend not to respond to rumors and speculation," Carr said.

The report comes a day after Ford said sales of its Ford, Lincoln and Mercury brands fell 18% in November, and it said it would produce 2.5% fewer vehicles in North America in the first quarter than it did last year.

Ford Chairman and CEO Bill Ford has said he plans to announce U.S. plant closings and layoffs in January.

The January restructuring plan will be the latest in a series of shake-ups and cost-cutting moves at the Dearborn-based automaker, which reported a third-quarter loss of $284 million. In North America, it lost $1.2 billion before taxes.

When the company announced the third-quarter results in October, Bill Ford said he planned to complete the restructuring plan in December and announce it in January.

Ford and other U.S. automakers have been hurt by competition from Asia as well as high health care and materials costs and bloated plant capacity.

On Thursday, Ford said its car sales slid 6% despite strong demand for the company's new Ford Fusion, Mercury Milan and Lincoln Zephyr sedans and a 46% increase in sales of the Ford Freestyle crossover. Sales of Ford trucks and sport-utility vehicles slipped 22%, led by a 52% decline in sales of the newly redesigned Ford Explorer SUV.

Ford also said it plans to build 850,000 vehicles in North America in the first quarter, down 2.5% from a year ago. Ford said it will be increasing car production and lowering its output of trucks and SUVs.

[Wes Bucey]

It's amazing how Ford and GM are in lockstep over how many employees and American communities they can wound (some with mortal wounds) while the top executives go blithely on, collecting huge bonuses, even when the company reports huge losses.

Delphi and Visteon were spun off to create fall guys when the inevitable retrenchment began.

It appears automotive and airline industries have had a long term plan to bust unions any way they can, even using the bankruptcy courts as unwitting conspirators in their plans.

In a related issue, airlines, aerospace, and automotive industries all say there is a crying need for "skilled" workers (machinists and CMM operators), but what fool would agree to go to work for an industry which publicly proclaims a concerted effort to drop ALL high paid hourly workers to a level of 1/4 or 1/3 of current wage rates, while reducing or eliminating benefits such as medical insurance, vacation pay, and education reimbursement?

Economists seem to agree there is an industry "shakeout" on the horizon. What they don't agree or comment on is whether top executives will also find themselves on the unemployment line with their hourly workers.

[Jconlake]

Wes,

I don't normally throw gas on the fire about executive compensation, but recently there was an article at NewsMax that disclosed the pension plan for GM's CEO. It seems Wagoner developed his own pension plan that will pay him $4.6M a year in retirement even if GM files Chapter 11 and everyone else loses their pension. Small wonder he has not exhibited any sense of urgency about turning things around.

[Jennifer Kirley]

Very good points Wes. When I packed up my kids and dog to find my professional fortunes in Seattle in 1999, I stayed away from Boeing because I didn't want to work for a company that just breathes its workers in and out.

Later I was part of the big exhale at SCI (who also used layoffs as strategy) back here in Maine.

IMHO it's just a result of short term thinking and the Wall Street model that encourages it. Rather than spend resources to develop products for future markets (did the top management really think gas would always cost less than $1.89 a gallon? Did they think the appetite for big, heavy vehicles would be inexhaustible--did they learn nothing from the 1970's?) they tried to out-snazzy each other in big vehicles, insisting it is what the consumer wants. Given the time required to put newly designed vehicles in the showrooms, the good times simply ran out of gas and stalled. Now workers will lose their jobs as a result of this short term thinking--poor management.

As always, high pension and health care costs are fashionable excuses. "Let us save money by forcing everyone to rely on old-world resources (family and charities) instead of maintaining this burdensome social contract." This is a shift back toward Industrial Revolution thinking, where productivity numbers did not seem at all linked to the lives they represented.

The scary part is the fact that our economy is said to be 2/3 driven by consumer spending. While all these layoffs occur and re-employment is established at a fraction of earlier earnings (2/5 in my case) the overall economy is bound to suffer. It hasn't happened yet because the average U.S. consumer is making up some of the difference by taking on more debt; many have taken cash-out mortgage refinancing to keep buying stuff.

I counsel against such an idea in my Personal Financial Management classes. I am set to offer those classes three nights a week. I did the math: if I run full classes of 18 people and add the earnings to my paraeducation professional's wages, then divide by 2080 typical yearly hours, I would bump up my earnings from the current $6.93 an hour average, to $8.89, just over half of what I used to earn.

Well, that's progress. Yours truly is stepping up to the plate to help support the economy.