Ford Looks to Close Plants, Shed Jobs in Overhaul

[Len_A]

From the Wall Street Journal:

 

Ford Looks to Close Plants, Shed Jobs in Overhaul

Moves Seen as One Element

Of Broader Strategy Review

Amid Losses, Falling Sales

 

By JEFFREY MCCRACKEN

Staff Reporter of THE WALL STREET JOURNAL

December 2, 2005; Page A1

 

Weeks after rival General Motors Corp. announced plans to eliminate 30,000 jobs next year, some details are starting to emerge about job cuts and plant closings at the U.S.'s other big auto maker, Ford Motor Co.

 

Though Ford's plan, dubbed the "Way Forward," is still being formulated and is subject to change, the nation's second-largest auto maker is likely to shutter assembly plants in St. Louis, Atlanta and St. Paul, Minn., according to two people familiar with its product plans. Also slated for closure are an engine-parts plant in Windsor, Ontario, and a truck-assembly plant in Cuautitlan, Mexico, said these people.

 

Together, the plants employ about 7,500 workers, roughly 6% of the company's total North American work force. A Ford spokesman declined to comment on the plan, which is expected to be unveiled in January.

 

The closings would be just one part of a broader rethinking of strategy and products at Ford that is being driven by William Clay Ford Jr., great-grandson of company founder Henry Ford and its current chairman and chief executive. Even as he is ordering plant shutdowns and layoffs, Mr. Ford is reviewing the company's luxury brands and marketing, overseeing a staff shake-up and exhorting employees to be "innovative."

 

Like GM, Ford is foundering amid a decline in popularity for sport-utility vehicles, rising gas prices, increased foreign competition and heavy labor and health-care costs. Its world-wide automotive operations have lost $1.69 billion through the first nine months of this year.

 

Yesterday, the company said U.S. sales fell 15% last month -- the worst of any auto maker -- and cut production targets for both the fourth and first quarters. (See related article1.) Especially hard hit were sales of trucks and SUVs. Ford Explorer sales have collapsed this year, falling nearly 52% in November from a year earlier despite an extensive redesign of the vehicle.

 

Ford once sold as many as 400,000 Explorers a year and ran two Explorer plants on overtime. This year, it will do well to sell more than 240,000 -- a single plant's worth.

 

"Gone are the days when we are going to sell 400,000 Explorers [a year] without incentives," said Ford sales analyst George Pipas, commenting on November's results. "It's sayonara."

 

In 4 p.m. composite trading on the New York Stock Exchange, Ford shares were off three cents at $8.10.

 

The Atlanta plant closing would be a surprise and could have the effect of saving an underused assembly plant in Wixom, Mich., which would become the manufacturing sites for new products under the Lincoln brand such as a Lincoln Continental and a full-sized sedan. If Wixom is spared over Atlanta, it will in part be due to Wixom's proximity to Ford's Michigan-centered supply base, said the people familiar with Ford's plan.

 

The company likely would face stiff union opposition in pursuing closings, since such a move would cut down on unionized sites and jobs. Still, like GM, Ford has a labor agreement with the United Auto Workers union that commits it not just to comparatively rich wages and health-care and retirement benefits, but to keeping plants open. Even if Ford permanently idles a factory, it must continue to pay wages to UAW workers who don't choose to retire.

 

Ford also is hamstrung by a 1999 deal with the UAW that earlier this year effectively forced it to take back 24 money-losing plants from parts supplier Visteon Corp., which was spun off from the auto maker, at a cost of about $1.15 billion. Ford now must operate those businesses until it can find buyers or usher the workers into retirement. This process could take years.

 

Union officials did not return phone calls seeking comment yesterday.

 

To some extent, the auto maker is paying for strategic decisions made in the late 1990s. Besides increasing its focus then on more-profitable SUVs and pickups, the company let cars like the tired Ford Taurus, Ford Focus and Ford Crown Victoria continue without major upgrades. This contributed to a consumer exodus to rivals like the Honda Accord and Toyota Camry and Chrysler 300C, which feature more modern technology and designs.

 

As a result, Ford now has more ground to make up, at higher cost, said Michael Robinet, vice president of CSM Worldwide, a Novi, Mich., auto-research firm. "Past plant-level investment decisions made in the mid-to-late 1990s have caused problems at Ford, causing them to overinvest in recent plant revisions they've had to make," he said.

 

The "Way Forward" will come less than four years after Ford launched an earlier cost-cutting effort that promised to trim 20,000 North American jobs, shutter several plants and get the company "back to basics" after a failed dot-com era diversification binge.

 

In 2002, Mr. Ford set a goal of earning $7 billion in pre-tax profits by middecade. But that target was abandoned earlier this year, as Ford's auto profits evaporated. The company also has fallen short on other targets, such as its 2002 goal of operating its auto plants at 100% of capacity or better.

 

Besides the latest round of closings, Ford is conducting an intense review studying the problems of disappointing brands like Mercury and Jaguar. The company also is re-examining its marketing and advertising strategy, borrowing concepts from political campaigns in an attempt to target such groups as red-state soccer moms, who don't buy many Fords today but could be won over with better targeted messages about values such as safety or fuel economy.

 

Some of the pending plan's details are likely to be shared next week with Ford's board when it meets Wednesday and Thursday.

 

In recent weeks, Mr. Ford also has been overseeing a management overhaul. To lead the North American overhaul, Mr. Ford in October named Mark Fields, 44 years old, who formerly ran the company's money-losing luxury brands and its European unit, to be executive vice president in charge of the Americas unit, which includes Ford's North American auto business. Last month, Mr. Ford named Anne L. Stevens as chief operating officer for North America.

 

Mr. Fields and Ms. Stevens have signaled plans to shake up Ford's North American white-collar work force, cutting an additional 4,000 salaried jobs, about 10% of the total -- after eliminating 2,700 jobs this year. Several top executives, meanwhile, have departed recently.

 

"Our most significant challenge going forward is our cost structure which clearly isn't where it needs to be," said Mr. Ford during the auto maker's third-quarter conference call in October. "And that is why one of Mark Fields's principal charges is to align our plants and our people to the market. That plan will include significant plant closings where facilities don't fit our strategy moving forward."

 

While GM has been reporting deeper losses and drawing much of the focus of the auto industry's woes this year, some industry executives and analysts see Ford as more vulnerable in certain ways. GM has a new lineup of full-size SUVs and pickup trucks on the way in 2006 -- vehicles that tend to be the most profitable for U.S. auto makers. The new GM models could cut into sales of Ford's most-important vehicle, the Ford F-series pickup truck line.

 

Analysts also are concerned that Ford's all-important new midsize vehicle, the Ford Fusion, has been slow to gain sales momentum, despite generally good reviews.

 

Meanwhile, the auto maker's longtime money machine, Ford Credit, is starting to bring in less, and is thus less able to make up for losses at the automotive arm. Ford's chief financial officer, Don LeClair has been warning Wall Street all year to brace for lower profits at Ford Credit.

 

Ultimately, turnaround experts say, the far-reaching re-evaluation program launched by Mr. Ford could lead to uncomfortable conclusions, such as asking why certain struggling brands even exist or why Ford bothers with products, such as the current Ford Freestar minivan, the struggle to compete with rival offerings.

 

"If you are Ford, and you are a great truck company but not great at something else like certain cars, or your minivan isn't competitive, will you act on that, will you make the painful choice to get out of a business, even if hurts shareholders and the bottom line for awhile?" said Holly Etlin, a New York-based turnaround official, who is president of the Turnaround Management Association and currently overseeing a restructuring at the Winn-Dixie grocery-story chain.

 

Mr. Ford has said that he is willing to make such painful choices if the company decides they are needed.

 

"Anyone who thinks or attempts to convince you that it's business as usual at Ford is wrong and would best serve us all by pursuing their interests elsewhere," said Mr. Ford in a voicemail sent to employees earlier this week. "Our heritage of innovation must be reclaimed and renewed or the greatness of our company will become part of our past. It's that simple."

 

Write to Jeffrey McCracken at jeff.mccracken@wsj.com2

[Bored of Pisteon]

You beat me to the punch on the article... I started a whole new topic on it without the information you provided... I just wonder what the end result is going to be after what I said in my reply on it.

 

There will be a lot of related and unrelated cutbacks for sure... I mean several departments in my plant that provide the axles for the vehicles in these plants described herein may cut a shift, cut a line out or be shut down all-together. Not looking good at all!

[statts]

You beat me to the punch on the article... I started a whole new topic on it without the information you provided... I just wonder what the end result is going to be after what I said in my reply on it.

 

There will be a lot of related and unrelated cutbacks for sure... I mean several departments in my plant that provide the axles for the vehicles in these plants described herein may cut a shift, cut a line out or be shut down all-together. Not looking good at all!

 

hey bored what dept you in? i heard alot of layoffs today coming up.

[Bored of Pisteon]

hey bored what dept you in? i heard alot of layoffs today coming up.

 

Let's just say that I know you work in 49 and I have something to do with your department. Tell me what you know.

[statts]

Let's just say that I know you work in 49 and I have something to do with your department. Tell me what you know.

 

i'm no longer in 49 left 4 months ago,i heard they want the plant down to 2100 people,i can't see it.

[Bored of Pisteon]

i'm no longer in 49 left 4 months ago,i heard they want the plant down to 2100 people,i can't see it.

 

We'll sit and see what happens. All I can say is THE STORM IS COMING! Especially if you are in my seniority range (10 years or less)

 

If what the union said "that no jobs will be lost with this C.O.A." vote at the description and explanation of it before the vote THEN THEY ARE FULL OF BULL CAPITAL S WITH A HIT! No jobs lost... MY ASS! For them and the rest of the executive board, and the good ol' boys network of course no jobs will be lost.

 

Is it any wonder why morale has gone down the rathole within the last 5+ years since this Visteon nightmare spinoff?

[chubby]

Hey I saw a write up from the Frankfurt Auto Show where Junior says Ford will close 8 plants Wixom and Atlanta included.How could Ford let the Town Car disintegrate?It is still selling {limos and taxis} and it is a 1995 product!Ford is now like Chrysler no TRUE luxury vehicle.It all started with Nasser.At the time he took over Ford was the cats meow.Nasser comes along with a bug up his ass about 50 year old white guys in management and BOOM no one gives a shit anymore.Real smart making enmity with the persons who got the company where it was{highly profitable}I am sticking with my source-Wixom stays Atlanta gets sold!Hell how could Ford even afford to PARK the vehicles it makes around the airport?ha,ha!

[Help]

Hey I saw a write up from the Frankfurt Auto Show where Junior says Ford will close 8 plants Wixom and Atlanta included.How could Ford let the Town Car disintegrate?It is still selling {limos and taxis} and it is a 1995 product!Ford is now like Chrysler no TRUE luxury vehicle.It all started with Nasser.At the time he took over Ford was the cats meow.Nasser comes along with a bug up his ass about 50 year old white guys in management and BOOM no one gives a shit anymore.Real smart making enmity with the persons who got the company where it was{highly profitable}I am sticking with my source-Wixom stays Atlanta gets sold!Hell how could Ford even afford to PARK the vehicles it makes around the airport?ha,ha!

:ph34r: :ph34r: :ph34r:

Chubby, Your right about this one!! Wixom will STAY!!!

[rkeep820]

We'll sit and see what happens. All I can say is THE STORM IS COMING! Especially if you are in my seniority range (10 years or less)

 

Can you elaborate on the 10 years or less part? Pension freeze by chance?

[mrballsonya]

I lifted this quote from a obscure website, the complete article was written DEC. 3rd.

 

Ford’s plan, called the “Way Forward,†is not due to be released officially until January and may still be revised. The leak to the press was likely aimed at gauging the response of Wall Street investors, who have been punishing the company’s stock—which is down to around $8 a share—and demanding a major restructuring of Ford.

 

This explaination seems to make the most sense of any as to why the wall street journal published the story.

 

It seems the investors didn't think 5 plants where enough as Ford stock didn't do anything on Friday. Now three days later we're hearing 8 plants to be closed. Although at the closing of the Bell today it appears F is down again. :lol: :lol: Get ready for 10 plants, in a couple of days :lol: :lol:

 

I won't believe anything until news comes from Jr. himself.

 

I still picture that brand new Wixom Rd. overpass leading straight to the new Ford Memorial 27 Hole Golf Course. Oh yes, Ford has "PLANS" for Wixom.

 

Sorry to be such a pessimist, but its hard not to after living through all this plant closing talk for the last couple of years.

[fantasyfrank]

:ph34r: :ph34r: :ph34r:

Chubby, Your right about this one!! Wixom will STAY!!!

Don't be so sure about Wixom. An article in The Atlanta Constition states that Ford has bumped the number of plants closing from 5 to 8......Wixom IS included in this "hit list" along with 3 parts plants. I guess we will find out in January for sure but it's not looking good no matter what happens.

[dark270]

Don't be so sure about Wixom. An article in The Atlanta Constition states that Ford has bumped the number of plants closing from 5 to 8......Wixom IS included in this "hit list" along with 3 parts plants. I guess we will find out in January for sure but it's not looking good no matter what happens.

''

 

hey what parts plant??? was monroe on that list??

[fantasyfrank]

''

 

hey what parts plant??? was monroe on that list??

I don't have any info on parts plants, sorry. The only thing I know is there are 3 of them. Edited December 5, 2005 by fantasyfrank

[dark270]

I don't have any info on parts plants, sorry. The only thing I know is there are 3 of them.

oh okay...thanks tho!!

[wolfpackrazorback]

''

 

hey what parts plant??? was monroe on that list??

Yeah dont believe all the crud....

Ive been hearing we (monroe) have work until 2012. probably more crud.

[Footballfan]

Hey I saw a write up from the Frankfurt Auto Show where Junior says Ford will close 8 plants Wixom and Atlanta included.How could Ford let the Town Car disintegrate?It is still selling {limos and taxis} and it is a 1995 product!Ford is now like Chrysler no TRUE luxury vehicle.It all started with Nasser.At the time he took over Ford was the cats meow.Nasser comes along with a bug up his ass about 50 year old white guys in management and BOOM no one gives a shit anymore.Real smart making enmity with the persons who got the company where it was{highly profitable}I am sticking with my source-Wixom stays Atlanta gets sold!Hell how could Ford even afford to PARK the vehicles it makes around the airport?ha,ha!

 

You got that one right. Doesn't it seem that Ford is making the same mistakes with Lincoln that Cadillac and Chrysler did back in the 1980s?

[Monroe B Gone]

''

 

hey what parts plant??? was monroe on that list??

 

Well I just feel so much better knowing that clay ford is involved with the major restructuring, heck if he tries to run the company like he runs the Football team(LIONS) we will all be out of a job in no time!!!! As far as what plants will be closed just look back and you will see a pattern....When they come through your plant with the dog and pony show telling you how great your doing with Q-1 and FPS then grab your ankles cuz your on the chopping block.......Heck Edison had the best FPS ranking of all assm. operations and "whack" there they went. So anyone that buys that great scores improve job security,I got some land in Florida I will sell ya. As far as the people at the LLC co. get real!!!!!!! you should of flowed back when you had the chance.and don't tell me you didn't get a chance(you where just to chicken shit to leave).as far as monroe goes there will be no converters after 07 so you figure it out!!!!!! GOODBYE!!!!! Looks like willow green trailer park will fill up to full capacity in 07. lots of houses will be in forcloser in cypres point and frenchmans bend!!!! Bye the way.....I was on the last life boat out!!!!!!talk to friends in the plant every day. One last thing.........What would the Lions be like if Toyota owned them?? I bet they would be run the team like their Co and be one cut throat team. Millen whould of never been hired (remember toyota started Fps) NO data to hire him..........maybee as equipment manager????? Ford,and the Lions are sliding because of one simple reason......They are out of touch with Reality!!!!!!!!!

[dark270]

Well I just feel so much better knowing that clay ford is involved with the major restructuring, heck if he tries to run the company like he runs the Football team(LIONS) we will all be out of a job in no time!!!! As far as what plants will be closed just look back and you will see a pattern....When they come through your plant with the dog and pony show telling you how great your doing with Q-1 and FPS then grab your ankles cuz your on the chopping block.......Heck Edison had the best FPS ranking of all assm. operations and "whack" there they went. So anyone that buys that great scores improve job security,I got some land in Florida I will sell ya. As far as the people at the LLC co. get real!!!!!!! you should of flowed back when you had the chance.and don't tell me you didn't get a chance(you where just to chicken shit to leave).as far as monroe goes there will be no converters after 07 so you figure it out!!!!!! GOODBYE!!!!! Looks like willow green trailer park will fill up to full capacity in 07. lots of houses will be in forcloser in cypres point and frenchmans bend!!!! Bye the way.....I was on the last life boat out!!!!!!talk to friends in the plant every day. One last thing.........What would the Lions be like if Toyota owned them?? I bet they would be run the team like their Co and be one cut throat team. Millen whould of never been hired (remember toyota started Fps) NO data to hire him..........maybee as equipment manager????? Ford,and the Lions are sliding because of one simple reason......They are out of touch with Reality!!!!!!!!!

 

 

hmm congrats on getting out..i never had a chance to flowback...now that is dead...it is too bad ford

offered something it could not deliver!!!as far as monroe city..well they dont want to be a big city but want big city revenue!!!! monroe has slowly killed itself!!! you missed a GREAT fight today in monroe plant!!!! lol

one guy is still in the ER....LOL the ohter guy?? didn't even work in the plant!!!

[carguy]

On a side note

 

L osers

I neffective

O ffensive

N o

S hows

:lol: :lol: :lol:

[Bored of Pisteon]

On a side note

 

L osers

I neffective

O ffensive

N o

S hows

:lol: :lol: :lol:

 

 

I'm just glad old man Sr. never ran this company...

Edited December 7, 2005 by Bored of Pisteon