Ford May Close Up to Five Plants, Cut Thousands of Jobs

By Chicago Tribune

Dec. 3–Ford Motor Co. could close up to five North American assembly plants and shed thousands of jobs in a bid to operate its factories at capacity and make its struggling automotive operations profitable.

Ford’s board is scheduled to review a restructuring plan next week that includes closings and job cuts. However, Chairman and Chief Executive Bill Ford Jr. has said the plans will be made public in January.

Speculation about the factories on the list has been swirling for weeks. Plants in St. Louis, St. Paul, Wixom, Mich., and Atlanta are the most frequently mentioned.

Global Insight, a Lexington, Mass., forecasting firm, also has tabbed a plant in Cuautitlan, Mexico. It builds mainly F-Series pickups for Mexico.

The Wall Street Journal reported Friday that the Cuautitlan plant was likely to close.

Ford’s restructuring, called “Way Forward,” will follow within weeks General Motors’ decision to close nine North American plants and eliminate 30,000 factory jobs, mostly through attrition and early retirement.

Ford’s North American operations have lost $1.4 billion this year. GM has lost $3.8 billion this year.

Both companies need to align their production capacity to their shrinking market shares, said Joseph Phillippi, principal of AutoTrends Consulting in Short Hills, N.J.

“GM has the [production] capacity for 30 to 35 percent of the market yet has a 26 percent share,” Phillippi said. “Ford is in the same situation, it has capacity for a 25 percent share of the market and is only at 19 percent. And the business isn’t growing.”

Global Insight forecasts that Ford will build 3.3 million vehicles in North America this year with its 19 assembly plants operating at 71 percent of capacity.

Ford wouldn’t comment Friday.

“The plan is still being worked on. So anything reported is speculation, and we won’t comment on speculation,” spokesman Tom Hoyt said.

The company said in September that it would announce plant closings before the end of the year, but Bill Ford delayed that until January to give a new North American management team time to assess the situation.

Global Insight analyst Catherine Madden says the delay has increased anxiety among Ford employees, who probably are adding to the rumors as they worry about their own futures.

“Clearly, no one at Ford has been told what is going to happen,” she said. “It’s unfortunate they’ve let it go on so long.”

Phillippi said one hang-up could be discussions with the United Auto Workers. The domestic automakers negotiate plant closings into union contracts and the current agreement ends in September 2007.

“It takes time to negotiate with and precondition the UAW to what is about to happen,” he said. “Also, there have been executive departures and turnovers, and it takes the new people time to get a handle on the landscape and formulate a comprehensive plan, which doesn’t help things.”

UAW spokesman Paul Krell said the union had no comment on possible plant closings.

“We are in talks with Ford regarding health care,” he said. “As to discussions about a plant closing list, I don’t know.”

Ford will close its Lorain, Ohio, assembly plant at the end of this month under an agreement with the UAW.

Earlier this year, Ford said it will eliminate 4,000 white-collar job in the first quarter of 2006. It has not said how many blue-collar jobs it will cut in connection with factory closings, which analysts predict will involve four or five plants.

Except for the Mexican truck plant, J.P. Morgan analyst Himanshu Patel lists the same ones as Global Insight: Atlanta, St. Louis, St. Paul and Wixom. The five plants employ a total of about 7,500 hourly and salaried workers.

Atlanta builds the Ford Taurus, production of which is scheduled to end this summer. About 90 percent of Taurus sales are to fleet buyers, such as daily rental companies.

Madden says St. Louis looks precarious because it operates on a single shift that builds the Ford Explorer and Mercury Mountaineer sport-utility vehicles, whose sales are on the skids. Explorer sales are down 30 percent this year, and Madden says Ford could consolidate production in Louisville.

St. Paul builds the Ranger compact pickup, which hasn’t been redesigned for more than decade, and Wixom operates on one shift to turn out the Lincoln Town Car and LS sedans.

The Atlanta plant was in line to build new Lincoln sedans and crossover vehicles, but Madden said production of those models could go elsewhere and Wixom could survive.

Ford has postponed a redesign of the Ranger several times, and analysts speculate that a successor could be built offshore and sold in other countries as well.

Ford’s problems extend beyond North America. Its Premier Automotive Group, which includes Jaguar, Volvo and Land Rover, lost $108 million in the third quarter. Ford doesn’t break out results for each brand, but only Volvo is believed profitable.

Even so, Volvo will eliminate nearly 1,500 jobs in Europe this year, about 5 percent of its workforce, and Jaguar is rumored to be planning production cuts in 2006 because of slumping sales.

Jaguar’s U.S. sales have fallen 34 percent this year, to 27,979, and Volvo’s are down 10 percent to 114,507. Land Rover has risen 31 percent, to 39,262, in the U.S. because of strong sales of the midsize LR3 SUV.

By Rick Popely and Jim Mateja

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