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EDITORIAL: Comeback Needed to Keep Kansas City, Mo., In Clear

Posted on: Wednesday, 25 January 2006, 18:00 CST

By The Kansas City Star, Mo.

Jan. 25--Ford's plan to eliminate 30,000 jobs is the latest blow for the American auto industry, which is bogged down by massive fixed costs and relentless competitive pressure.

The Kansas City area, however, dodged another bullet: Ford's Claycomo plant was not on the list of plants to be shuttered.

Claycomo churns out some of Ford's top products, including the F-150 pickup and two popular compact sport-utility vehicles: the Ford Escape and Mercury Mariner. Both SUVs are available in the gasoline-electric hybrid mode.

Ford says it will shut down seven assembly plants and seven parts plants in North America. That will wipe out about a quarter of the company's production capacity and a quarter of its North American workforce of 122,000.

The plan, according to the company, will make Ford's North American operations profitable by 2008. For its global operations as a whole, the company remains profitable.

The decline of the Big Three carmakers in the last two decades has been accompanied by steady investment in North America by foreign companies. They built factories in several states, mainly in the South and West.

The U.S. auto industry -- meaning that industry employing Americans to make vehicles -- is much broader and deeper, despite Detroit's decline.

True, a larger percentage of the capital employed in that industry is owned by foreign companies. But at a time when people are concerned about outsourcing, this is a reminder that the process of globalization sometimes works in America's favor.

Foreign auto makers have outsourced nearly 60,000 jobs to U.S. workers, who earn wages that are roughly similar to those paid by Detroit.

Those employees are turning out top-quality vehicles for Toyota, Honda, Nissan, Hyundai, BMW and Mercedes.

One of the most ruinous costs shouldered by Detroit is the misguided "jobs bank," a 1980s-era legacy that forces Big Three companies to give workers nearly full pay even after their jobs no longer exist.

According to analysts cited by The Wall Street Journal, about 5,000 workers remain in GM's jobs bank, for example. They receive $100,000 in pay and benefits every year even though they no longer work.

Claycomo is one of Ford's most productive plants, and the Kansas City area is fortunate it wasn't on the chopping block. But the plant's future ultimately depends on Ford's ability to reverse its decline.

The cuts announced this week are difficult, and the individuals who lose their jobs deserve support and assistance in finding new work. But Ford's long-term survival depends on its ability to offer attractive products and reduce its heavy fixed costs.

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To see more of The Kansas City Star, or to subscribe to the newspaper, go to http://www.kansascity.com.

Copyright (c) 2006, The Kansas City Star, Mo.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

F, TM, 7203, HMC, 7267, NSANY, 7201, RNO, HYMTF, BMW, DCX, GM, DJ,

Source: The Kansas City Star (Kansas City, Missouri)

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