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U.S.A.:Ford gains right to move jobs

UAW contract gives greater flexibility to relocate idled workers

By Mike Hudson / The Detroit News

Plant closing timetable

Ford released the final timing for several plant closings on Thursday.
The details: Site Employees Closing date
Dearborn Vulcan Forge 88 Year-end
Cleveland casting 185 Year-end
Edison, N.J. 863 First quarter 2004
Lorain, Ohio 1,640 Phase out through 2007
Source: Ford

DEARBORN -- Ford Motor Co., preparing to close three U.S. parts factories and two assembly plants, won greater freedom to redeploy laid-off and idled workers under a new labor contract signed with the United Auto Workers union.

The flexibility to move laid-off workers to other plants, as needed, is expected to save the automaker millions of dollars annually in lost productivity. In the past, Ford and other automakers have kept factories running almost at any cost, because laid-off workers made 90 percent of their base pay.

Privately, Ford officials are lauding the more flexible rules as a game-changing coup. Publicly, they have been careful not to trumpet the changes as a victory over the UAW.

In a conference call Thursday, Ford's vice president for labor affairs Dennis Cirbes said Ford will redeploy its pool of idled workers as needed depending on sales over the next four years.

"It depends on customer demand," he said. "We're aligning manufacturing capacity with customer demand."

Ford currently has 600 idled workers, with the number expected to rise sharply as the automaker closes factories and eliminates production shifts. Idled workers will still receive 90 percent of their normal pay during an initial 48-week period, and 100 percent of wages for the duration of the contract. Based on the $70,200 average salary of a Ford UAW assembler, activating those 600 workers would eliminate more than $42 million in lost productivity per year.

As part of a sweeping turnaround announced in 2001, Ford is slashing 12,000 production jobs across North America and cutting 1 million units of production capacity in an effort to grow its profits.

Ford lost $6.4 billion in 2001 and 2002, but has made $1.3 billion so far this year.

Under previous union contracts, Ford and other Detroit automakers were limited by how far they could require laid-off workers to relocate.

But under side letters attached to the new national contract between Ford and the union, the company can offer transfers to virtually any of its 72,500 workers, as well as to Visteon Corp.'s 21,000 workers, if they can't find interest among laid-off or idled workers.

Idled and laid-off workers would then qualify to fill any positions left by workers who transfer from plants within 50 miles of their last job site.

Chrysler, GM also gain

DaimlerChrysler AG's Chrysler Group and General Motors Corp. also secured greater freedom to relocate idled workers, helping them close a costly productivity gap with foreign rivals.

"The companies are looking for ways to support short-term production increases within a plant in a more efficient manner," said Richard Block, labor professor at Michigan State University. "It may not be exactly what the union wanted, but the workers will have job security" in a tough auto market.

GM's tentative contract, scheduled to be ratified by workers Saturday, includes a beefed-up relocation package for workers who move further than 50 miles to fill job openings. Under the plan, workers would receive a $5,000 signing bonus immediately, another $15,000 paid within three weeks of signing on at a new plant, and $5,000 after completing a year of service at the new plant.

Plant closings

On Thursday, Ford released a timeline for closing four plants, including Vulcan Forge in Dearborn and Cleveland Casting by the end of the year, and an Edison, N.J., truck assembly plant during the first quarter of 2004. The closures will affect around 3,000 jobs.

Ford's Woodhaven forging plant is also slated for possible sale or joint venture.

Ford's St. Louis assembly plant -- which makes the Ford Explorer, Mercury Mountaineer and Lincoln Aviator sport utility vehicles -- will drop one of its two production shifts, affecting an undisclosed number of the plant's 2,700 workers. The St. Louis factory had been scheduled to close before contract talks began in July, but the union eventually agreed to close a Lorain, Ohio, van plant instead, and move many of its 1,600 workers to a nearby plant in Avon Lake by 2007.

Ford will continue to maintain 14 assembly plants, 31 parts manufacturing plants and 21 parts distributions centers after the closures are complete.

Market share

Wall Street's response to Ford's restructuring plan was mixed.

"I just don't see how they gain efficiency by running plants on one shift," said Stephen Girsky, analyst with Morgan Stanley in New York.

Ford's U.S. market share has fallen from 25.7 percent in 1995 to 19.5 percent this year, due to stiff foreign competition.

To cut costs and increase efficiency, Ford officials aim to cut 1 million units of capacity from the automaker's North American manufacturing operations.

Analysts remain divided on whether the 2003 UAW contract will enhance the competitiveness of Detroit's automakers, with many arguing that only improvements in Big Three products will help stave off foreign competition.

"The ability to close a plant and move workers around is important, but it really isn't going to mean anything unless the Big Three start making cars that people want," said Daman Blakeney, auto analyst at Key Bank's Victory Capital Management investment firm in Cleveland. "It will be a stretch to assume that an improvement in the labor agreement will be the end-all solution to their problems."

But Ford officials remain confident the new UAW deal will put the automaker on a more solid foundation.

"All of this helps us adjust capacity and meet customer demand, and in the process we're becoming more efficient," said Roman Krygier, head of Ford's manufacturing operations.

"Unfortunately, when you reduce capacity and improve efficiency, people are affected and jobs are eliminated."

My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....
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