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US:Ford cuts may not be enough to turn around North America business

Ford cuts may not be enough to turn around North America business


DETROIT -- Ford Motor Co. is poised to close plants and cut jobs in North America, but analysts wonder if it will be enough to turn around the money-losing division.

"Whether longer term that actually makes a difference, I have questions about that," said Argus Research group analyst Kevin Tynan.

Ford needs wage and benefits cuts from the United Auto Workers union to compete with Asian rivals, he said.

"If you line up Ford with Toyota, let's say, even if you put them at the same capacity in the U.S., it's still costing Ford more to build here because of the compensation package," Tynan said.

Ford has said it would unveil in January a restructuring for North America, dubbed "Way Forward", which CEO Bill Ford Jr. has said would include plant closings.

Ford is likely to close at least five assembly plants in North America to bring capacity in line with demand, said Steven Szakaly, economist at the Center for Automotive Research in Ann Arbor, Mich.

Like General Motors, Ford has seen its margins squeezed by soaring health-care and raw material costs, and a decline in U.S. market share. So far this year, Ford's North American unit has lost more than $1.4 billion before taxes.

GM said last week that it would cut 30,000 jobs through 2008 and close 12 facilities to reduce excess capacity.

Ford's plants in St. Louis, Atlanta, St. Paul, Minn., Wixom, Mich., and Cuatitlan, Mexico, are among the most vulnerable, analysts said. They employ around 7,900 people, roughly 6.5 percent of Ford's North American work force.

Ford spokesman Tom Hoyt declined to address the subject of plants that might be closed, saying plans had not been finalized.

Last month, Ford said it planned to eliminate 4,000 salaried jobs, or 10 percent of its North American white-collar work force, as part of the plan.

The company launched a multi-year restructuring program in 2002 that included 35,000 job cuts, seven North American plant closings and elimination of unprofitable models.

Ford's North American head Mark Fields is expected to present Bill Ford with the plan later this month.

The company's Atlanta plant makes the Taurus sedan, slated to be phased out in early 2006. No new products have been announced for that plant.

Ford's St. Louis assembly plant, which makes the Explorer and Mountaineer SUVs, is down to one shift. Sales of those SUVs, which are also made at Ford's Louisville, Ky., plant, have declined 30 percent and 27 percent respectively this year

Ford's U.S. sales have fallen for all but two of the last 18 months. The company's sales fell 15 percent in November.

"If they don't get their sales up, it's not going to be enough," said Efraim Levy, equity analyst at Standard & Poor's. "There is going to be ongoing restructuring."

Tynan said unless the automaker makes new vehicles that people want to buy, Ford after the restructuring will be a "struggling company that is a little bit smaller."

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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