Re: US:Report: Ford likely to close five North American plants
Ford's secret deal
BY SARAH A. WEBSTER, MICHAEL ELLIS and GINA DAMRON
FREE PRESS BUSINESS WRITERS
While workers at Ford Motor Co.'s Wixom Assembly Plant cling to new hints that their plant will be spared in Ford's next round of cost cuts, the automaker revealed this week that it reached a secret agreement with the State of Georgia to expand a plant instead of closing it.
Ultimately, though, neither plant may be out of danger considering the automaker's dismal sales performance.
Ford, identified in court documents as "XYZ Corp.," has reached a secret 30-page preliminary agreement with Georgia to keep its Atlanta Assembly Plant open and expand it, in return for incentives such as grants, tax breaks and road improvements.
The deal was revealed during a court hearing in Georgia on Monday.
The incentive package, which remains under a court seal, needs to be approved by the state General Assembly.
Georgia's development office has agreed to ask the Legislature to change its laws governing tax breaks if Ford's board signs off on the deal, according to the Atlanta Journal-Constitution, which previously identified XYZ as Ford.
Ford's board of directors is slated to meet this upcoming week.
Workers at the Wixom Assembly Plant are hopeful that if the Georgia deal falls through, their facility could be spared for closure when Ford announces its "Way Forward" cost-cutting plan in January.
Atlanta builds the Ford Taurus and Mercury Sable; the Wixom plant builds the Ford GT and two Lincoln sedans, the Town Car and LS.
Ford officials refused to comment publicly on speculation about its plants, saying the company's restructuring plans will be announced in January.
Workers are trying to remain hopeful.
"I'm optimistic that it's true," said Paul Brown, 53, of Plymouth, who has worked at the Wixom plant since 1974.
Meanwhile, some automotive experts said they wouldn't be surprised to see Ford close both plants, despite suggestions in the Wall Street Journal and Automotive News that there will be an either-or choice between Atlanta and Wixom.
The Free Press already has identified other plants that are likely closure targets, including those in St. Louis, St. Paul, Minn., and Cuautitlan, Mexico.
Ford has far more plants than it needs, especially considering its plummeting sales.
Sales for the Dearborn-based automaker are off 4.6% for the year through November.
What's more, Ford has the capacity to build 4 million vehicles and sells less than 3.4 million a year.
When an automaker's plant doesn't produce all the vehicles or parts it can, the plant equipment is not being used efficiently and isn't paying for itself. It's the equivalent of an employer paying workers full-time pay for part-time work.
That is one of the factors causing problems in Ford's North American automotive operations, which have posted a $2.1-billion pretax loss through September.
Erich Merkle, a senior auto analyst with IRN Inc., an automotive research firm in Grand Rapids, said Ford has been "teetering back and forth" between Atlanta and Wixom. But, he noted: "I think it would probably make more sense to close both."
Ford never has announced plans to close the sprawling, 4.7-million-square-foot facility in Wixom. However, autoworkers there and experts who study the industry have long expected that the plant would be shuttered soon.
Some workers took news reports that their plant might remain open with a grain of salt.
Richard Abner, 48, of Romulus, has worked at the Wixom plant for 32 years and said he is suspicious of news Wixom will remain open.
"We don't believe it," he said. "We know something devastating is going to come down."
Even UAW Local 36 President Dave Berry was skeptical.
"It's a good rumor, but it's just that, a rumor."
Sandy Ring, chief operating officer of the Michigan Economic Development Corp., said he was "heartened" by the suggestion that Ford might keep Wixom open, but even he was uncertain how likely such a move would be.
"We've always been in talks with Ford," he said about keeping plants open in Michigan.
In Georgia, meanwhile, the likelihood that the incentive agreement will be approved also seemed sketchy, especially since details have not been publicly revealed to taxpayers.
Georgia officials have been negotiating the deal with Ford for 18 months, according to the Atlanta newspaper.
One of the problems facing the Atlanta plant, which is located in Hapeville, Ga., is that it is landlocked and does not have good access to parts from suppliers -- which might be addressed in the incentive package.
General Motors Corp. recently announced it would close its Doraville, Ga., plant, which employs more than 3,000 workers. The threat of also losing the Ford plant might inspire taxpayers and lawmakers to back an appealing incentive package.
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.....