US:In Wixom, workers at Ford await fate
In Wixom, workers at Ford await fate
BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER
Moufid (Moe) Leon says he hears a different story almost every day from the workers who stream into the restaurant he owns across the street from the Wixom Assembly Plant, the 48-year-old facility where workers build the Ford GT, Lincoln Town Car and Lincoln LS.
Many of the patrons at Leon's, where lunch specials are $5.95, work at the plant, judging from the plastic Ford badges clipped onto their pockets, and Leon says he frequently asks them: "Any news?"
"Now, we hear by April," he said of the latest date when workers fear the plant will close.
Ford Motor Co. hasn't publicly announced any plans to close the sprawling, 4.7-million square-foot facility, which is located on a prime piece of real estate just off I-96, on the outskirts of the booming suburb of Novi.
But rumors and worry are increasingly common in Wixom and in other Ford plant cities -- St. Louis, St. Paul, Minn., and others, even Cuautitlan, Mexico -- since Chairman and CEO Bill Ford said that the automaker will announce another round of cost-cutting and reorganization on Oct. 20. Ford also delivers its third-quarter earnings results on that date, and Ford officials have refused to discuss details before then.
Ford has more than 49,000 workers in 19 assembly, 8 stamping, 10 power train and 5 casting plants in North America. And several auto analysts and industry insiders interviewed about Ford's manufacturing capacity throughout North America say they expect Ford to close at least three, and possibly four, of them. Such a move could affect 3,800 workers or more.
While Ford's plants in Wixom and St. Louis are widely expected to close, another plant, in Cuautitlan, seems a likely target for closure because of its old age, low production levels and lack of new products to build. Ohio workers, meanwhile, may see more layoffs, too, when a plant in Lorain is closed in December and consolidated with another plant in Avon Lake.
On Wednesday, Bill Ford again signaled that changes to the company's plant operations are coming.
"There is no secret that in some parts of the world that our capacity is too great," he said. "We do find ourselves with the wrong footprint in some cases, and that's something we have to address."
It's easy to see why industry insiders see Wixom and St. Louis, which employ 1,560 and 1,445 workers, respectively, closing.
Production of the vehicles made in Wixom can easily be moved to an Ontario plant that builds large cars, while the Louisville Assembly Plant in Kentucky can easily pick up production of the Ford Explorer and Mercury Mountaineer that are now built in St. Louis.
"Wixom and St. Louis are gone," Catherine Madden, an auto analyst for Global Insight, a research firm in Lexington, Mass, concluded.
But even if those plants close, Madden and others said Ford would still be using too little of its overall plant capacity. They believe Ford must close at least one more plant to make itself respectably efficient and help stop its financial losses.
Ford used just about 86% of its plant capacity in 2004, according to the Harbour Report, the annual study of automotive manufacturing performance by Harbour Consulting in Troy. In all, Ford has extra capacity to build 800,000 vehicles in its assembly plants, Brian Johnson, an analyst at Sanford C. Bernstein & Co. in New York added.
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.
Most automakers aim for an efficient system where they use 90% or more of their capacity.
In St. Louis, hope that the local plant will be spared is laced with sober realities about Ford's need to become more competitive. There is also a sense that St. Louis was lucky to keep the plant, in suburban Hazelwood, open this long.
Ford announced in 2002 that it would close the St. Louis plant, but a last-ditch effort by local political leaders, which offered Ford $17 million in tax and training assistance, saved the plant. With SUV sales now waning, a rescue may not be possible this time.
Patrick McKeehan, project director for the Ford-Hazelwood Task Force, which was created to save the plant at the time, said he's been talking to Ford executives weekly and he's experiencing a case of déjÀ vu about the plant being on a closure list.
"We've been on the list before," McKeehan said. "Until the doors are shut, we still think we have a chance. We're not going to be surprised we might be put on a list."
There's also concern there about whether Ford, which posted a $907-million loss in its North American operations during the second quarter, will try to close plants before its national contract with the UAW expires in September 2007. The contract says the company will not close or spin off plants covered by the contract, but also notes that some conditions "could make compliance with this commitment impossible."
Meanwhile, the plant in Cuautitlan, north of Mexico City, which makes the Ikon car sold in South America and older F-Series trucks, could easily be eliminated, and perhaps more quickly than a UAW-organized facility, several experts agreed. Although it operates in a low-cost country, the car plant at Cuautitlan operated at just 45% of capacity last year, while the truck plant operated at 37% capacity, according to Harbour Consulting.
In Ohio, meanwhile, the fear is how deep layoffs will be when two plants are combined later this year.
Ford is making a $130-million investment to reconfigure its assembly plant in Avon Lake, which employs 2,100 workers and makes the Econoline, Ford spokeswoman Anne Marie Gattari said. Ford has already said it is closing its assembly plant in Lorain, which employs 1,580 and also builds the Econoline, and moving production to the Avon Lake facility.
Workers had already expected some layoffs in Lorain with the closure of one plant. But with more efficiency comes less need for workers, and Ford has not said how many jobs might be eliminated there when production at Lorain ends Dec. 23.
As a result of the changes, though, the State of Ohio has decided to not reward all of the financial incentives to Ford that it previously promised, said spokeswoman Maria Smith. She said Ford promised to retain a certain number of jobs and also bring new products to Avon Lake. In return, the state promised more than $25 million in grants and tax credits. Ford will now collect only a portion of that.
In St. Paul, Matt Kramer, commissioner of the Minnesota Department of Employment and Economic Development, said internal intelligence and regular discussions have the state and local officials believing that the plant, which builds the compact Ford Ranger pickup truck, will remain open.
"St. Paul, right now, still has a very vital role," agreed Michael Robinet, vice president of global vehicle forecasting for CSM Worldwide in Farmington Hills.
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.....