Ford Forums banner
1 - 3 of 3 Posts

· Registered
7,738 Posts
Discussion Starter · #1 ·
Ford to close 7 assembly plants, cut up to 30,000 jobs

Dale Jewett and Amy Wilson
Automotive News

DETROIT -- Ford Motor Co.’s “Way Forward” plan calls for shutting down seven assembly plants and seven parts plants and cutting between 25,000 and 30,000 factory jobs by 2012.

But the plan also calls for more vehicles with hybrid powertrains, profits in the North American auto business by 2008 and the addition of a “low-cost manufacturing site” in the future.

Ford officials would not give more details about the new plant other than to say that the plant would be located in North America and that low cost was the highest priority. Mark Fields, Ford's president of the Americas, would not rule out a U.S. location for the plant.

Some, but not all, of the details of the plan were laid out Monday by CEO Bill Ford, COO Jim Padilla and Fields.

“The Way Forward contains some strong medicine for the North American business,” Bill Ford said.

The automaker, whose North American vehicle operations posted a pretax loss of $1.6 billion in 2005, said the plant closures will cut its assembly capacity by 1.2 million units, or 26 percent, by 2008.

Investors were encouraged by the plan. At the end of trading on Monday, Ford stock was up 38 cents to $8.28 a share.

“Our plants are running at 75 percent capacity use,” Fields said. “That is clearly unsustainable.”

Seven assembly plants will close, Ford said. But the automaker named only three of them:

St. Louis, which builds the Ford Explorer and the Mercury Mountaineer SUVs. It will close in the first quarter of this year.

Atlanta, which builds the Ford Taurus. The plant will close late in 2006. Taurus production is set to end on Aug. 31, sources have said.

Wixom, Mich., which builds the Lincoln LS, Lincoln Town Car and Ford GT. It will close in the second quarter of 2007.

Ford will reduce production at the St. Thomas, Ontario, assembly plant sometime in 2007, said Buzz Hargrove, president of the Canadian Auto Workers. That will cut jobs at the plant from 2,500 to 1,300, he said.

"Our people are devastated," Hargrove said. "Remember we got hit pretty hard already by Ford. ... Their credibility is really challenged here."

With Monday's announced cuts, Ford is on track to eliminate close to 4,000 CAW jobs since mid-2004 when an Oakville, Ontario, truck plant closed, Hargrove said. In contract negotiations last year, the CAW agreed to the closure of a casting plant in Windsor, Ontario.

News of the shift cut at St. Thomas comes on the heels of a $200 million investment planned for that plant in 2007. Ford told the CAW on Monday that it would go ahead with the investment and a freshening of the Ford Crown Victoria and Mercury Grand Marquis, Hargrove said.

Of the seven parts plants to close, Ford named only two:

The Batavia, Ohio, transmission plant that builds four-speed automatics used in the Ford Escape, Mercury Mariner and Mazda Tribute SUVs. It is also Ford’s only plant that builds continuously variable transmissions used in the Ford Five Hundred and Mercury Montego sedans and the Ford Freestyle sport wagon.

A casting plant in Windsor, Ontario.

In a statement, UAW President Ron Gettelfinger said the plant closings leave "a cloud hanging over the entire workforce" and will make the 2007 contract negotions "all the more difficult and all the more important."

He added, "Like the 2002 plan, Ford's new Way Forward is based on cutting jobs and closing facilities to align Ford's production capacity with shrinking demand for Ford's vehicles. Then, as now, the focus should instead be on striving to gain market share in this competitive market by offering consumers innovative and appealing products."

The Way Forward plan, which was developed over the past three months by Fields and Anne Stevens, COO of the Americas, covers all facets of Ford’s business. Specifics include:

Ford said it would reduce its corporate officer ranks by 12 percent by the end of the first quarter. The departure of six or seven officers will be announced Tuesday, Jan. 24, said Joe Laymon, Ford group vice president of corporate human resources and labor affairs. Ford currently has 53 officers.

Steve Lyons, group vice president of marketing, sales and service, will be one of the departing executives, sources have said.

White-collar layoffs also will occur throughout this week, said Laymon. Ford says it will reduce 4,000 salaried jobs during the first quarter of 2006.

Ford will not offer any earnings guidance for the future. The reason, Ford officials said, is so that executives have a long-term focus that will lead to sustainable profitability.

Cuts in material costs of at least $6 billion by 2010.

Capital expenditures of $7 billion by 2006.

Vehicle pricing that is closer to transaction prices, with smaller rebates. Said Fields: “We’re committed to this, even if the competition backslides.”

Offering hybrid technology on half the nameplates in the Ford, Mercury and Lincoln divisions. Hybrid versions of the Ford Five Hundred and Mercury Montego sedans and the Ford Edge and Lincoln MKX sport wagons will arrive between 2008 and 2010. Hybrids will be offered on the Ford Fusion and Mercury Milan sedans in 2008.

Increased spending on products, with more frequent styling freshenings. Ford said it will spend more money on the F-series truck lineup. Mercury products will get more expressive design, and the brand will offer a “unique purchase experience,” the automaker said.

Greater use of global vehicle platforms, especially for cars and sport wagons, and more sharing of components.

· Registered
7,738 Posts
Discussion Starter · #2 ·

Ford slashes 28% of its work force in sweeping bid to save itself

Bill Vlasic and Bryce G. Hoffman / The Detroit News

DEARBORN -- Ford Motor Co. is staking its future on the success of a gut-wrenching restructuring of its North American operations that will dramatically downsize the No. 2 U.S. automaker.

Mired in one of the deepest crises in its 102-year history, Ford on Monday unveiled its long-awaited "way forward" plan to slash up to 30,000 manufacturing jobs, cut 4,000 salaried employees and shutter 14 factories -- including its assembly plant in Wixom.

"These cuts are a painful last resort, and I'm deeply mindful of their impact," Chairman and CEO Bill Ford said. "They're going to affect many lives, many families, and many communities."

The restructuring plan is Ford's most determined effort yet to stem deep losses in North America and beat back surging foreign automakers. Even so, some investors and analysts said Ford left key questions unanswered Monday and they remain skeptical that the automaker is moving quickly and aggressively enough.

Ford's announcement was another staggering blow to the traditional American auto industry, coming on the heels of the bankruptcy of auto-parts giant Delphi Corp. and moves by General Motors Corp. to cut 30,000 of its own hourly workers and close 10 plants.

Since 1979, Detroit's automakers have cut more than 600,000 jobs -- including about 80,000 since 2001 -- in a desperate bid to overcome huge legacy costs and troubled brands.

The central aspects of Ford's "way forward" plan were first reported Dec. 7 by The Detroit News.

Bill Ford said the plan represents nothing less than a cultural revolution and a declaration of war -- against not only Ford's competitors, but also its own change-resistant bureaucracy.

"Today, we declare the resurgence of Ford Motor Co.," Bill Ford said. "Here is what we will not stand for: incremental change, avoiding risk, thinking short-term, blocking innovation, tying our people's hands, defending procedures that don't make sense, and selling what we have instead of what the customer wants. In short, we will not stand for business as usual."

It was a message that scores of Ford employees invited to hear the announcement at a Ford design center in Dearborn greeted with enthusiastic applause. Ford's announcement, part of a historic retrenchment of the U.S. auto industry in the past year, drew throngs of local, national and international members of the media.

With its U.S. market share in a 10-year freefall, dropping to a low of 17.4 percent last year, Ford said Monday that its North American auto operations posted a pre-tax loss of $1.6 billion last year.

Ford committed to returning the business to profitability no later than 2008. "That's not a prediction. That's a promise," said Mark Fields, president of Ford's America's division, who oversaw the restructuring plan, which was hammered out by 50 people during 60 hectic days.

Ford also said it expects to cut $6 billion from its annual cost structure by 2010.

Production to be cut 26%

But fixing its core auto operations will come at a heavy price. According to the plan, Ford will reduce its North American production capacity by 1.2 million vehicles -- or 26 percent -- over the next six years. Ford currently has the factory capacity to build 4.8 million vehicles a year in North America using 43 parts, stamping and assembly plants, but it only sold 3.3 million last year.

The job cuts will be equally severe. The 25,000 to 30,000 factory cuts combined with the planned 4,000 white-collar cuts amount to up to 28 percent of Ford's 122,000-person North American work force. Ford has approximately 87,000 hourly workers and 35,000 salaried workers. And, given Ford's losses in North America last year, neither blue-collar nor white-collar workers can expect meaningful bonuses. Ford said half the jobs the automaker is cutting will be through attrition, while the rest will be through layoffs. He said the company plans to help workers using buyouts and possible placement in other plants.

Ford Chief Financial Officer Don Leclair said employee buyouts and other elements of the restructuring plan could cost the automaker around $500 million this year.

Ford also committed to reducing its 53 corporate officers by 12 percent by the end of the first quarter. Ford did not say which executives would be leaving, but one of them is expected to be Steve Lyons, group vice president over sales and marketing in North America.

"We will be making painful sacrifices to protect Ford's heritage and secure our future," Bill Ford said.

Industry analysts said the moves represent a realistic assessment of Ford's steadily declining share of the U.S. auto market.

"You have to praise their sense of realism, that they'll never get to a 25 percent share again," said David Healy of Burnham Securities. "They have got to do this to survive."

Some on Wall Street, though, questioned whether Ford has gone far enough given that Ford shareholders have suffered through an alarming drop in stock value in recent years. Shares of Ford gained 42 cents, or 5.3 percent, to close at $8.32 on the New York Stock Exchange Monday.

"We think (Ford) plans to be more aggressive with design and technology in its vehicles, to be faster in the refreshing of its vehicle lineup and to make added cost cuts that will help improve financial performance over the rest of the decade," said Efraim Levy, an analyst with Standard & Poor's Equity Research. "However, we do not believe the restructuring will meet all of Ford's objectives and we think that not all benefits will accrue to the bottom line."

Automaker looks long term

Ford said it would no longer provide earnings guidance beginning in 2006 -- a signal that it will focus on its long-term viability rather than quarter-by-quarter results.

"We can't succeed in the long run if we're focused only on the short term," Bill Ford said.

The massive restructuring comes four years after Bill Ford announced a similar plan to revitalize the company, which included some 20,000 job cuts and several plant closures. He noted the earlier plan was successful in returning the automaker to profit worldwide, but neither the goal of making $7 billion a year in pre-tax profits by mid-decade or stabilizing U.S. market share was achieved.

The new round of job cuts and plant closings pose a direct challenge to the leadership of United Auto Workers union, which is already bracing for a fight on similar issues with GM and Delphi.

UAW President Ron Gettelfinger blasted Ford's plan as "extremely disappointing" and "devastating news for the many thousands of hard-working men and women who have devoted their working lives to Ford."

Moreover, Gettelfinger said a showdown over the wholesale elimination of jobs and factories is coming at the Big Three-UAW national contract talks in 2007.

"Certainly, today's announcement will only make the 2007 negotiations all the more difficult and all the more important," Gettelfinger said.

But Ford can ill afford to continue operating at less than 80 percent of its manufacturing capacity, Fields said.

"The hard but simple reality is that Ford has the costs, capacity and staffing of a company that is much larger than our sales and market share can support -- even under the best of conditions," Fields said.

A total of 14 Ford manufacturing facilities, including seven vehicle assembly plants, will cease production by 2012. The first wave includes the idling of five assembly plants and two large component factories by 2008. Included among the shutdowns are assembly plants in Wixom; Atlanta, Ga.; and St. Louis, Mo.; a transmission plant in Batavia, Ohio; and a casting plant in Windsor, Ontario. In addition, Ford's assembly plant in St. Thomas, Ontario, will be reduced to a single shift.

Two more assembly plants will be added to the list later this year. In addition to the facilities named Monday, analysts also have predicted the assembly plant in St. Paul, Minn., that makes the slow-selling Ford Ranger pickup. Ford said it was not ready to name the other plants that will close.

Low-cost plant is in works

The automaker also said it plans to build a new low-cost manufacturing site in North America, but did not provide additional details.

The cuts will have devastating consequences in company towns such as Wixom, where 1,567 workers face an uncertain future when Ford's 49-year-old assembly plant shuts down next year.

Wixom worker Venessa Seldon, 35, got an urgent phone call from her teenage daughter Monday following Ford's announcement.

"She called from school and said, 'Mom, are we broke?' I told her that we'll be OK," said Seldon, who works on car radiators at the Wixom plant where the Lincoln LS, Lincoln Town Car and Ford GT are built.

Seldon, who has three daughters, was among a handful of employees who trickled into Leon's Food and Spirits restaurant across the road from the 4.7 million-square-foot plant where Ford nameplates have been produced since 1957. Up until the last minute, she thought factory workers had a chance.

Michigan Gov. Jennifer Granholm said the Wixom plant closing is another example of how the lack of a U.S. industrial policy on health care costs and balance-of-trade issues is crippling American automakers.

"This is a story we have heard over and over again in Michigan," Granholm said. "We're going to do everything we can to help these people, but I hope this gets Washington to take notice that we have a problem."

Ford's problems in the market have been well-documented. Sales of its large sport utility vehicles have tanked due to rising gas prices, and its passenger cars had until recently fared poorly against offerings from Japanese and European companies.

Still, Ford remains profitable, unlike GM.

The company said Monday that it earned $2 billion worldwide in 2005 on revenues of $178.1 billion, but continued to bleed red ink in its North American business.

The "way forward" plan highlighted Ford's future product strategy. The critical component, Fields said, will be strengthening the company's Ford, Mercury and Lincoln brands.

Carmaker keeps all 3 brands

Killing one of the brands was considered, but ultimately rejected, Fields said.

"Ford is a stronger company with all three brands but if -- and only if -- each appeals to a different set of customers," Fields said.

He said all three brands had been burdened by conservative designs and slow product-development cycles. By utilizing Ford's global vehicle platforms, Fields said the average age of a Ford product in 2008 will be 3.2 years, compared to 4.4 years currently.

Ford will also accelerate its development of small cars, crossovers and hybrids. Fields said that hybrid versions of the Ford Five Hundred and Mercury Montego sedans, and the Ford Edge and Lincoln MKX crossovers will debut between 2008 and 2010. Ford also revealed that the upcoming Lincoln MKS sedan will be built on the same platform as the Five Hundred and Montego.

Still, the cost-cutting portion of the "way forward" will largely determine whether Ford will be healthy enough financially to pursue its product blitz.

Prior to the plan's release, some industry analysts wondered whether Ford downsizing would go far enough. Reaction from Wall Street was mixed after Monday's announcement.

"We expect management to bring capacity in line with demand by one million units, but question whether this will be enough, given continued declines in market share," Jon Rogers, an analyst at Citigroup, wrote in a research note.

Bill Ford conceded that cuts alone won't turn around the company his great-grandfather founded more than a century ago. "You can't cut your way to success," he said.

"Our 'way forward' is not a retrenchment. It's about taking back our future," Fields declared, echoing his boss. "We are ready to reclaim our place as America's car company."

· Registered
7,738 Posts
Discussion Starter · #3 ·
FAQ: Here are answers on Ford's new plan

The Detroit News

Q : What did Ford Motor Co. announce on Monday?

A : The company will close or idle 14 facilities over the next six years, shedding up to 30,000 jobs, and plans to build a "low cost" manufacturing plant. Five facilities were identified to be closed eventually. They will be idled by 2008. Ultimately, Ford intends to reduce output by 1.2 million vehicles by the end of 2008 to better match supply with demand. Additionally, the company will cut its white collar work force by 4,000 by the end of March and reduce the number of top officers by six or seven.

Q : Other than idling plants, did Ford make any other announcements?

A : Yes. Ford will consolidate the number of parts it uses -- such as brakes and underbody parts -- to save money. Ford also plans to cut parts and material expenses by $6 billion by 2010 and leverage global resources to bring new models to market faster. Ford also intends to adopt "straightforward pricing" by moving away from rebates and steep discounts as incentives to buy a vehicle. The company also intends to do more to attract new buyers by entering new products segments, such as subcompact cars, and offering additional hybrid models for the Ford Edge, Five Hundred, Lincoln MKX and Mercury Montego.

Q : Why is it closing the plants?

A : Currently, Ford can produce more than it can sell. The overhead costs for operating a plant do not change very much whether a plant is working at 50 percent or 100 percent capacity. Ford's North American plants currently operate at about 75 percent of capacity. Ford's North American facilities currently have the capacity to build 4.8 million vehicles. It will cut that capacity to 3.6 million by closing the plants. The company sold 2.9 million vehicles in the United States in 2005.

Q : Which plants are closing?

A : Five plants were named; nine more, which will include at least two more assembly plants, will be closed in the coming years. St. Louis Assembly will be idled in a few months. Wixom Assembly will be idled by the summer of 2007. Other facilities slated to be idled, most likely by the end of 2008 are: Atlanta Assembly, Batavia Transmission, Windsor Casting. The other facilities to close will be named at a later time.

Q : What is the difference between idling a plant and closing it?

A : Due to Ford's contract with the UAW, most plants cannot be unilaterally closed by Ford without the union's consent. A plant that is idled is shut down and no additional production is done there, however, technically, it is not closed.

Q : Could there be additional cuts not mentioned during Monday's announcement?

A : Visteon Corp., formerly a part of Ford, returned 23 facilities and 18,000 employees, to Ford last year and was not included in current plans. Ford must still find buyers for the former Visteon plants. If the plan doesn't work and help Ford generate profits in North America by 2008, the company may need to make deeper cuts down the road.

Q : How many people will lose their jobs and how soon?

A : All told, Ford intends to reduce its work force by 25,000 to 30,000 people. This includes manufacturing employees and white collar workers. Factory workers will stop working when their individual plant is idled. About 4,000 white collar workers will be out of work by the end of March.

Q : What will happen to those who lose jobs?

A : Some workers will receive settlement packages, others will be offered early retirement. Under the company's current contract with the UAW, workers at the idled plants will continue to get most of their base pay and benefits until a new contract is negotiated in 2007.

Q : Does the UAW have to approve the restructuring plan?

A : The UAW will have to agree to some portions of the plan. Negotiations between Ford and the union begin in fall 2007.

Q : How will the restructuring plan impact retirees?

A : There are no planned changes to retiree benefits.

Q : What will this mean for Michigan's economy?

A : Over the short run, any time a factory closes, it is tough on the economy. When Wixom Assembly is shuttered, it will mean 1,500 people will be unemployed. More important for Michigan's economy will be if any of the remaining nine facilities to be named are in the state. Those closings could further exasperate any economic problems.

Q : Where can I learn more?

A : A number of organizations have information regarding the restructuring. The Ford Web site is and includes the entire plan. The UAW Web site is The Detroit News Web site is and offers additional information.
1 - 3 of 3 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.