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Job Growth: Ford plant will have to cut jobs


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DEARBORN, Mich. - Ford Motor Co. plans to cut up to 30,000 jobs and shutter 14 plants in a sweeping restructuring that the nation's second biggest automaker hopes will tackle declining market share and rising costs that led to hefty losses in its North American operations.

 

Ford shares rose on Monday's news, indicating some investors were pleased with the long-awaited "Way Forward" plan as well as the company's larger-than-expected $124 million overall profit in the fourth quarter. Union leaders called the planned cuts "extremely disappointing."

 

Ford shares rose 42 cents, or 5.3 percent, to close at $8.32 on the

New York Stock Exchange.

 

Ford said the plan will restore profitability by 2008. But some analysts said the plan was short on details, leaving them uncertain if it would boost Ford profits as the company struggles with aggressive competition, higher gasoline prices, rising costs for labor and raw materials and a junk credit rating. Ford named only five of the plants it plans to close.

 

"It's a step forward in the culture of Ford. Whether it translates into increased profits remains to be seen," said Brian Johnson, an auto analyst with Sanford Bernstein.

 

The cuts represent up to 25 percent of Ford's North American work force of 122,000 people. Ford has approximately 87,000 hourly workers and 35,000 salaried workers. In addition, Ford plans to cut 12 percent of its corporate officers in the next two months.

 

Ford's St. Louis plant will be the first plant idled, in the first quarter of this year. A plant near Atlanta will close at the end of this year and a plant in Wixom, Mich., will close in the second quarter of 2007, according to Ford Americas President Mark Fields, the architect of the plan.

 

Other plants to be idled and eventually closed through 2008 are Batavia Transmission in Ohio and Windsor Casting in Ontario. Ford will choose later this year two more plants to be idled. The company also will reduce production to one shift at its St. Thomas assembly plant in Ontario. All of the plant closings and job cuts are scheduled to be completed by 2012.

 

"These cuts are a painful last resort, and I'm deeply mindful of their impact," Chairman and Chief Executive Bill Ford said in announcing the cuts. "In the long run we will create far more stable and secure jobs. We all have to change and we all have to sacrifice, but I believe this is the path to winning."

 

In addition to the facilities named Monday, analysts also have predicted assembly plants in St. Paul, Minn., and Cuatitlan, Mexico could be at risk for closure because of the products they make.

 

Under the company's existing contract with the

United Auto Workers, workers at the idled plants will continue to get most of their pay and benefits until a new contract is negotiated next year.

 

Ford also plans to build one plant in North America, but Fields wouldn't say where it will be located. He would only say that the plant must be a low-cost operation.

 

UAW President Ron Gettelfinger and Vice President Gerald Bantom expressed disappointment over the plan.

 

"The impacted hourly and salaried workers find themselves facing uncertain futures because of senior management's failure to halt Ford's sliding market share," they said in a statement. "The announcement has further left a cloud hanging over the entire work force because of pending future announcements of additional facilities to be closed at some point in the future."

 

The pair said Ford should be trying to gain market share, rather than aligning production capacity with shrinking demand for the company's vehicles.

 

Fields said Ford's North American plants have been operating at about three-quarters of their full capacity.

 

"That is clearly unsustainable," Fields said. He said Ford's actions will reduce assembly capacity by 1.2 million vehicles, or 26 percent, by the end of 2008.

 

In addition to the job cuts, Ford said it plans to achieve $6 billion in material cost savings by 2010 as part of its restructuring. It also plans to revitalize its Ford, Mercury and Lincoln brands by giving them more distinct identities and relying less heavily on costly incentives.

 

Earlier Monday, Ford reported earnings of $2 billion in 2005, down 42 percent from last year's profit of $3.5 billion. It was the third straight year the automaker has reported a profit, but gains in Europe, Asia and elsewhere were offset by a loss of $1.6 billion in North American operations.

 

The latest results included a 19 percent increase in its overall profit to $124 million, or 8 cents a share, in the fourth quarter thanks to the sale of its Hertz Corp. rental division and improved profits for its luxury brands. That was despite a loss of $143 million in its North American operations, an improvement from a loss of $470 million the same period a year ago.

 

Ford said it would no longer provide earnings guidance beginning in 2006.

 

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

 

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.

 

Fields said half the jobs Ford 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.

 

In Wixom, 18-year veteran James Crawford said he is too young to retire and might not have enough seniority to get hired at another plant.

 

"This really hits me hard," said the 39-year-old car painter, who listened to the announcement on the radio in a white Ford Probe parked across the street from the plant. "It looks like I'm starting over."

 

During the 2007 labor negotiations, Ford will almost certainly try to eliminate the unparalleled job protection that lets hourly workers continue to collect wages and benefits when there is no longer any work for them, said Gary Chaison, a professor of industrial relations at Clark University. The UAW has vowed to keep those protections in place.

 

"The announced plant closings and future announcements are the subject of ongoing discussions with Ford," Gettelfinger and Bantom said. "Certainly, today's announcement will only make the 2007 negotiations all the more difficult and all the more important."

 

Ford and its larger rival, General Motors Corp., have been hurt by falling sales of profitable sport utility vehicles, growing health care and materials costs and restrictive labor contracts. GM announced a similar restructuring plan in November that will shave its work force by 30,000 and close 12 North American facilities.

 

Ford also has seen its U.S. market share slide as a result of increasing competition from foreign rivals. The company suffered its tenth straight year of market share losses in the United States in 2005, and for the first time in 19 years, Ford lost its crown as America's best-selling brand to GM's Chevrolet. Ford sold around 2.9 million vehicles for a market share of 17.4 percent in 2005, down from 18.3 percent the year before and 24 percent in 1990.

 

"It's a competitive shootout like we've never seen before," said Fields, who said the number of vehicle nameplates in the U.S. market will reach 300 by the end of the decade, up from 215 in 2002.

 

The restructuring is Ford's second in four years. Under the first plan, Ford closed five plants and cut 35,000 jobs, but its North American operations failed to turn around. Bill Ford said this plan makes far more dramatic changes, including changing a stifling corporate culture and focusing more heavily on consumer demands.

 

"We're going to be a big company that thinks like a small company," he said.

 

___

 

AP Business Writers Harry Weber in Hapeville, Ga. and Adam Geller in New York, and Associated Press Writer Tom Krisher in Wixom contributed to this report.

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Originally posted by Aggie2008

American car companies cannot compete with the engineering and pricing of foreign models.

 

Japan and Germany produce better cars at the fairly same price as their American counterparts.

The UAW has driven labor costs of domestic automakers through the roof. The average labor cost per vehicle of GM and Ford compared to Toyota is why we can't compete! :w00t:
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You are right . . . Toyota vehicles overall better quality than GM and Ford. I worked for GM in management for a year after I retired from the AF and Toyota was considered the "gold standard" of the competition. Toyta was at or near the top of most of the J.D. Powers ratings. ;)

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Voted4, the only reason I know so much about the unions is because I held government contracts for several regions with National Labor Relations Board. NLRB, if you didn't know, are the people that decide on what's right between employers and unions. Now, I'm here to tell you, I've seen some pretty far-fetched things these unions do, and if the people knew that were paying them their fair share every month, it'd blow their mind, not to mention how they literally prey on the uneducated and minorities.

 

Granted, there are employers that aren't doing the right thing, take the mining industry where we've seen so many things happen to recently, that's a prime example of an employer not doing what they need to be doing, as far as safety.

 

But you take an employer, who has to decide on hiring, and you've got two guys - one is a union, what they call, a buster, who hasn't worked say in the last couple of years, and another guy that's just your average Joe wanting to put food on the table. The union will file in a heartbeat against an employer if the buster isn't hired. And guess what, they'll win every single time, because they were union.

 

Ohhh, don't even get me started on this.... I'm so glad I don't do that work anymore!

 

P.S.: I'm not jumping on you, just trying to explain some things that even I didn't know about until I got into that business.

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Well, you certainly provided me with some information that I had no idea about. I'm not pro-Union by any means.

 

Heres what I think the 5 causes for GM's misfortune's are, in any order...

 

1) the Unions. They take and take and take and take and take. Unions had their time and place

2) The fact that GM does not make cares that are reliable anymore

3) Overproduction

4) The rising cost of health care

5) Horrible customer service

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Voted4, I totally agree. Funny, I used to be a union member when I worked for the railroad.

 

Check this out - you'll get a kick out of this.

 

The railroad does stuff called investigations when the guys mess up. I was the reporter/transcriptionist, whatever you want to call it. One of the Asst. Trainmasters (non-union) had taken a hearing, and I had did it in shorthand and backed it up with a tape recorder. When I got through with the transcript, this little red-headed woodpecker came in here and started hollering at me, telling me to change the transcript, that that's not what the guy said... I told him, yes, it was, it's on the tape. He wanted to change it, because he knew he could fire the guy (union) that way.

 

He got so red-faced screaming at me, and I'm sitting there calmly telling him nope, I'm not changing it, that's my signature on there. Superintendent calls us both in there and tells us that if there's any investigations going on, we have to go, and we needed to get over this and told me to change the transcript - said, nope, I'm not changing it. Then superintendent starts screaming. I told them both I had a doctor's appointment and just left - came back around lunch time when everybody was gone, got all my stuff, packed my car and left a note on the trainmaster's desk that said I resigned and if they change the transcript, I'll notify the union - what they didn't know is I faxed a copy of it to the General Manager in Dallas.

 

Next morning I get a call from the GM - he asks what happened, I told him, asked me to come back to work - told him, no, I wasn't working for people like that, but if they changed that transcript, I was calling the union - he advised me they wouldn't. Five minutes later, I get a call from the union just begging me to file charges on the railroad, etc., told them no, I quit, period, and I didn't do stuff like that.

 

Now, in the meantime, my Dad worked for 'em and was in the same building - Dad kept coming home telling me what all was being said and how the bosses were so scared I'd file, blah, blah. I was 22 at the time.

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Originally posted by parentofredheads

KirtFalcon, you are exactly correct - it's the unions that are the downfall of the American car manufacturers. That, and rising gas prices - everybody wants something smaller, better gas mileage and that will last longer.

 

 

Agreed.......I think Ford and the other major US car producer's are beginning to realize the hard way that what the average US citizen wants now is fuel efficiency and lower cost.......As for me, personally, when I can afford a new car, it will not be a ford, or chevy, etc......Instead, I will purchase either a Toyota Corolla, Camry or the Volkswagen Jetta because of the price and the fuel efficiency........

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I drive a 2005 Ford F150 4x4. My wife drives a 2002 Mercury Mountaineer Limited Edition.

 

We have both been very happy with both of them.

 

But, I did seriously consider the Nissan Titan before buying.

 

Don't know what this has to do with anything but...

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Guest Sideliner
Originally posted by parentofredheads

Voted4, the only reason I know so much about the unions is because I held government contracts for several regions with National Labor Relations Board. NLRB, if you didn't know, are the people that decide on what's right between employers and unions. Now, I'm here to tell you, I've seen some pretty far-fetched things these unions do, and if the people knew that were paying them their fair share every month, it'd blow their mind, not to mention how they literally prey on the uneducated and minorities.

 

Granted, there are employers that aren't doing the right thing, take the mining industry where we've seen so many things happen to recently, that's a prime example of an employer not doing what they need to be doing, as far as safety.

 

But you take an employer, who has to decide on hiring, and you've got two guys - one is a union, what they call, a buster, who hasn't worked say in the last couple of years, and another guy that's just your average Joe wanting to put food on the table. The union will file in a heartbeat against an employer if the buster isn't hired. And guess what, they'll win every single time, because they were union.

 

Ohhh, don't even get me started on this.... I'm so glad I don't do that work anymore!

 

P.S.: I'm not jumping on you, just trying to explain some things that even I didn't know about until I got into that business.

 

The NLRB is the biggest anti-worker organization in the world....

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Guest Sideliner

Some Toyota.s are Union made. The corolla and tacoma are union made.The new truck plant in San Antonio is being built with Union labor and the company has already agreed to man the plant with UNION labor.

 

Reasons for downfall of American carmakers.

 

1. Currency fixing. ( Adds 10, 000 to price of some models )

2. 36,000 mile warranty.s

3. Not much to choose from.. ( New Models are a joke )

4. Hanging on to big trucks and Suv.s GM has 15 new models. 13 are trucks and suv's

5. Gas mileage is a joke.

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My great-uncle was a Union boss his whole life. But he wasn't your stereotypical one, and he was from a different time. When needed, they fought for the rights of workers. But he was out overseeing a job, and one of the guys in his union was not doing a good job, or had been lacking in the performance department, he would give them one shot to shape up or they were fired. He didn't want these type of people in his union.

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i dissagree on the pricing problem between the forgien and the domestics. we've got both types in our fleet. or we've had. the toyotas, fords, nissans and GM's that we've had have all be within a thousand or so dollars of each other for years. when you compare apples to apples. in other words basicly equally equipped trucks.

 

over the last two years we've replaced every domestic in our fleet with the exception of one with a toyota or a nissan. and trust me, the fords and chevy's equally equiped would have cost substantialy less. we spent more money for the trucks we have now because we wanted more reliability and better long term service.

 

plus the toyotas and the nissans are just better trucks all the way around. they ride better and handle better. i was going to buy a ford again in 04' just like i always had but to get the 4x4 off road and towing package in a half ton, i'd have had to bought a step ladder to reach over the side of the bed to get a wrench out of it. ford, chevy an dodge have gotten out of the work truck business and have started creating family sedans in truck form. they're to big, to wide, to bulky feeling on the road and to much extra stuff on them to make them serious functionaly work trucks.

 

i could have spent the same 30K on a ford or chevy but instead i opted for the toyota. and actually spent a couple of grand more on it. but it absolutly the best ridng, best handling truck i've ever had. and you know it gets the worst miliage of any truck i've had since they late 70's. 13 on a good day.

 

you'll just have to belive me when i say that i always bought american 100% of the time. thought i was doing my part to help the country but i just can't after this many years continue to buy ain inferior product.

thats my opinion anyways.

 

it's not the price, it's the truck!!

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Rabfan, right before Christmas we bought our son a truck, of course, it was used. I kept looking at the Nissans, etc. and saw what their gas mileage was and I was totally shocked. Their resale price was like 3 to $4,000 more than a truck, in my opinion, of the same value. In my son's case, I'm looking for something heavy.

 

We're a Dodge family, have been for a long time. So we got him a Dodge 4x4 half ton - it's not raised, and it's just a tad bit higher than my one ton. Get this, with my one ton, I get 21-22 mpg. When I'm hauling the 38 foot horse trailer, I get around 13. Son gets around 18-20 with his truck. I usually trade like every six years, but I might have to make this one last 'cuz I'm not real keen on spending $40,000 on a new truck.

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