Ford may cut 30,000 jobs

There a better article in the Detroit News but can't post from there.

The Board called this a "super plan".

DEARBORN-- Ford Motor Co. executives will present a restructuring plan to the company's board of directors today that calls for closing at least 10 assembly and component plants and eliminating 25,000 to 30,000 hourly jobs in North America within five years, according to people familiar with the plan.

The cuts would be deeper than many had expected, signaling the urgency of Chairman and CEO Bill Ford Jr.'s push to restore the automaker's ailing North American operations.

Bill Ford has promised the impending moves, expected to be announced Jan. 23, will affect all levels of the company. As such, the automaker will announce the departure of as many as seven top executives in the coming weeks, according to the people familiar with the plan.

The broad outlines of Ford's plan -- dubbed the "way forward" -- were approved by directors at an off-site meeting in October with top executives in South Carolina.

In meetings today and Thursday, Mark Fields, Ford's new president of the Americas division and the architect of the "way forward" plan, will walk board members through the fine points, including budget projections for 2006 and 2007, capital expenditure requests and other details, sources said.

Fields also will present his blueprint for revitalizing the Ford, Mercury and Lincoln brands, which includes a new strategy to attract young buyers for the Blue Oval brand.

"That scale of action by Ford would be perceived as a very aggressive right-sizing move and would go a long way toward Ford getting its cost structure back in line with its much-diminished market share," said Glenn Reynolds, an analyst with Credit Sights, a New York-based research firm.

Ford would not publicly comment on its plans. "Our work continues," said spokesman Oscar Suris. "These plans will be final when they're ready to be shared publicly."

Ford's upcoming turnaround plan appears to be more far-reaching than the one Bill Ford launched after he became CEO four years ago. That plan called for 20,000 job cuts in North America, several plant closures and the elimination of vehicles like the Mercury Cougar.

At the time, Bill Ford set a goal of making $7 billion in annual pretax profit by the middle of this decade. Ford has since abandoned that goal. The company is likely to earn about $2.5 billion this year after taxes, but has struggled with falling sales and deep losses in North America.

The new plan, which will guide the company through 2011, calls for 25,000 to 30,000 blue collar jobs to be eliminated in North America. Ford had 87,000 UAW-represented workers in North America at the end of 2004. It has about 11,600 union workers in Canada.

The cutbacks in the works at Ford appear to be similar in scope to those outlined last month by General Motors, which said it will cut 30,000 jobs and close nine plants.

Ford will make the case that its hourly work force won't be alone in accepting sacrifices. The automaker already has announced plans to cut about 4,000 salaried jobs in the first quarter of 2006 on top of 2,750 white-collar cuts made this year.

United Auto Workers President Ron Gettelfinger has made it clear that his members won't abide suffering cutbacks alone. Nevertheless, Ford's plan to close at least 10 assembly and component plants over the next five years in the United States, Canada and Mexico will be a bitter pill for the union.

Sources familiar with Ford's strategy said the decision about which plants to close has not been finalized, adding that Ford may only announce a few specific plant closures in January.

Those are likely to include Ford's assembly plants in St. Paul, Minn., and St. Louis, Mo. The St. Louis plant's prospects have been hurt by a dramatic decline in demand for Ford's once best-selling Ford Explorer SUV, which is also built in Louisville, Ky. The St. Paul factory produces the Ford Ranger pickup, which has not been redesigned in several years.

The fate of Ford's underused Wixom plant, the subject of much speculation in recent months, is still up in the air, as is that of Ford's Atlanta assembly facility.

Ford is likely to hold off on naming all the plants slated for closure. The company is already negotiating with state and local authorities around the country, and the outcome of those talks could go a long way toward determining which plants stay open and which ones close. However, Ford also wants to keep its options open in order to adjust to changing market conditions.

While Ford may not specify all of the plants it intends to close, it will estimate the amount of production capacity it plans to eliminate. Its goal is to boost capacity utilization to at least 95 percent. Global Insight Inc. estimates that Ford's North American factories are currently running at 72 percent capacity. Anything less than 90 percent is considered to be operating at a loss.

Ford cannot afford for its North American factories to operate inefficiently. Over the past year, Ford's pretax profits in North America have fallen from almost $1.8 billion in the first nine months of 2004 to a loss of nearly $2.2 billion for the same period in 2005. Ford, Lincoln and Mercury's share of the domestic market has dropped to 17.4 percent, compared to 25.6 percent in 1995.

'A super plan'

On Tuesday, Ford board member Kimberly Casiano told Dow Jones News Service that she and her colleagues will pore over the details of the proposal this week. "The plan is a super plan," Casiano said after speaking at a luncheon in Detroit.

She cautioned that the board may not approve every aspect of the "way forward" plan. "You can't always make every detail of a plan possible."

UAW Vice President Gerald Bantom said Tuesday that the details of Ford's restructuring plan will be released Jan. 23, but said he did not know the extent of Ford's planned cuts. "We're hoping that nothing happens," said Bantom, who heads the UAW's Ford bargaining unit. "But we know that's not going to happen."

Ford is already in negotiations with the UAW and hopes to receive concessions on health care costs similar to those the union recently negotiated with GM. Ford hopes a deal can be ratified by union members by the end of the year.

In a recent interview with the Detroit News, the UAW's Gettelfinger said he has had several meetings with Fields since he took over as head of Ford's Americas division in October and feels comfortable working with him.

Speaking at a press conference Tuesday, Gettelfinger said the UAW has hired an outside firm to review Ford's finances. "We're still in the process of analyzing the data," the union leader said.

Ford's restructuring announcement will come on the heels of a series of new product and brand revelations at both the Los Angeles and Detroit auto shows. The timing is designed to demonstrate that Ford's "way forward" plan is about not only closing plants and cutting jobs, but also expanding the company into new markets.

Fields' biggest challenge will be to stop Ford's 10-year market share slide.

Fields to detail plan Jan. 4

On Jan. 4, Fields is likely to outline Ford's new brand strategy in his keynote address at the Greater Los Angeles Auto Show. While the details are still being worked out, Fields is expected to outline a comprehensive strategy to attract young buyers to the Ford brand.

"Ford definitely needs a youth strategy," said Jim Sanfilippo, an analyst with AMCI Inc. in Detroit. "Ford can't continue to operate without more volume at the low end of the market."

While Ford once had a solid hold on the bottom of the market with vehicles like the Fiesta and Escort, that grip has been broken in recent years as competitors have rolled out more targeted products. Toyota Motor Corp. has led the charge with its new Scion brand.

Jim Hall, an analyst with AutoPacific in Southfield, said Ford has several interesting international designs that could appeal to younger buyers in its home market, but most do not meet U.S. safety standards.

"There's nothing that's an easy pull off the shelf," Hall said. "Expediency will be difficult."

Ford may unveil a youth-oriented concept car at the Detroit auto show, but that will take some time to develop into a production vehicle.

"There are some products that would fit with a youth strategy that Ford has in its pipeline," said Michael Robinet, an analyst with CSM Worldwide in Farmington Hills. In the meantime, Ford will likely use new marketing strategies and trim lines to draw younger buyers to its existing products.

As The Detroit News reported last month, Fields took a hard look at killing the Mercury brand. However, that study concluded that Mercury brings in more money than would be saved by eliminating it. Instead, the company will try to reenergize Mercury by giving the brand new product designed to appeal to women and more youthful buyers.

Fields would also like to expand Mazda's presence in North America by encouraging more Lincoln Mercury dealerships to add Mazda franchises.

Some dealers, like Jerry Reynolds in Dallas, already have side-by-side Lincoln Mercury and Mazda dealerships. "It really is a good mix," Reynolds said, though he stressed he has heard nothing about Fields' plan. "You get the younger buyers with Mazda, the older with the Lincoln and hopefully some in the middle with Mercury."

Sanfilippo said Mazda has struggled to expand its sales channel in North America. "Lincoln Mercury might be a way to get that going faster," he said."First you've got to fix Mercury and Lincoln."

Bad for everybody concerned.

It is bad that the US keeps bleeding middle income jobs and replacing them with service jobs. We can't go on forever with our middle class jobs being eliminated, or sent to India.

"We can't go on forever with our middle class jobs being eliminated, or sent to India."

Or replaced with lower cost inferior quality Asian imports

Dear Editor,

As Frederick "Rick" Dubinsky, the hard-driving former chairman of United's pilots union, once said: "We don't want to kill the golden goose. We just want to choke it by the neck until it gives us every last egg," the relationship between unions and the companies they work for is “What can you do for me now.”

Unfortunately, years of union benefits piling on union benefits have made many of the companies they work for unviable. For instance, if Ford wants to lay off union workers, they still must 90% of their salaries and benefits for years. To unplug a computer in the Philadelphia Convention Center requires that a union electrician does the work (the actual unplugging). SEPTA union employees pay not one dime in co-pays or deductibles for their medical benefits and are willing to shut down the entire mass transit system in Philadelphia, indefinitely, to keep it that way.

When companies can not make a profit or compete because they are being squeezed for every golden egg, they have two options. Either go out of business or go to areas where unions are not as strong. This used to mean going to the mostly nonunionized Southern United States, where for the last 20 years every major automobile manufacturer has chosen to build new manufacturing plants, but now means to go overseas in search of the most competitive place to do business.

Management is not innocent, they have created this mess. They have made many unwise decisions of putting short term profits over the long term health of their companies. In the same vein, they have also agreed to outrageous union contracts because the bills and heartburn for them would come due on some else’s watch in the future.

Now the bills are coming due. And all the union iron clad contracts mean nothing if the company they work for goes out of business. Just ask the workers of steel and airline companies. And ask their retirees. All wish that the company they work for or retired from was a healthy and profitable company.

Unions need to focus on how they can make the companies they work for as strong as possible. This is the only way to keep union jobs, pay and benefits around for the long run. And that doesn’t mean massive pay cuts. Flexibly in work rules, retraining for new jobs when technology changes the old jobs, plugging in and using membership brains/experiences to make the company more profitable are all foreign concepts in many union shops. Their company’s future is their future. For instance, when union workers in Japan go on strike, they wear arm bands that proclaim “On Strike” as they continue to work. They understand that to cause unneeded financial damage to the company they work for, in these days of global competition, is one way to lose their jobs forever.

Unions also need to get out of politics. All of the major unions are strong supporters (both in money from mandatory union dues and “forced” volunteers) of the most liberal of democrat candidates. They have publicly taken positions of being pro-abortion, anti-gun and anti-tax cut (among a plethora of other social issues). None of these issues has anything remotely to do with how a union operates. But it serves to isolate unions from over half the population of America who want nothing to do with them just based on their political stands on these controversial issues. Many people actively avoid buying union made products because they feel they are financing their political enemies.

The union’s heritage is of the craftsman guilds. When you hired a craftsman, you knew you were getting value – someone who was trained, knew what they were doing and did the job right. Today, hiring a union person to do a job is synonymous for expensive, inflexible, sloppy work and belligerence. That is the image that needs to be changed for unions to flourish – what can we do to provide value.

Regards,

2banana

Sounds good but the middleclass jobs holders you mention have wheedled them selves out of work by making extortionist demands on employers.

The fact they are American doesn't mean they are not subject to law.....economic law. Less work, more pay will loose to people who work harder for less. Artificial supports will not prevail. Michigan is doomed unless it repeals the union shop. Freedom and right to work will prevail in surviving industry.

The ride is coming to an end and some will to be thrown off.

Close the plants. Make all Fords in China.

General Motors CEO Rick Wagoner had a column in yesterday's Wall Street Journal chronicling the plight of GM, which has lost a lot of money and is closing 12 North American plants. His key point: though GM is doing well in international markets, it suffers at home from key competitive disadvantages.

General Motors CEO Rick Wagoner: "Litigation now costs the U.S. economy more than $245 billion a year, or more than $845 per person. That's more than 2% of our GDP. No other country has costs anywhere near this level. And the perverse thing is that, in many cases, the majority of courtroom settlements go to the lawyers and other litigation costs, not to the injured parties."

Check out your new GM car, made 100% in China (where GM is booming). Thanks to the crooked trial lawyer wing of the democrat party, you can kiss your American car jobs goodbye forever!

The Chinese, Indians, Asians...are smarter than we are...they work harder and better...and cheaper...they graduate more engineers than we do...what part of this equation don't you understand....but hey...we got the COOL Rappers...they can buy our CD's..

oh buy the way..How would you like to buy a car made from New Orleans employees....

"The ride is coming to an end and some will to be thrown off."

This is what worries me about the global economy. Will we be able to maintain our standard of living in a world where it doesn't really matter where something is made, or where an information related task is performed? Or will in fifty years we have ended up meeting the third world in the middle?

We DON"T have to lose the jobs...But the Unions HAVE to get real....

"Or replaced with lower cost inferior quality Asian imports"

Or, replaced with superior, lower cost imports. Ford, by the way, has a new plant in Thailand, making, of all things, Mazda pickups. Hmm....

Doesn't the name "the way forward" have a communist Chinese sound to it? Seriously.

At least they should have come up with a better name. I'm sure they probably have 10 people in a department somewhere who's sole job is to name plans.

And while you're at it Bill, please sell off your ownership in the Detroit Lions.

Like Toyotas ?

"Management is not innocent,"

More than "not innocent"... They're "Guilty".

It was, after all, ultimately THEIR job (not labor's) to look out for the interests (both long and short term) of their company.

"Michigan is doomed unless it repeals the union shop."

So is Ohio until the attitude of labor changes here.

But don't hold your breath. Rather than leading, our political class here (eg. Dennis Kucinich) will do all they can to demagogue the issue for votes.

LOL oh the irony, :-) but unfortunately that doesn't help the guys in the USA who are getting layed off when the US-made goods plant, closes for business as the lower cost Asian imports flood the market.

When Ford stock hits $6, buy it.

December 7, I wonder how many people will go out and buy a toileta or hon-duh today?