Ford slams on the brakes Taurus and Sable lines to halt a week

goodbye to 4 models

March 18, 1997|By BLOOMBERG NEWS

DEARBORN, Mich. -- In moves that reflect a broad slowdown in car demand and consumer tastes, Ford Motor Co. yesterday said it will halt production for one week of the best-selling Taurus and sister car Mercury Sable, and stop making four other models.

The company said it will eliminate the Ford Thunderbird and Mercury Cougar, and take a $150 million second-quarter charge to close the assembly lines that make the cars at its Lorain, Ohio plant. The moves will eliminate up to 2,500 jobs, including 1,800 at the 40-year-old plant and as many as 700 at plants that supply parts for the cars.

The No. 2 U.S. automaker also will discontinue the Probe car and the Aerostar minivan, which are made elsewhere.

Ford's steps to cut car capacity are a response to shifts to light trucks such as sport utility vehicles and pickup trucks. Ford also is determined to cut costs by $1 billion this year as part of a global cost-cutting program started in January 1995.

"This is a concession to reality," said David Healy, an analyst at Burnham Securities. "They've made a decision to cut out low-volume models where they're probably losing money."

Ford will stop making the four models at the end of the current model year.

The Taurus and Sable shutdown is the first ever at the Atlanta and Chicago plants, and underscores Ford's drive to trim costs, analysts said. The company previously resorted to costly incentives and advertising to boost Taurus sales during periods of weak demand.

Ford's cutback at Lorain is the biggest at a Ford plant since the automaker closed its San Jose, Calif., plant in 1982, Ford spokesman Bert Serre said.

The Lorain plant also produces Econoline and Club Wagon commercial vans and employs about 3,800 in all. It's one of Ford's most underused North American plants, having made just 111,529 vehicles, or 42 percent of its capacity of 240,000 units, last year.

"They need to reduce auto capacity where it's not needed and redeploy those assets into areas of the market that have greater long-term potential," such as sport utilities, said Jack Kirnan, a Salomon Brothers analyst.

The changes will shift Ford's light-truck production capacity to 55 percent of its total capacity and cars to 45 percent, said Jac Nasser, president of Ford Automotive Operations. In 1991, about 35 percent of Ford's capacity was used to make trucks.

"We basically have the right balance now," Nasser said.

He said he anticipated no further cuts at North American plants ** in the next few years but said work to improve Ford's troubled European operations was "not finished yet."

The Thunderbird, introduced in 1954, was a noteworthy victim of changing consumer tastes and of Ford's inability to revive the model.

At first sporty, the car grew to a full-size car in the 1970s. Its sales fell to 79,721 last year from a peak of 350,000 in 1977.

Speculation that the Thunderbird would be killed and jobs eliminated has circulated for months at the plant near Cleveland, but that didn't make the news any easier to take for some workers.

Under the automaker's contract with the United Auto Workers, workers who lose their jobs will continue on the company's payroll, though at reduced pay, at least until the present contract expires in three years.

Ford said the St. Louis plant that makes the Aerostar won't lose any jobs because the company will increase production of its popular Explorer sport utility vehicle that is made there. Aerostar sales fell 20 percent to 64,339 last year from 1995.

The Probe car, popular in the late 1980s, is made at a Ford and Mazda Motor Co. joint venture in Flat Rock, Mich. Probe sales fell 39 percent to 32,505 in 1996.

Pub Date: 3/18/97

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