Ford says it isn't planning permanent closings

But some factories may be mothballed for several weeks

January 08, 2002|By Rick Popely | Rick Popely,SPECIAL TO THE SUN

DETROIT - Ford Motor Co. will not permanently close any U.S. plants before its current contract with the United Auto Workers expires in September 2003, Ford's president said yesterday.

"We clearly have signed a contract not to close plants, so we are not going to do that," said Nicholas V. "Nick" Scheele at the Detroit Auto Show.

But when asked whether Ford will mothball plants for extended periods and pay unemployment benefits to idled UAW members, Scheele said: "That's not ruled out."

Ford, which will lose money in 2001 for the first time in nine years, plans to announce a restructuring plan this week. Wall Street analysts have said Ford needs to close five or more U.S. plants and fire thousands of workers to return to profitability quickly.

Amid rumors that the restructuring plan will indeed include thousands of layoffs, Scheele refused to specify how many union and white-collar workers Ford plans to trim, saying: "I'm not going down that road."

Ford said it will reveal more of its cost-cutting plan Friday at a meeting with securities analysts.

Cost-cutting measures already announced by Ford include trimming more than 4,000 white-collar jobs through early retirement, eliminating executive bonuses, reducing contributions to employee retirement programs and increasing the employee's share of health-insurance costs.

"We address the concerns of the company first, not the concerns of Wall Street," Scheele said.

Other alternatives include eliminating shifts at some plants, slowing assembly-line speeds and closing plants for a week or two. In December, Ford eliminated one shift at its Edison, N.J., plant that builds the Ford Ranger pickup

Ford's U.S. sales dropped 5.5 percent last year, to 4 million vehicles, including imports and all seven of its brands, but it has the capacity to produce 5.7 million vehicles in North America, making plant closings likely after the UAW contract ends.

"Does anyone really think we need 5.7 million capacity? Obviously not," Scheele said. "At the end of the day, what we can build is what we can sell."

For the rest of the UAW contract, Ford will use attrition to reduce its unionized factory work force of 105,000. Attrition usually runs 6 percent to 7 percent a year.

Ford expects to post an operating loss of more than $800 million for 2001 before charges for early retirements and restructuring when the company's year-end results are announced next week.

As vehicle sales declined in 2001, Ford's marketing costs soared, and the company engaged in a bitter battle with Firestone over the safety of tires on the Explorer and other Ford models.

A decision by then-Chief Executive Officer Jacques A. Nasser in May to replace 13 million Firestone tires cost Ford $2.1 billion. Chairman William Clay Ford Jr. replaced Nasser as CEO in October and promoted Scheele to chief operating officer, a title he still holds.

Ford said Sunday that the company plans to introduce new products in the next few years to boost sales and profits.

Scheele, who led a turnaround at Ford's European operations before becoming chief operating officer, said a flexible manufacturing plan that helped cut costs in Europe will be applied to North American plants.

Under flexible manufacturing, a system used in the United States by Japanese producers Toyota and Honda, plants don't have to be retooled every time a vehicle is redesigned. Instead, the vehicles are restyled to look new, but major components are carried over or updated, reducing costs and factory down time.

Ford's shares closed down 44 cents to $16.50 yesterday on the New York Stock Exchange.

Rick Popely is a reporter for the Chicago Tribune, a Tribune Publishing newspaper.

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