Ford may shut as many as 5 plants

Jobs at risk at four U.S. factories and one in Mexico

December 03, 2005|By RICK POPELY AND JIM MATEJA | RICK POPELY AND JIM MATEJA,CHICAGO TRIBUNE

CHICAGO -- Ford Motor Co. may close up to five North American assembly plants and shed thousands of jobs in a bid to operate its factories at capacity and make its struggling automotive operations profitable.

Ford's board is scheduled to review a restructuring plan next week that includes closings and job cuts. Chairman and Chief Executive Officer William Clay Ford Jr. has said the plans will be made public in January.

Speculation about the factories on the list has been swirling for weeks. Plants in St. Louis; St. Paul, Minn.; Wixom, Mich.; and Atlanta are the most frequently mentioned.

Global Insight, a Lexington, Mass., forecasting firm, also has tabbed a plant in Cuautitlan, Mexico. It builds mainly F-Series pickups for Mexico. The Wall Street Journal reported yesterday that the Cuautitlan plant was likely to close.

Ford's restructuring, called "Way Forward," will follow within weeks General Motors' decision to close nine North American plants and eliminate 30,000 factory jobs, mostly through attrition and early retirement.

Ford's North American operations have lost $1.4 billion this year. GM has lost $3.8 billion this year.

Both companies need to align their production capacity to their shrinking market shares, said Joseph Phillippi, principal of AutoTrends Consulting in Short Hills, N.J.

"GM has the [production] capacity for 30 to 35 percent of the market yet has a 26 percent share," Phillippi said. "Ford is in the same situation; it has capacity for a 25 percent share of the market and is only at 19 percent. And the business isn't growing."

Global Insight forecasts that Ford will build 3.3 million vehicles in North America this year with its 19 assembly plants operating at 71 percent capacity.

Ford wouldn't comment yesterday.

"The plan is still being worked on. So anything reported is speculation, and we won't comment on speculation," said spokesman Tom Hoyt.

The automaker said in September that it would announce plant closings before the end of the year, but Ford's chief executive delayed that until January to give a new North American management team time to assess the situation.

Global Insight analyst Catherine Madden said the delay has increased anxiety among Ford employees.

"Clearly, no one at Ford has been told what is going to happen," she said. "It's unfortunate they've let it go on so long."

Phillippi said one hangup could be discussions with the United Auto Workers. The domestic automakers negotiate plant closings into union contracts and the current agreement ends in September 2007.

UAW spokesman Paul Krell said the union had no comment on possible plant closings.

Earlier this year, Ford said it would eliminate 4,000 white-collar jobs in the first quarter of 2006.

Except for the Mexican truck plant, J.P. Morgan analyst Himanshu Patel lists the same ones as Global Insight: Atlanta, St. Louis, St. Paul and Wixom. The five plants employ about 7,500 hourly and salaried workers.

Atlanta builds the Ford Taurus, production of which is scheduled to end this summer. About 90 percent of Taurus sales are to fleet buyers, such as daily rental companies.

Madden says St. Louis looks precarious because it operates on a single shift that builds the Ford Explorer and Mercury Mountaineer sport utility vehicles, whose sales are on the skids. Madden says Ford could consolidate production in Louisville.

St. Paul builds the Ranger compact pickup, which hasn't been redesigned for more than decade, and Wixom operates on one shift to turn out the Lincoln Town Car and LS sedans.

The Atlanta plant was in line to build new Lincoln sedans and crossover vehicles, but Madden said production of those models could go elsewhere and Wixom could survive.

Rick Popely and Jim Mateja write for the Chicago Tribune.

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