Ford to close pickup truck plants in Va., Minn. in 2008

4,300 workers affected

2012 target is 30,000 jobs

April 14, 2006|By BLOOMBERG NEWS

DETROIT -- Ford Motor Co., planning to cut 30,000 jobs by 2012, said yesterday that it will close vehicle assembly plants in St. Paul, Minn., and Norfolk, Va., in 2008.

The St. Paul factory builds the Ranger compact pickup truck. The Norfolk plant is one of three in the United States that produce the F-150 pickup. The closings will affect about 4,300 employees.

St. Paul "is a really dated, really old plant," said IRN Inc. auto analyst Erich Merkle in Grand Rapids, Mich. Domestic Ranger sales fell 23 percent last year and another 16 percent in the first quarter.

The closures will bring Ford, the second-largest U.S. automaker, a step closer to its goal of cutting as many as 30,000 hourly jobs in North America and closing 14 manufacturing plants by 2012. The automaker had a pretax loss of $1.6 billion at its North American operations last year after a decade of falling U.S. market share.

"Our decisions are final on the idling," Executive Vice President Mark Fields said in a conference call.

Members of the United Auto Workers union continue to draw 95 percent of their take-home pay as well as full health benefits after shutdowns under a "Jobs Bank" program.

The Jobs Bank, part of the union's national labor agreements with Ford, General Motors Corp. and DaimlerChrysler AG's Chrysler unit, expires in September 2007. The St. Paul and Norfolk closings are scheduled to occur after that, meaning they would be covered by whatever contract emerges from 2007 negotiations.

The automaker offered employees represented by the UAW at a St. Louis plant shut down last month five buyout options, including an offer of $15,000 annually for four years of college, full medical benefits and half their regular pay while they go to school. Another option was a $100,000 buyout without health benefits.

The St. Paul plant, which opened in 1925, has 1,750 hourly workers and 135 salaried employees.

The Norfolk plant has 2,275 hourly employees and 158 salaried workers. The model F-150 pickup accounts for 60 percent of sales of F-series trucks, the top-selling line of vehicles in the United States.

Ford has other F-150 plants in Dearborn, Mich., and Kansas City, Mo. The $2 billion Dearborn plant opened in 2004. The company closed another F-150 plant, in Oakville, Ontario, two years ago.

The company can make the same number of F-150 trucks in fewer locations, and isn't reducing its capacity to build the trucks, Fields said. The company looked at "logistics and overall operating costs" in deciding to close Norfolk, he said.

Ford's shares rose 7 cents, nearly 1 percent, to close at $7.35 yesterday on the New York Stock Exchange. They have declined 27 percent in the past 12 months.

The company will close factories in Atlanta this year and in Wixom, Mich., in 2007. Its shuttered St. Louis plant built the Explorer sport-utility vehicle; Atlanta produces the Taurus sedan, which is being discontinued. Wixom makes the LS sedan and GT sports car, both being discontinued, and the Lincoln Town Car.

Ford's U.S. market share fell to 18.6 percent in 2005, from 25.7 percent in 1995, the last year the automaker gained market share. In announcing its "Way Forward" restructuring plan for North America Jan. 23, Ford said it needed to bring production capacity in line with sales.

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