Ford Motor Company Announces Plant Closings and Drastic Job Cuts

By Linda Orlando

One of the oldest automobile manufacturers in the United States announced Monday that it will eliminate nearly 30,000 jobs and close 14 plants by 2012. The restructuring plan, called "The Way Forward," is part of a larger plan designed to reverse a tremendous loss of $1.6 billion in Ford’s North American operations last year. Although the company has reported a profit for three straight years, but gains in foreign markets were offset negatively by the billions of dollars lost in North American operations.

Based in Dearborn, MI, Ford Motor Co. has been operating for over a century. The company currently has approximately 87,000 hourly workers and 35,000 salaried workers all across North America, and up to 25% of those workers will lose their jobs as part of the plan. The St. Louis, MO, plant that makes the Ford Explorer and Mercury Mountaineer will be closed, primarily because Explorer sales were down by 30% in the first 11 months of 2005 despite an extensive redesign. Also scheduled for closing is the Atlanta plant, which makes the Ford Taurus sedan that is scheduled to be phased out in 2006. The Twin Cities plant in St. Paul, MN, which makes the Ford Ranger pickup, will also be closed. Batavia Transmission in Ohio and Windsor Casting in Ontario are also slated for the chopping block. Two other assembly plants to be closed will be announced later this year, and seven others will be closed over the next six years.

Ford’s Chairman and Chief Executive Bill Ford issued a statement saying, ""We will be making painful sacrifices to protect Ford's heritage and secure our future. Going forward, we will be able to deliver more innovative products, better returns for our shareholders and stability in the communities where we operate."

Ford used to be the nation’s best-selling brand, but profits have been hurt by falling sales of sport utility vehicles, increased materials costs, growing health care and insurance expenses, and labor contracts that have severely restricted the company’s ability to close plants and cut jobs. The company’s U.S. market share has suffered as a result of increased competition from foreign competitors. So for the first time in 19 years, Ford gave up its #1 seat last year to GM’s Chevrolet brand.

The United Auto Workers Union will be forced to agree to some of the changes Ford is planning. "We don’t like to see any jobs go away," UAW President Ron Gettelfinger said last week. "We're always in hope that down the road we'll be able to reverse some of those decisions."

The plant closings will not only affect individual workers, but may also affect entire economic structures in some cities. Alan Hallman, the mayor of Hapeville, GA, where the Atlanta Assembly Plant is located, said that Ford’s restructuring plan is "a setback for the state." The plant has about 2,000 employees, which account for 9% of the small city’s total budget. "We've got hundreds of man-hours and thousands of dollars invested on various plans to keep them here. The fact that they've elected to idle the plant is very disappointing," Hallman said.

Ford’s plant capacities have been dwindling in recent years, and this restructuring plan is the second in four years. GM, also suffering from dwindling profits, recently announced plans to cut 30,000 hourly jobs and close 12 facilities by 2008. GM’s sales fell by 4% in 2005. Toyota Motor Corp., on the other hand, is operating at full capacity.

CEO Bill Ford has acknowledged that the U.S. automobile market is facing ever-increasing competition from foreign automakers, and drastic changes must be made if the tide is going to turn. "We must be guided by our long-term goals of building our brands, satisfying customers, developing strong products, accelerating innovation, and, most importantly, producing a sustainable profit from our automotive business," Ford said.