- The Washington Times - Tuesday, January 24, 2006

Ford Motor Co. yesterday said it will close 14 North American manufacturing facilities and cut employment by up to 30,000 in the next six years as part of a broad restructuring meant to reverse financial losses and stabilize eroding sales in the company’s home market.

U.S. automakers and their suppliers are laying off tens of thousands of workers as they struggle to overcome high pension, health care and wage costs; strong foreign competition; and auto designs that have limited consumer appeal.

General Motors Corp., the top U.S. automaker, in November said it would shutter a dozen facilities and eliminate 30,000 jobs. The entire auto sector announced 110,016 job cuts last year, including more than 45,400 among suppliers such as Lear Corp. and Dana Corp., said Challenger, Gray & Christmas, a consulting firm.

Ford, founded in 1903 and the second-largest U.S. auto company, yesterday said it will eliminate as much as a quarter of its North American work force by 2012. It already had announced the elimination this year of 4,000 white-collar jobs.

“In the long run, we will create far more stable and secure jobs. We all have to change. And we all have to sacrifice,” said William Clay Ford Jr., chairman and chief executive of the Dearborn, Mich., company.

Ford’s worldwide operations turned a profit in 2005, but the company’s North American auto operations posted a pretax loss of $1.6 billion amid declining sales.

Mr. Ford and Mark Fields, president of Ford’s Americas division, yesterday outlined the company’s second revitalization plan since 2002 — this one called the “Way Forward.”

It includes one new manufacturing facility, in a yet-to-be-determined location, but also the idling of 14 others to reduce capacity by 1.2 million units, or about 26 percent. Ford also is changing its lineup to include fewer big sport utility vehicles and more cars, crossover SUVs and gas-electric hybrids.

Ford did not detail specific changes to its lineup, but pointed to its pickup trucks and Mustang as models of success it hopes to emulate with the Ford Fusion, a midsize sedan built on a Mazda platform, and the Ford Edge, a crossover.

Mr. Fields said the change reflects rising prices for gasoline, which has tamped down sales of gas-guzzling SUVs, and acknowledged stiff competition from foreign competitors, such as Japan’s Toyota, Honda and Nissan, which are offering more models.

“We expect more than 300 nameplates by the decade’s end — a 50 percent increase in only seven years. That’s unprecedented, and it has spelled the end of the Big Three as we know it,” Mr. Fields said of GM, Ford and DaimlerChrysler. “Today, it’s the up-for-grabs Big Six and a competitive shootout like we’ve never seen before.”

The Japanese companies are expanding sales and operations in the U.S. Toyota, for example, last year announced that it would build new plants in San Antonio and Woodstock, Ontario, to increase its manufacturing capacity to 1.81 million autos by 2008. Hyundai, a South Korean automaker, opened its first U.S. plant in May in Montgomery, Ala.

Ford is having more success in foreign markets, posting profits in Asia, Europe and South America. The company, for example, is expanding its manufacturing facilities and introducing new products with a more than $1 billion investment in China, the Associated Press reported last week. The autos are sold in the fast-growing country.

The United Autoworkers (UAW), which represents Ford workers, said the “Way Forward” plan, like the 2002 strategy, is a misguided attempt to gain profits by cutting workers and closing plants in North America.

“Then, as now, the focus should instead be on striving to gain market share in this competitive market by offering consumers innovative and appealing products,” said UAW President Ron Gettelfinger.

Mr. Gettelfinger said the cuts would make negotiations on a new contract, due in 2007, more difficult.

But analysts said Ford is going to have to force the UAW to make concessions on salary, benefits and workplace rules if it is to become more competitive.

“Somehow Ford is going to have to take on the UAW,” said Jim Hossack, a consultant with AutoPacific Inc., an industry research firm.

Peter Morici, a professor at the University of Maryland, said the plan does not clearly state how Ford will get its labor and design costs in line with its Japanese competitors, a shortcoming that will limit its ability to compete on price, quality and content.

“In a nutshell, the ‘Way Forward’ looks like the road to Chapter 11,” Mr. Morici said, naming the most common filing under U.S. Bankruptcy Code.

Investors were less skeptical. Ford gained 42 cents, or 5.3 percent, to $8.32 in trading on the New York Stock Exchange.

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