Ford To Consider Further Plant Closings, Employment Reductions

Autoparts Report, Nov 18, 2001

Ford Motor Co. is considering another round of massive job cuts, and possible plant closings, as part of a restructuring plan to pull the world's second-largest automaker back to profitability, according to published sources.

Details of the restructuring plan, which was first announced in August, will not be made public until January, company officials say. But industry analysts, who dispute whether plant closings are possible, say the odds are that the team led by William Clay Ford Jr. will adopt as dramatic a plan as possible to reverse the recent turn of fortune at the company his great-grandfather founded in 1903.

Any major restructuring moves made by Ford could also boost the company's shares, which have been outperformed by those of larger rival General Motors Corp. since the start of the year. "They're going to make some big announcement in January and they're going to have to be pretty dramatic to impress Wall Street," said one Wall Street analyst.

Jacques Nasser, who was ousted as Ford's chief executive on Oct. 30, left a company saddled with many problems, including $1.4 billion in losses over the previous six months. But there is little consensus on how to get Ford back on track at a time when analysts say auto sales are poised to fall to their lowest levels in years in 2002 and a recession has been all but officially declared in the United States.

On the chopping block are up to four of Ford's 21 North American assembly plants and job cuts targeting about 10,000 hourly workers. Another 3,000 white-collar jobs may also be cut, according to industry sources.

Plant closings could help ease the burden of carrying excess production capacity at Ford, which has seen its U.S. market share erode steadily this year. They also make sense at a time when Ford needs to slash spending on marketing incentives and stop chasing an overly ambitious market share, in the face of relentless foreign competition.

The problem, however, is that there is a moratorium on plant closings in the United States under the contracts between Detroit's Big Three automakers and the powerful United Auto Workers union. Those contracts are is binding until September 2003.