Ford Prepares For Job Cuts

Assemblyman Jason Rapp prepares to install a door on a Ford F-150 truck at the Dearborn Assembly Plant in Dearborn, Mich., Jan. 31, 2005. AP

Ford Motor Co., hurt by falling sales of sport utility vehicles, is expected to close plants and cut thousands of jobs in North America as part of a restructuring program to be announced Monday.

Ford has refused to release details of the plan, dubbed the "Way Forward," which also is expected to include product changes and cuts to Ford's salaried ranks. Ford has about 87,000 hourly workers and 35,000 salaried workers in North America and CBS News correspondent Tony Guida reports

"It's going to be painful for some people," Ford Chairman and CEO Bill Ford said earlier this month at the North American International Auto Show in Detroit.

The assembly plants believed to be most at risk for closure are in St. Louis; St. Paul, Minn.; Atlanta; Wixom, Mich.; St. Thomas, Ontario; and Cuatitlan, Mexico. Those plants could be targeted because of their age, the products they make, their lack of flexibility or other factors.

States were scrambling to offer tax credits and other incentives to keep Ford from closing their facilities.

Earlier this month, Missouri Gov. Matt Blunt and other state officials flew to Ford's headquarters in Dearborn for a meeting with Ford executives. Michigan Gov. Jennifer Granholm said she outlined a package of incentives to Ford last week. Granholm wouldn't disclose the details of the package and said she wasn't given any assurance that Michigan plants would be spared.

Ford is expected to report a worldwide profit for 2005 when it releases earnings Monday. But it lost more than $1.4 billion in its North American operations in the first nine months of last year.

The No. 2 U.S. automaker has been hurt by falling sales of its profitable sport utility vehicles, growing health care and materials costs and labor contracts that have limited its ability to close plants and cut jobs. The United Auto Workers union will have to agree to some of the changes Ford wants to make.

"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."

Ford also has seen its U.S. market share slide as a result of increasing competition from foreign rivals. The company suffered its tenth straight year of market share losses in the United States in 2005, and for the first time in 19 years, Ford lost its crown as America's best-selling brand to GM's Chevrolet. Ford sold about 2.9 million vehicles for a market share of 17.4 percent in 2005, down from 18.3 percent the year before and 24 percent in 1990.

The restructuring is Ford's second in four years. Under the first plan, Ford closed five plants and cut 35,000 jobs, but its North American operations failed to turn around.

Ford used just 79 percent of its North American plant capacity in 2005, down from 86 percent in 2004, according to preliminary numbers released last week by Harbour Consulting Inc., a firm that measures plant productivity. By contrast, rival Toyota Motor Corp. was operating at full capacity.
  • Gina Pace

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