Rough Patch Of Road For Ford

Ford Motor Co. announced Monday it would cut 25,000 to 30,000 jobs and 14 facilities in North America, as the company embarks on a new restructuring plan.

CEO Bill Ford said his company "will retake the American roadway."

The cuts represent 20 percent to 25 percent of Ford's North American work force of 122,000 people. Ford has approximately 87,000 hourly workers and 35,000 salaried workers in the region.

"These cuts are a painful last resort, and I'm deeply mindful of their impact," Ford said. "They're going to affect many lives, many families and many communities."

Plants to be idled through 2008 include the St. Louis, Atlanta and Wixom assembly plants and Batavia Transmission in Ohio. Windsor Casting in Ontario also will be closed, as was previously announced following contract negotiations with the Canadian Auto Workers. Another two additional assembly plants to be idled will be determined later this year.

Outside the Wixom Assembly Plant in Wixom, Mich., workers told Pat Vitale of CBS radio station WWJ-AM they had expected the closing, and were glad that it was now out in the open.

Earlier Monday, Ford reported earnings of $2 billion in 2005, down 42 percent from last year's profit of $3.5 billion. It was the third straight year the automaker has reported a profit, but gains in Europe, Asia and elsewhere were offset by a loss of $1.6 billion in North American operations.

Those numbers were on the plus side in 2004, reports Jeff Gilbert of WWJ.

"Maybe I'll be happy, maybe I'll be sour, but I've had 29 years of good living from Ford, and if my plant closes, then, so it be," a worker at the Wixom Assembly Plant in Wixom, Mich. told WWJ-AM before the announcement. Wixom was one of the plants being idled.

The cutbacks are just the first step, said Catherine Madden, a senior analyst for Global Insight.

"It may be cliché at this point, but no doubt, product is king, and they need to establish what the Ford and Mercury and Lincoln brands are to the consumer," Madden told CBS Radio News.

The 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 10th 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 General Motors Corp.'s Chevrolet. Ford sold around 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.

"Can Ford ever be what the Ford of 1955 was? Probably not. The post-war Ford probably won't exist in the same form, but I don't think it's too late," said Madden. The auto industry is no longer a "Big Three," but a "Big Six," she added, and Ford is still a significant automaker.

Alan Hallman, mayor of Hapeville, Ga., where the Atlanta Assembly Plant is located, called the news "a setback for the state."

The plant, which makes the Taurus, has about 2,000 employees. Hallman said it accounts for 9 percent of the small city's 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," he said.

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.

Ford said in its earnings announcement Monday that it reduced employment in 2005 by 10,000 people due to layoffs, buyouts and attrition. Ford has around 300,000 employees worldwide.

States have been scrambling to offer tax credits and other incentives to keep Ford from closing their facilities ever since the automaker said last fall that it was developing a restructuring plan.