spwolf

p.s. I "liked" this one:

sha4000

iTrader: (1)

they probably will, but not enough to give all those workers jobs

Overclocker

DEARBORN — The Ford restructuring plan, called "The Way Forward," will make cuts of 25 percent of North America production capacity — closing 14 plants — and 25 percent of North America personnel, or as many as 30,000 job cuts.

In his Monday morning announcement, William Clay Ford, Jr., called the cuts "a painful last resort" and called on his company to "unleash the spirit of American innovation." President for the Americas Mark Fields confirmed reports that Mercury will not be eliminated as Ford's third division. Insiders have suggested that the brand is valued mainly because it appeals to women customers. Fields elaborated on the restructuring details, which aim in part to restore profitability to North American operations no later than 2008.

He also said Lincoln will not be targeted for export markets, saying it will remain a U.S. market product.

Fields pointed out that Ford will have four additional hybrids by the end of the decade and said Ford plans to "seize" the growth opportunity in increasing demand for small cars in the U.S. markets. He said the carmaker will develop "bold, innovative, and American small cars, not bland econoboxes." This will likely include the elimination of the company's current minivan lineup, which would be replaced by crossovers. Other plans included a reported effort to create recyclable cars.

With North American vehicle sales down 20 percent, factory capacity is more than a million units too high, say analysts. "We must do more," said chairman Ford, emphasizing the importance of "sustainable" growth and criticizing the company's "overreliance on SUVs."

Among the 14 facilities to close are seven vehicle assembly plants, the company said. The plants will be idled and eventually will all be closed by 2012. Not all the names of the plants to close were announced today.

Material cost reductions are targeted at $6 billion by 2010 under the new program.

In speaking of pricing, Fields called current U.S. automakers' incentive wars "irrational" and said Ford will reestablish the value of Ford products through "straightforward and simple pricing" that will phase out "cash on the hood rebates," he said.

Just before the restructuring announcement, Ford released a statement that its earnings were $2 billion in 2005, most of which was made in the first half. North American and Jaguar market share losses were behind the losses, Ford said. Ford's North American operations lost $1.6 billion during the same year.

Still, in the words of Chief Operating Officer Jim Padilla, "Execution is the name of the game."

What this means to you: Bill Ford said, "You can't cut your way to success." With this program, the company is, he says, "changing the business model that's existed for many decades." Time will tell whether that's possible.

Source: http://www.edmunds.com/insideline/do...ticleId=109019

spwolf

they ARE building new plants - Tennessee came online in 25 and San Antonio will come online in 2006. Next scheduled is Ontario is 2008 and they are already scounting for more - they are pretty relentless in that. Toyota has 40,000 direct employees in the USA and has invested 16 billion into US plants and facilities. Toyota also buys 40billion per year in parts from NA suppliers. That is not as much as Ford or GM, but foreign employers are only ones currently investing into US while GM and FORD are "investing heavily" in China and India.

It is not only US, they are trying to raise local production everywhere in the world, including europe, with major plants in GB, France, Czech Republic and Turkey.

GM especially is trying to make it seem as if Toyota is making them lose all that money, but it was really all up to them. If it wasnt Toyota it would have been Hyundai or someone else. I dont doubt for one second that average american would preffer to buy an american car.

Ford has to do something for sure, and this is an good start, even though many people lost jobs. If they did not do it now, many more could have only few years ahead. The fact is that they should have done it a lot sooner than now, and maybe most of these people would not have lost their jobs now.

Lexmex

No, she worked in Ford HQ here in Mexico City. Kind of sad as they moved their offices from downtown out here to the nice Santa Fe neighborhood here. All that investment down the drain. I actually have a friend who works for Mazda here (works out of Ford HQ) and they have waiting lists for their vehicles.

GS69

U know, I always wondered what the difference was b/n Ford & Mercury .... Ford & Lincoln I understood ...

Lexmex

The girl I dated worked in the Lincoln/Mercury area. Those cars have a very tough time selling down here even Cadillacs in the GM line. In Mexico, when people want luxury it is usually one of the European luxury brands that gets the nod.

SilverLady

I loved my 1996 Ford Explorer - had it for 10 years with virtually no problems, great quality and I was looking forward to an updated version.

Well, I hated the new one. They can't blame the gas prices, because I bought the GX470 for a lot more money and marginally worse gas mileage.

What did Ford do? In 1996 they owned the SUV market and never offered deals on the Explorer - it was a hot car in a market they created. So of course the competition, including Toyota and Lexus, came in. Ford's response? Cheapen the product! Every year they took something out (I'm talking the quality items - like the great adjustable seats that were a lot nicer than my GX's or anything I have seen since - not the electronic toys).

Here they were the leader, and they chose to compete on price! I probably could have bought a new 2006 Explorer for less than I paid for the 1996. It looked and felt it, too.

"Reducing material costs" in their plan seems more of the same. Americans look at their cars as investments; the safety and happiness of our families revolve around having a good, reliable and comfortable vehicle. When it comes to trade in we remember the problems longs after we remember a few hundred dollars in price.

Indio

iTrader: (1)

Product issues are only part of the problem, if politicians don't get control of health care costs this will become a problem for many more industries, GM is forced to add as much as 3K to the price of some vehicles to cover retirees where as Honda adds as little as 50 dollars to some of it's cars in addition to much lower wages, when the UAW contract comes up next year it won't be pretty.......

ktiger

Indio, please explain why you feel that GM's health care cost can be solved by politicians when it was GM's management that agreed to the terms of that contract. If GM and Ford had the same market share that they had when the labor contract was signed health care cost would not be an issue. The problem here isn't health care cost (though I agree that it is crippling everyone) it's product. Maybe we should have the politicians teach them how to make an attractive reliable vehicle.

This article says it all:
Are Unions Killing Corporate America?

FNC
Jonas Max Ferris
Two of America’s most storied industries are crumbling before our eyes. Airlines and automobile makers have been some of our biggest employers, and there was a time you could measure the strength in the economy by looking at these titans.

Tune in to FNC's Business Block, Saturday at 10am ET, for more with Jonas Max Ferris and the FOX News business team.

Today, the economy and corporate profits are humming along, while most U.S. airlines and automakers are teetering on bankruptcy. Four major U.S. carriers have already filed for bankruptcy since the start of the millennium, with some smaller failures peppered in along the way. GM stock trades at 20 year lows, while Ford is in the single digits. Today the combined market value of all U.S. based airline and auto makers is less than half the market value of Google, an Internet search engine that didn’t exist a decade ago. Where did it all go wrong?

Many blame labor unions. Their collective bargaining deals have increased costs to these old businesses to the point of bankruptcy. Unions are by no means good for corporate profits or stock prices. They are not even good for non-union labor, who can face lower wages outside a union than they may face without any unions, and can have trouble breaking in and getting a job with the union powers that may be calling many of the shots. Unions are mainly good for union members, but possibly just in the shorter run.

Individually, most workers are a commodity. Their pay does not have to be closely related to how much value they bring to the table, and is more a factor of supply — how many people will line up to do the job at a certain price. Without any unions and with a glut of cheap labor like we had 100 years ago, lower end workers can get treated pretty badly. By grouping together, unions have the ability to extract profits from a company and receive pay packages that are probably more then they would get without unions in the picture.

With enough union power, it is even possible to squeeze industry right into bankruptcy. But it is unlikely such a squeeze is taking place. At best, or rather, at worst, unions are just one straw that broke the camels back.

Union power has been declining for decades. Today, just 12.5 percent of wage and salary workers are union members. Back in 1983, a full 20.1 percent of the workers were union members.

Beside a graying of the line between owners and workers (thanks to employee stock ownership plans and option packages), the labor market has become more free-flowing. Jobs are more likely to be moved overseas to save a buck. Workers are more likely to hop around trying to get the best deal rather than sit back and enjoy the comfort of job security and a pension. Most workers have not seen significant wage increases during the time since this trend has been building, so it may not be a system that is working for all (not that they always have a choice). However, on my last visit to Russia some told me they liked things better under communism.

Perhaps the real culprit behind the steady weakening of unions is bad union management. Some unions don’t realize you can’t get blood from a stone, and if your union members work for a poorly run company or one that could easily outsource entire swaths of manufacturing, different tactics and goals may be in order.

A good example of poor leadership in today’s unions is the recent fiasco with the Metro Transit Authority strike in New York City. Service jobs, as FOX News’ Terry Keenan pointed out in a recent column, are the last areas of labor strength. You can’t outsource a bus driver. By all means, the MTA union was in a position of power — they could shut down the entire transit system of the most important city in the world and cost billions in damages.

Unfortunately for the workers seeking a more gravy deal, they chose to start a strike but had little muscle to back it up. This is like starting a war with no bullets. By my estimates, the MTA union had a war chest of about $100 per worker on strike. What ever happened to the days when unions would support the workers while on strike with cash and food? Many of these guys live paycheck to paycheck, and are in no position to go without money for a month. All they achieved was losing even more public support for unions.

So if unions are so weak today, what is bringing down these two American industries? High oil prices? Government restrictions? Dumping by foreigners? Surely somebody is to blame.

Two words: bad management. There are very few costs that could destroy a business if the same costs had to be paid by your competitors. Oil is a good example. High oil prices can’t destroy the airline industry because all airlines have to buy oil and would therefore pass the costs on to consumers (as do successful airlines in Europe). If all airline workers were in a union, and they somehow got a ridiculously high pay package, it is something the airlines would have to pass on in ticket prices. Unless the prices to the consumer were so high and consumers stopped wanting the services entirely, the businesses would survive.

With airlines, the problem is twofold. First, I can’t think of one difference between one carrier and the other (other than I’m pretty sure I can get leather seats and a TV on JetBlue). Airline executives have turned airline travel into a commodity. The magic and nostalgia of the jet set lifestyle from the 50’s is long gone. I’m willing to pay a larger price premium for organic tomatoes than one carrier over another.

Who has the best seats? The best legroom? The best service? Lounge? Baggage handling? Food? You don’t know because there is no answer. When I book a trip, I’ll spend hours trying to find the right hotel, but the flight is just an equation of price and times. Are unions to blame for this? I’d point the finger of blame squarely at executives — none of whom are union members (though equally overpaid given their sorry performance).

What slim profits could be had serving up a product that has no premium value over competitors is ruined by a hyper-competitive marketplace. Airlines could charge a price premium if demand exceeded supply, or if they could build mini-monopolies on certain routes. The latter doesn’t exist because the government has been very good (possibly too good) at insuring competition in the business. No buying up all the gates in Newark and charging $500 to fly to Miami.

Demand rarely exceeds supply because airline executives made the brilliant decisions to do major expansions in the late 1990s because passenger travel was growing thanks to a hot economy. The paint wasn’t even dry on Northwest’s multi-billion dollar terminal expansion at DTW before they filed for bankruptcy.

Bankruptcy itself is another big problem. Unlike in Europe, it’s all too easy to wash away your mistakes and keep right on flying, ensuring solvent competitors will never be able to charge a price premium as supply will still exceed demand. If stock and bond holders of airlines “unionized” and forced some to shutdown, they would do better as a group.

The auto business is even more screwed up than air travel. Detroit has spent the better part of 30 years destroying what brand value they built up in the golden years for American autos. Today, many wouldn’t even bother test driving a new U.S. car — they wrote them off as crummy long ago.

Sure, pensions and union pay packages add a few thousand dollars to the price of a car, but does that explain why consumers will pay $10,000 more for a Toyota than a similar U.S. car or truck? American autos are fast becoming the choice for those that simply can’t afford a “better” Japanese auto. Are unions to blame for management never building a product that is saleable in a high gas price environment, or making desirable designs, or focusing on reliability? Did union members think up the Pontiac Aztec? The last major oil shock almost wiped out the entire U.S. auto business (and jump started the Japanese auto industry). Since management clearly didn’t learn any lessons that time, the U.S auto business can probably only last another couple years if gas prices (or the U.S. dollar) don’t fall.

Let’s not forget that foreign airlines are successful. Even Air France is far more successful than American Airlines. Think about that for a minute. France. Do you think it is because they have low-paid, hard-working labor?

The American automobile industry is losing out to the Japanese, and to some extent, the Germans. It’s not like GM is facing cheap imports from China. European and Japanese cars are expensive and these countries have had to deal with a falling U.S. dollar that makes U.S. produced goods cheaper. Germany has one of the highest cost and longest vacation time labor forces in the world. Toyota’s labor unions have won big bonuses for workers amidst all the profits. Japanese workers on the lower end of the income distribution have a bigger share of total income compared to Americans so you can’t say it's surplus cheap labor that makes the clock tick in the land of the rising sun.

Bottom line, Toyota makes better products that people are willing to pay up for. They have brand equity; GM and Ford have $7,500 cash back. Airlines have frequent flyer miles — a costly incentive to fly the same airline even though it stinks ("I hate ‘em, but that’s where my miles are…"). The biggest innovation out of the American auto business in recent years was employee pricing — another gambit to sell B-list merchandise at paper-thin profits.

Sure, it’s a bit unfair that employers can’t merge into one and call all the shots without government intervention, while employees, in theory, can set labor prices as one. Unions are not blameless in the slow death of these industries, but are far from the root cause. Besides, in 20 years there may not be any private sector unions. Then we’ll have to find the real culprits.

And everybody say: AMEN!!!

Indio

iTrader: (1)

Ktiger you made my point by acknowledging that health care costs are crippling everyone, GM is but one example, using your analogy of maintaining market share if health care costs go up every year the only way to keep your profit margins are to GAIN market share to offset those costs or pass them on to employees which has been happening for years now.

As for your labor union bashing and Fox News to bolster your views, they present a very biased view slanted towards Corporations and stock holders, a recent disclosure showed that CEO's in 2004 made 430 times more than the average employee up from 301 times in 2003 so who's killing who, what's good for the corporation is not good for the average working man/woman. Example: Ford announces 30,000 job cuts and the stock price jumps five percent, great for Ford and it's investors but what about the 30,000 employees , their families, the suppliers who make parts and the small buisnesses that are patronized in the communities where these people work and live, it creates a ripple effect that is multiplied many times, labor unions fought for many of the rights we enjoy at work today, the forty hour work week being one example.

You also don't appear to understand what I meant about politicians, example: after lobbying congress the pharmaceutical industry was allowed to write it's own legislation for Medicare Part D, who do you think this benefits, you, me? Last summer while we paid 3.50 for a gallon of gas oil companies reaped record profits, I assume you work for a living like most of us so wake up and realize the middle class is being squeezed, so my point was was if Washington does not get control of health care providers if will be the automakers today, another industry tommorow while we as individuals continue to pay more each year.

mmarshall

Sure, health-care costs are a problem, but there's a lot than can be done even without government intervention. Employees ( and managers) THEMSELVES can do a lot.....by living healthier lifestyles, giving up unhealthy foods, changing their diet, giving up smoking ( I did at age 22 ), excercising more, using generic presciptions, and, of course, by going to more reasonably-priced local medical-care clinics whenever possible instead of EXPENSIVE hospitals and hospital emergency rooms which charge outrageous fees and are an absolute nightmare in paperwork.
A lot of companies...including Ford and GM ( and the government, of course ) pay out a lot of cash to support and subsidize unhealthy life styles. While it is true, of course, that some diseases and problems ae beyond a person's control and cannot be avoided, and some are hereditary, the fact is that there is a LOT than CAN be done.

bitkahuna

iTrader: (20)

Advanced medical technology (devices, scanning machines, new drugs, to name a few), combined with an overweight sedentary aging population, equals skyrocketing costs. So we have 3 choices or some combination: 1) have less advanced care, 2) get off our butts and live healthier, 3) pay up!

If you believe the answer is more government regulation of the healthcare system or taking it over entirely, this will only make it more expensive, less efficient, and guarantee we have less access to advanced care. People in countries with "socialized" medicine think it's free, but they're paying up the wazoo in taxes for it and it's literally killing them because of care that is delayed or denied.

Did you actually read his article? It said while unions are partly to blame it's corporate management that's the problem combined with (in the airlines case) it being too easy to go in and out of bankruptcy and not really fix the problems. Unions did some good things decades ago but labor laws have largely regulated what they fought for and they abused their own power and are killing many golden gooses.

The politics of envy. Don't like it? Become a CEO! Nothing stopping you. A CEO who causes share prices to double has doubled the value of an entire corporation and their compensation while often ridiculous in terms of what they can spend in a lifetime, is still a relatively small fraction of the value they've created. I don't always like how they go about it and I've certainly worked with and for CEOs who thought very little of their employees but I still don't resent what they're paid.

Makes no sense because a corporation wants the best people running it, and that requires competitive compensation. Or would you rather have an 'average man/woman' running GM?

I take it you'd rather have the government regulate how much profit is allowed or regulate the price, or tax 'excess' profits? These have all been tried and all have unintended consequences. And it's REGULATION that has created what are almost monopolies in the oil companies.

ktiger

Indio, I'm just not a fan of big brother telling us what to do. You and I both know that if the government start with controlling health care eventually they will expand the power. As for CEO pay, that's been out of control but I don't have an answer for how to stop the "man" from filling his own pocket. Yet the same can be said about Congress. They have a pension and all expense paid health care at the tax payers expense. Why don't they have a 401K like most of us?

If the government gets involved with health care it will inevitably lead to rationing and no one wants that.

Indio

iTrader: (1)

Bit you must be a CEO, when I become one maybe I will share your views, as far as creating profits some CEO's do but a large portion don't, they lost money, so envious of a person who doesn't help the bottom line but collects a huge salary, bonus and company stock, yes, great work if you can find it., I acknowledged that the 30,000 job cuts was good for Ford's stock price but what about what about the employees and families, plant suppliers, and communities where these people live, work and shop, how do these small buisnesses recover the lost income, my aim was not to make this a boardroom vs. breakroom discussion, but remember that the company's money is managed upstairs but generated downstairs.