LexFather

Black Monday' looms over Ford's future

Ten plants, 25,000 jobs ride on Bill Ford's 'Way Forward' strategy to be announced Monday.

Bryce G. Hoffman / The Detroit News
January 22, 2006

Ford Motor Co. workers already have a name for tomorrow.

"It's Black Monday," said Mark Mockaitis, a line worker at Ford's assembly plant in St. Paul, Minn.

Like workers from Wixom to St. Louis to Mexico, Mockaitis is anxiously awaiting Monday morning when Chairman and Chief Executive Officer Bill Ford Jr. takes the podium in Dearborn to outline a massive restructuring plan he calls the "Way Forward."

As The Detroit News first reported Dec. 7, Ford will shutter at least 10 assembly and parts plants and cut at least 25,000 blue-collar jobs in North America over the next five years, according to people familiar with the plan.

The automaker also plans to cut 4,000 salaried jobs by April 1. The layoffs begin this week. Ford also will commit to reducing its number of top executives by March 1.

While workers like Mockaitis wonder where their jobs will be tomorrow, Wall Street waits to see whether the plan goes far enough.

The company that led America to greatness and put the world on wheels now faces one of the biggest challenges in its 103-year history. And for Bill Ford, the great-grandson of Henry Ford, the stakes are not only the fate of a storied company, but the legacy of one of America's last great dynasties.

"It's the most serious crisis at Ford in modern times," said David Cole, head of the Center for Automotive Research in Ann Arbor. "I think they view this as a last shot."

The situation could hardly be more critical. Ford's market value has plunged by an astonishing $40 billion since 2001. Its North American automotive business is hemorrhaging cash and market share.

Ford posted a net profit of $1.88 billion for the first nine months of 2005, but its North American unit has lost more than $1.4 billion before taxes. The numbers are expected to look even grimmer Monday when final 2005 financial results are reported.

Meanwhile, Ford's domestic brands -- Ford, Lincoln and Mercury -- saw their combined share of the U.S. market fall 4.7 percent last year, from 18.3 percent in 2004 to 17.4 percent in 2005. A decade earlier, Ford's market share stood at nearly 25.6 percent. Every percentage point of market share represents 170,000 vehicles.

"We do have a North American auto business issue and we are committed to fixing that," Bill Ford said. "It's going to be painful for some people."

So far, Ford has responded by cutting its white-collar work force, selling its Hertz rental car business and reshuffling senior management. But one fundamental reality remains unchanged.

Ford's North American manufacturing operations still look a lot like they did when the company built one out of every four cars and trucks on the road. Ford has the factory capacity to build 4.5 million vehicles in North America, but produced just 3.3 million last year. As a result, Ford's factory utilization rate is the lowest in the industry -- just 79 percent, Harbour Consulting said last week.

http://www.detnews.com/apps/pb...20408

bitkahuna

iTrader: (20)

Give Bill Ford one credit point - he's no longer accepting any pay until they become proftable.

Pearlpower

iTrader: (2)

Without going into the reasons on why this is occurring, I do feel for those that will be impacted from these changes and wish them and their families the best.

JDMUSCLE

iTrader: (1)

well, i feel very bad for the people that are gonna lose thier jobs......ford loss of market share is due to poor quality automobiles and thats mainly why they are failing, its not the company its the product.

for example...look at the ford 500...who on earth with the right mind consider that car, clock the steering wheel and the power steering pump starting crying out loud....the dash feels like the plastic toyota uses in the trunk. the car looks like a bad rental car, trying to copy the bland look of the toyota cars but it has badly back fired!!

Trexus

It's sad that Ford dropped the Taurus, Tempo and Contour. They never tried to make them better. Instead each year it's realibility got worst and they never stayed consistent. Now Ford has the Five Hundred and the Fusion. There is no history with these new cars. Will they last? Ford should change their stategy name from "Way Forward" to "Way Behind".

Pearlpower

iTrader: (2)

I actually do like my Fusion. V6, 6 speed, handling that easily bests that of an Accord or Camry. Nice stereo with MP3 6 disc changer which can hold almost 900 songs. Good room front and rear. Decent acceleration. OK braking. The car is easy to drive unlike some others out there. I like the style. Seats are comfy. A/C is cold. Rear view is horrible due to raised backseat deck. I cannot see cars headlights at night behind me! Tranny shifts are incredible slow (a problem again).

Now for the Ford part many are used to; dealer service repair twice and I need to go back for 2 other issues on the car. Now has 8k miles on it.

The car has all of the safety items but with Ford you always can count on excuses when someone is killed in their products (remember last gen death trap F-150?). I am hoping for something better this time around similar to the new F-150 which does well in crash tests.

The car is a huge step over the Taurus which is not saying much as the Taurus was the bottom of the bucket. So far the Fusion gets me to where I am going though one moring it simply would not kick over and I left it though it fired right up later and has not repeated this.

BTW ,it's a company car. I would rather have an Accord or Camry myself and had a choice of this or a 500.

mmarshall

I have to disagree. I did a review of the AWD Five Hundred a few months ago and was quite pleased with the car, although it is perhaps borderline underpowered even with the CVT. Its fit-and-finish, quality of materials and build quality is substantially above average for a Ford product.

Now........if you want to see a real piece of junk at Ford, look at the materials the new Mustang is built out of.

Back to the financial situation here at Ford...on topic. Of course the company ( like GM ) has to get back into the black somehow, but I'm not sure that laying off all those people ( again like GM ) is the right way or the most sensible way to do it. Both companies need to sell cars....and to be more profitable. Tens of thouseands of laid-off employees, in all probability, will not be able to afford new cars, and even if they CAN swing a deal with their vastly vastly reduced income, do you think for one second they are going to buy from the company that just put them out of a job? Osama Ben Laden will wear a red, white, and blue Uncle Sam costume before that happens.
True, some Ford and GM vehicles, like the F-150 and Chevy Silverado, will sell no matter what....they are American institutions, but last summer proved that to move their slower-selling vehicles, both Ford and GM have to lower their list prices or have incentives. When the incentives were discontinued in the fall, the result was a disaster. One can argue, as some have, that neither company can afford to continue the incentives ( things like employee pricing and rebates ) ...they won't make enough money on each car to stay in buisness.
My answer to that is they simply can't afford NOT to......the last several months have proved that.
Granted. they will make less on each car, but the only way to make money ( even at a reduced profit margin ) is to sell cars, and the only way to sell cars is to lower prices. So you do the math....the company will have to sell more cars ( maybe at a lower profit margin) for a long enough period of time to erase the huge losses and start being profitable. It's like McDonald's....they can make a lot more money selling a billion hamburgers at a 2-cent profit each than selling a million at, say, a 5-cent profit.
Granted, I am not a professional buisnessman or economist, ( and I admit that ) but I honestly don't see any other realistic way out.

Lexmex

I had a blind date with a girl who worked at Ford down here. She talked about how the cars had all these great features and she could not figure out why not to buy them. I then showed what Japanese cars had and the quality issues (it is very tough legally in Mexico to make quality comparisons down here in the promotional literature as opposed to the U.S.). This made her kind of nervous (we did not go out again).

To be honest, Ford cars are not bad...it is just that the consumer normally comes down to buying one car and has to make a decision after adding up the +s and -s of the vehicles they are looking at.

mmarshall

Did she work at the Ford-Mercury Hermosillo plant? I don't know how close that is to Mexico City.

Pearlpower

iTrader: (2)

The number one controllable expense a business incurs is payroll. With Ford operating at less than 80% capacity, it simply cannot afford to continually pay out the huge health care benefits of idle employees while waiting for new products to drum up business. New products take a while to get from drawing board to production and the loss of payroll/benefits during this time would be substantial and something no company could adsorb for any length of time. Their decision though tough is reasonable to bring the company back into financial viability. Also keep in mind that selling more vehicles at a reduced margin would cost Ford and others more money in many areas especially in warranty work leading ultimately to less profits once again.

Fusion sales are strong as well as those of Mustangs and F-150's. Other models are not. 500's sell ok due to fleet sales, the same reason Taurus sales at one time eclipsed Accord sales.

For me I would not consider a Ford because of my prior experience with Ford products, dealer service, and how the company treats the American public as if we have just crawled out from a rock from safety issues in the past to their ridiculous advertising trying to link their NASCAR cars to their production cars which bear nothing in common other than name.

sha4000

iTrader: (1)

i was watching this on cnn this morning, this is going to really disrupt alot of ppls lives but ford has got to do it

toy4two

they can all get jobs working for Toyota, just leave the Union Card at the door....

...there is so much demand for Toyotas, especially the Prius, they will have no problem finding work, Toyota can't keep up with demand.

sha4000

iTrader: (1)

i doubt it unless toyota is going to build more plants

ktiger

Then tell him to give up his stock options, too! Better yet, give them to the men and women they just laid off.

spwolf

and they are not? ;-)