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Monday, January 23, 2006

A Closer Look at Ford's Way Forward

Bob Allen of Crain's Detroit Business writes:
I just finished reading a critique of an important move made by the head of Ford Motor Co. The critic says the CEO has "committed economic blunders, if not crimes. They may well return to plague him and the industry he represents as well as organized society.
Bob writes that the criticism was directed at Ford ... Henry Ford by the Wall Street Journal ... in 1914. Continue reading Bob's Excellent Column.

The next stop is Ford itself for an archived copy of the webcast of the Ford Motor Company Business Review and news releases including a detailed explanation of the North American "Way Forward" plan and the text of remarks by Chairman and CEO Bill Ford where he makes sweeping statements like:
Here is what we will not stand for: incremental change, avoiding risk, thinking short-term, blocking innovation, tying our people's hands, defending procedures that don't make sense, and selling what we have instead of what the customer wants. In short, we will not stand for business as usual.
The Detroit News Auto Insider reports that the end of "business as usual" means that by 2012 Ford will close 14 plants (seven of those vehicle assembly plants), cut North American manufacturing jobs by 25,000 to 30,000 and cut 4,000 salaried positions. That's nearly 30% of Ford's 122,000 person North American workforce and 25% of its capacity. Plants targeted for closure include Wixom MI, St. Louis MO, Atlanta GA, Batavia OH, Windsor Ontario. The company also plans to cut 6 or 7 of its 53 corporate officers by the end of the 1st quarter.

A key part of Ford's strategy is to increase production of hybrid gas-electric vehicles to 250,000 units by 2010. For plans hybrid versions of the Ford Five Hundred, Mercury Montego, Ford Edge, and Lincoln MKX debuting between 2008 and 2010. These were hyped in a couple of Time Magazine pieces that were, if anything, well timed to soften the blow.

The reaction to the sweeping plans was (predictably) mixed.
Shares of Ford gained 42 cents 5.3% to close at $8.32 on the New York Stock Exchange Monday.

The Detroit Free Press said
...If it works, Ford will become a smaller company, making less but selling all of it. If it doesn't, Ford will become a smaller company with even larger problems. The Wall Street Journal wrote ...What's really sad is that Ford is in such bad shape that few people think the restructuring and job cuts are too aggressive, even though they were larger than many auto industry analysts had been expecting.

The United Auto Workers response was pretty predictable. In Wixom, where Ford opened the plant in 1957 and 1500 workers will need to find new employment, there was anger and sadness. Thankfully, Wixom has reduced its dependence on Ford (12% - far down from 50% of days gone by) and much the same story is true in Hazelwood (near St. Louis).

The final verdict on yesterday's actions will not be known for years. One thing that is sure is that the auto industry has changed forever and Michigan will have to find a path to its future that relies less on cars. Here's hoping we can.

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# posted by farlane @ 4:40 PM
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