Ford may mothball more North American plants
Michigan, St. Louis possible targets Auto maker still beset by overcapacity
Ford Motor Co., the world’s Number 3 auto maker, may close more plants after a 2002 plan to cut costs failed to end losses in North America, says Ford president James Padilla said.
“ We will align our capacity with demand and see how that falls,” Padilla, said yesterday at the Frankfurt International Motor Show. The auto maker already closed the Jaguar Browns Lane plant in the U. K. and will soon close a van plant in Lorain, Ohio, he said.
Plant closings may be part of a further restructuring that chief executive William Clay Ford Jr. plans to carry out in the fourth quarter. In August, Bill Ford promised “ new initiatives” that will go beyond cost- cutting to combat dwindling profits and shrinking U.S. market share. Last week, he reassigned five executives and named Ford of Europe executive vice-president Mark Fields to run operations in North America.
“ Ford is clearly on the path of closing at least a car plant if not a truck plant,” Global Insight Inc. analyst Rebecca Lindland said in an interview from Frankfurt. “They’re losing market share, and they have too much capacity.”
Ford got a start on plant closings with this week’s contract agreement with the Canadian Auto Workers. The union agreed that Ford could close a Windsor casting plant and reduce output at an engine plant, cutting 1,100 jobs, or 8.8 per cent of the union’s membership of 12,460. The auto maker surrendered market share in the U. S. for 28 straight months until July and August, when sales were boosted by offers of employee prices for all customers. The company has lost money in North America in three of the past four quarters, and profits have slipped 31 percent this year. CAW president Buzz Hargrove cited Ford’s declining market share in the Canadian union’s agreement to accept job losses.
Lindland predicted the auto maker will shut a Wixom, Mich. plant that makes the Lincoln Town Car and other models. A St. Louis plant that makes Explorer sport utility vehicles may also be vulnerable as U. S. buyers shift to more fuel- efficient vehicles in response to rising gasoline prices, Lindland said.
Ford has about 800,000 units of excess capacity, which implies it should close four plants, said Brian Johnson, an analyst with Sanford C. Bernstein & Co. in New York. He also expects Wixom, with 1,800 employees, and St. Louis, with 3,200 workers, to close. “ Ford should get a bounce from restructuring, assuming it gets a deal with the UAW to close several plants,” Johnson said.