Could this be the future of Wal-Mart?

[southsider2k5]

Ford is closing 14 plants and getting rid of 30,000 workers to try to cut capacity by 1 million vehicles per year. The interesting thing is that their biggest expense that puts them at a competitve disadvantage with the imports is their health care costs. They estimate that health care adds about $1500 to the cost of each car that they sell. Combined with the cuts Ford made earlier in 2000, they will have cut their workforce from about 150,000 to around 75,000-80,000 employees when all is said and done.

 

Job One at Ford: Cut jobs, factories

Automaker slashing payroll by 30,000, closing up to 10 plants

 

By Jim Mateja and Rick Popely

Tribune staff reporters

Published January 23, 2006

 

 

The ailing Ford Motor Co. will announce a massive restructuring Monday, closing anywhere from four to 10 assembly plants and slashing nearly 30,000 jobs in a bid to return to profitability in North America.

 

Stung by a double whammy of soft sales and strong competition from its Japanese rivals, the Dearborn, Mich.-based automaker will have reduced its capacity by roughly 25 percent when the cuts are finished, making it a smaller and, it hopes, more efficient operation.

 

Ford has enough capacity to turn out 4 million vehicles a year. Last year it made only 3.15million.

 

Ford's Torrence Avenue assembly plant on Chicago's Southeast Side is expected to sidestep the cuts because of recent updates that made it one of Ford's most modern plants.

 

But other parts of the Midwest won't be so lucky.

 

Among the plants expected to be shuttered is the automaker's St. Louis operation, one of two plants that produce the Ford Explorer sport-utility vehicle--a segment of the industry that has been hit hard by high fuel costs.

 

Ford is expected to keep open its Louisville Explorer plant, which is considered the more modern of the two.

 

Explorer sales plummeted 29 percent in 2005 to 239,788, a far cry from 2000, when Ford sold 445,157 of them at a time when consumers enjoyed far lower fuel prices.

 

"We make a product that's not efficient as far as gas mileage," said Dennis Gallie, a member of United Auto Workers Local 325, which represents assembly workers at the plant in Hazelwood, Mo., just outside St. Louis. "Historically, that tends to mean a plant is on its way out."

 

Ford's recovery plan, dubbed "Way Forward," follows General Motors Corp.'s decision late last year to sharply curtail capacity and eliminate tens of thousands of jobs as the U.S. auto industry struggles to find a way out of one of its biggest tailspins in years. In the first nine months of 2005, Ford lost $1.4 billion in North America.

 

High fuel prices and an uneven economy have forced automakers to rethink their product lines. In addition, Ford and GM face steeper labor costs than their foreign counterparts, whose growing North American plants employ far fewer union workers.

 

But some workers say Ford's problems are the result of poor corporate decision-making going back several years.

 

"When they had the money seven or eight years ago, they bought the Volvo car company when they could have invested in a hybrid vehicle we could be driving today," said the UAW's Gallie, a former Chicagoan who has worked at the St. Louis plant for 17 years.

 

Acquiring other automakers, among them Volvo and Land Rover, was the handiwork of Jacques Nasser, Ford's chief executive at the time. Bill Ford, the great-grandson of company founder Henry Ford, ousted Nasser in 2001, taking the reins himself. In 2002 the company undertook a restructuring that cut thousands of jobs and closed five plants.

 

When the upcoming cuts are finished in the next four or five years, Ford will have reduced capacity by 1 million cars and trucks, to about 3 million a year. Of the 30,000 jobs targeted to be eliminated, 25,000 will be hourly positions. Roughly 5,000 salaried jobs will be cut as well.

 

In addition to the St. Louis plant, at least three others may be on the chopping block: one in St. Paul, another in Atlanta and a third in Wixom, Mich.

 

St. Paul builds the compact Ranger pickup and Atlanta the Taurus sedan. Ranger sales fell 23 percent last year, while Taurus sales dropped 21 percent.

 

The Wixom plant produces the aging Lincoln Town Car, which is scheduled to be replaced in two years. Production of Ford's GT sports car, also produced in Wixom, is set to end with this model year.

 

"It's a good move because Ford can't be a full-line manufacturer," said David Cole, president of the Center for Automotive Research. "They have to focus on investing their money where they'll make money. If they get 1 million units out of production, they can go forward to regain profitability."

 

Overseeing the restructuring is Mark Fields, head of Ford's North American automotive operations.

 

"He made it clear the attitude at Ford is change or die," said Cole, who has had discussions with Fields recently.

 

Cole said Ford probably would see the benefits from the cuts fairly quickly. The hourly worker now earns an average of $130,000 including benefits. "But get them to retire through a buyout and that goes down to $50,000 with benefits," Cole said.

 

Joe Phillippi, a principal with AutoTrends, an automotive consulting firm, said the salaried worker cuts would be necessary to show the union there will be shared sacrifice.

 

"The only people sure of their jobs are Bill Ford and Mark Fields," Cole said.

 

Whether the plan will help Ford's stock is unclear.

 

Standard & Poor's Ratings Service and Moody's Investors Service lowered Ford's credit rating further into junk status earlier this month.

[NorthSideSox72]

Ford is closing 14 plants and getting rid of 30,000 workers to try to cut capacity by 1 million vehicles per year.  The interesting thing is that their biggest expense that puts them at a competitve disadvantage with the imports is their health care costs.  They estimate that health care adds about $1500 to the cost of each car that they sell.  Combined with the cuts Ford made earlier in 2000, they will have cut their workforce from about 150,000 to around 75,000-80,000 employees when all is said and done.

 

Ford has consistenly allowed themselves to be bullied by unions. I doubt Walmart would allow that to happen (unless their management takes a U-turn). Ford has also made an endless series of marketing blunders over the last 10 years. They did this to themselves - no one made them pay their line workers 130k a year.

 

With Walmart and that ridiculous law in MD, that's different. They are being bullied by the government, which is wrong. Ford has been bullied by the unions, which is as much Ford's fault as anyone elses.

[NorthSideSox72]

Ford is closing 14 plants and getting rid of 30,000 workers to try to cut capacity by 1 million vehicles per year.  The interesting thing is that their biggest expense that puts them at a competitve disadvantage with the imports is their health care costs.  They estimate that health care adds about $1500 to the cost of each car that they sell.  Combined with the cuts Ford made earlier in 2000, they will have cut their workforce from about 150,000 to around 75,000-80,000 employees when all is said and done.

 

Ford has consistenly allowed themselves to be bullied by unions. I doubt Walmart would allow that to happen (unless their management takes a U-turn). Ford has also made an endless series of marketing blunders over the last 10 years. They did this to themselves - no one made them pay their line workers 130k a year.

 

With Walmart and that ridiculous law in MD, that's different. They are being bullied by the government, which is wrong. Ford has been bullied by the unions, which is as much Ford's fault as anyone elses.

[Balta1701]

To answer the question posed in the title...this is one possible future for Wal-Mart, if the employer-provided health care system continues in this country, and is mandated by law in states/the whole country for certain employers...and if no government action is taken to reform the health care system to hold costs down at any point...and if people aren't willing to just, you know, fall ill and die.

[Rex Kickass]

Of course if Ford made cars worth driving....

[EvilMonkey]

Not to totally demean our proud, union autoworkers, but since when is it worth $28/hour plus health benefits to push a button, or put in a car seat? I worked briefly at the Ford stamping plant in Ford Heights, and there is not much brain power needed. Yes, the high pay earned by our middle class is what helped to fuel our country's great growth, but when people in China and Korea do the same thing for $2, it is time to at least rethink the current strategy. Should they be making $21,000 per year? No. But should they be pushing $100+k? Maybe not.

[kapkomet]

To answer the question posed in the title...this is one possible future for Wal-Mart, if the employer-provided health care system continues in this country, and is mandated by law in states/the whole country for certain employers...and if no government action is taken to reform the health care system to hold costs down at any point...and if people aren't willing to just, you know, fall ill and die.

Again, I'll pose the question, is health care supposed to be government funded and/or ran?

[Texsox]

Again, I'll pose the question, is health care supposed to be government funded and/or ran?

 

Government? No

Employer? No

 

No one is suppose to fund it. And that may be the root of the problem.

[sox4lifeinPA]

Again, I'll pose the question, is health care supposed to be government funded and/or ran?

 

funded? no

organized? maybe

implemented? HELL NO!

[sox4lifeinPA]

Could this be the future of Wal-Mart?, Ford to layoff 30,000 workers.

 

only if the future of Wal-Mart includes hiring 30,000 former Ford employees....

[Balta1701]

Government? No

Employer? No

 

No one is suppose to fund it. And that may be the root of the problem.

That I'll agree with. Then, I think, that leads to 1 more question...and it's one the President is going to launch a debate on here in about a week or so...who is the best person to pay for it? Someone is going to have to, so before everything breaks down, we better figure out an answer to that question.

[Texsox]

Is anyone thinking that a healthy workforce helps us to compete in a global economy? Is our society better off, or worse off, with uninsured workers?

[kapkomet]

Government? No

Employer? No

 

No one is suppose to fund it. And that may be the root of the problem.

That's an interesting observation.

 

I've said this before on here, too, and it's a really harsh stance. The little healthcare company I worked for previous (which I left and you will see why in a second) had a CEO who always ran around saying that "people in America need to get over the fact that health insurance is not a God given right"...

 

Of course, he got rich (no one else did in his craptacular POS company) by those same health insurance funds. A wee bit hypocritical, don't ya think? That's one of the reasons, among many, why I left.

 

But, the heart of his argument is somewhat true. The only problem is it splits the 'classes' in the country further apart.

Edited January 24, 2006 by kapkomet

[FlaSoxxJim]

only if the future of Wal-Mart includes hiring 30,000 former Ford employees....

 

Who does this smartass belong to?

[Texsox]

So the next question becomes, is it in our countries best interest to have a healthy population?

 

History shows societies that fell because of the plague and other maladies. We need some level of public health to save ourselves. We are packed into cities and towns where infectious desease could spread rapidly. It would seem to be in our self interest to want people healthy.

[southsider2k5]

The irony of all of this is that these are the jobs that all of American wants. They are extremely high paying jobs for people with not nearly as much education as most people in that income bracket have. These people have a pension, health insurance, and high wages. Well a funny thing happened, American's didn't buy enough American cars, to keep American's working. American's seem to expect their jobs to provide them with everything, but yet they won't accept the difference in both cost and quality that comes with more resources going to wages, than going to either quality and/or research. Now because of that, instead of these people are out of jobs and probably pretty unemployable because of their typical educations and wage levels. We can't have it both ways. We can't expect corporate America to shoulder all of these extra cost, yet desert the industry at the first shot. Now not only do they not have insurance, 30,000 people won't have jobs when all is said and done.

[Texsox]

I was part of a Career Pathway project that was created to help textile workers who were out of work after Levis and others moved out of the country. One thing we discovered with that population, and I suspect may be at work here as well, is their experience level.

 

Many will have been at the plant for a couple decades, with steady cost of living increases, yet their job skills did not improve beyond the first year or two. They were doing the same job, in this case sewing blue jeans, and there is a limit on how good you can get, and most workers hit that wall quickly. I used the statement they have 1 year of experience repeated 20 times. So they aren't anymore valuable to their employer in year 8 as they were in year 2, they only cost more. This is a reflection on factory work, not a reflection on the people and their work ethics.

 

I don't think you would know the difference in a Mustang built by 25-year veterans or 2-year veterans, yet Ford would know in the bottom line. The answer from a manufacturing side, is investing in machines that do not get more expensive with age, outsourcing to cheaper labor markets, and creating value with the next "hot car".

[FlaSoxxJim]

So the next question becomes, is it in our countries best interest to have a healthy population?

 

History shows societies that fell because of the plague and other maladies. We need some level of public health to save ourselves. We are packed into cities and towns where infectious desease could spread rapidly. It would seem to be in our self interest to want people healthy.

You think? I agree, it seems logical enough.

 

Proactive healthcare costs 1/5 to 1/10 of what reactive healthcare costs. But it is perfectly clear we're not really serious about ever moving to a federally guaranteed proactive model.

[Texsox]

You think?  I agree, it seems logical enough.

 

Proactive healthcare costs 1/5 to 1/10 of what reactive healthcare costs.  But it is perfectly clear we're not really serious about ever moving to a federally guaranteed proactive model.

 

It seems to come down to what is fair. I've always believe when people who are getting government benefits are receiving more than what the middle class has, there are problems.

 

A classic situation I remember was a young mom who worked for me through a temp agency. Both her and her husband worked at minimum wage jobs, and their children qualified for some programs. One was dental. The same time I was writing a large check for orthodontics for my daughter, she was b****ing she couldn't select which Orthodontist to take her daughter. Stuff like that creates a backlash against programs.

[JUGGERNAUT]

It's the Global Economy people. It's guaranteed to produce the lowest cost labor supply in the world today or your money back.