DETROIT -- Cost cutting and plant closures got the most attention in Ford Motor Co.'s Way Forward North American restructuring plan announced Monday, Jan. 23.
After all, with a 10-year slump in market share and severe underuse of its assembly plants, getting smaller is Job 1. But Ford executives also touted plans to improve marketing and brand identity, develop innovative products and ultimately build sales.
"The Way Forward contains some strong medicine for our North American business," CEO Bill Ford said. "But it also contains the vision and strategic focus to rebuild the business."
Details were scarce. But here are some key promises: Ford will close 14 manufacturing plants from 2006 through 2012, including seven assembly plants. As many as 30,000 hourly and salaried factory jobs will be eliminated. Ford will reduce assembly capacity by 1.2 million units, or 26 percent, by the end of 2008. Ford's North American automotive business, which lost $1.6 billion before taxes in 2005, will return to profitability no later than 2008. An assembly plant near St. Louis will be idled in March, followed by an assembly plant near Atlanta late this year. The Wixom, Mich., assembly plant will be idled in the second quarter of 2007. Also, production at an assembly plant in St. Thomas, Ontario, will be reduced to one shift sometime in 2007.
This year, Ford will name two additional assembly plants to be idled before the end of 2008. Plants in St. Paul, Minn., and Cuautitlan, Mexico, are candidates. A transmission plant in Batavia, Ohio, and a casting plant in Windsor, Ontario, will be idled before the end of 2008. Ford will build a low-cost manufacturing site somewhere in North America. Ford will finish cutting 4,000 salaried, contract and agency jobs by the end of the first quarter. Ford will trim 12 percent of its corporate officers: Six or seven positions out of 53 as of Jan. 23. The reductions started last week. Ford will stabilize its U.S. market share in 2006. Ford expects net material cost reductions of at least $6 billion by 2010. Ford no longer will provide earnings guidance. Vehicle pricing will be closer to transaction pricing. Ford says it will cap "cash-on-the-hood" rebates. Investment in new products and use of global vehicle architectures will allow Ford to deliver more new products faster. They include more crossovers, small cars and hybrids. New hybrids announced last week are the Ford Five Hundred and Mercury Montego sedans and the Ford Edge and Lincoln MKX crossovers. All will arrive from 2008 through 2010. Ford says it will improve the average age of its products from 4.4 years today to 3.2 years by 2008. Ford intends to revive the Lincoln and Mercury brands, with Lincoln becoming the volume leader of the two.
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