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While employees expressed relief, they're not out of the woods yet. Ford plans to close another four auto assembly plants as part of a major restructuring effort. Two of them will be named later this year. Many experts consider the St. Paul plant a likely target.
St. Paul, Minn. — Ford's problem is pretty simple: The quintessential American car company has trouble selling cars in the U.S. Last year Ford made money everywhere in the world but North America, where it lost $1.5 billion.
The company's solution is a grand plan called "The Way Forward," rolled out with a certain amount of pomp Monday at the company's headquarters near Detroit. The plan includes closing 14 manufacturing plants, including seven vehicle assembly plants like the one in St. Paul.
Many expected "The Way Forward" would be the end of the road for 1,900 workers building Ford Ranger trucks there. But St. Paul was not on the list. Assembly plants in Atlanta, St. Louis, and Wixom, Michigan were. They will close by 2008.
Ford says it will announce two more assembly plant closures later this year, and two more will close before 2012. Mark Fields, Ford's Americas-region president and the architect of the restructuring plan, gave no further clues to St. Paul or the other plants left in limbo.
"We also know that this causes stress for our employees, and also the communities where we are still yet to make a determination. Our commitment is to make that determination as soon as possible, and work with communities to make that transition as smooth as possible," said Fields.
In the other details of "The Way Forward" plan, there are both bad and good portents for the St. Paul plant.
On one hand, executives spoke excitedly about Ford's increasing ability to manufacture outside the U.S. In discussing the types of vehicles that will lead Ford to profitability in North America, Ford makes no mention of the St. Paul-made Ford Ranger. Sales of the light truck fell 23 percent in 2005 -- a primary reason analysts consider the St. Paul plant vulnerable to closing.
CEO Bill Ford says the company will now take a blunt approach with models consumers do not want -- and the factories that make them.
"We develop vehicles to fill plants, sometimes at the expense of creativity. And that is why we must reduce capacity in North America," Ford said. "From now on, our products will be designed and built to satisfy the customer, not just to fill a factory."
On the other hand, workers in St. Paul might take heart in hearing that Ford intends to retrofit many of its existing assembly plants. By 2008, it plans to make 75 percent of its North American production "flexible" -- that is, able to produce more than one kind of vehicle on the same line.
University of Minnesota professor of strategic management Alfred Marcus says the St. Paul plant has a strong record of productivity, and may be a good candidate for conversion. But even that's not a perfect outcome.
"Even if they convert it, conversion doesn't take place in an instant. Even that would involve some sort of a shutdown," says Marcus. "It might be as long as three months to two years for conversion to take place."
Marcus says despite the possibility of conversion, the St. Paul plant is still in a very vulnerable position. Gov. Pawlenty reiterated Monday he will push for any state investment that might convince Ford to convert, rather than close, the factory.
Pawlenty suggested he is prepared for the bidding war that might ensue among other states with troubled plants.
"We want to find out what is strategically important to them -- what is a difference-maker to Ford," said Pawlenty. "And we'll invest in that because we want to align with their strategic future, not our strategic past."
Pawlenty flew to Detroit this month to pitch Ford executives on one particular idea -- a research and production facility for hybrid and alternative-fuel vehicles. The governor stressed Minnesota's leadership in ethanol production.
Though Ford has not signalled its level of interest in the governor's concept, its restructuring plan leaves the door open. CEO Bill Ford says by 2010, half the automaker's North American vehicles will be available as a gas-electric hybrid. He also says Ford plans to release four new ethanol-fuel vehicles in the coming year.
These details don't change one hard truth -- Ford still has four North American assembly plants to close, and intends to cut 30,000 jobs in all. While St. Paul might not have been an easy first-round choice, analysts say Monday's announcement may only be a temporary reprieve.