In a move previously announced, Ford detailed how it would cut up to 30,000 jobs in the next six years. The effects of the job cuts are expected to be far-reaching. Specifically, the ongoing relationship between the production union, UAW, and the company will need to change drastically. A central issue is a stipulation that still pays workers wages and benefits when no work is in the pipeline. In a competitive market where overseas companies can pay much less, this agreement from more robust times is heavily crippling.
Ford continues to lose market share to foreign companies and recently saw its No. 1 brand moniker fall to American competitor Chevrolet. Also hurting the bottom line are falling sales in its lucrative sport utility vehicle lines and rising costs of providing employee benefits. However, its past agreements with the UAW have limited its capacity to reduce jobs and close plants. Ford will need to come to new agreements with its major union before it can carry out this recent initiative.
On the other side of the equation are the municipalities that can expect plant closures. Ones already announced through 2008 are St. Louis, Atlanta and Michigan’s Wixom assembly plants and Batavia Transmission in Ohio. All together fourteen facilities should expect shutdown by 2012 though no other specific closings have been announced: some expect idling of St. Paul, Minn., and Cuatitlan, Mexico facilities. Many cities have in the past given subsidies and concessions to allow plants to remain in their towns. This trend may continue to keep certain plants open
Though profitable overseas, North American operations have bled red for many years, losing $1.6 billion last year. Ford is also cutting 4,000 salaried positions by end of year, but the march to the future seems painful for the No. 2 U.S car producer.