01/23/06: Despite the major showroom hits that Ford Motor Company has on its hands in the 2005 Mustang and 2006 Fusion, those successes alone are’nt enough to stem their major loss of market share in America and stop the red ink. No, there are much larger problems with Ford that go well beyond today’s product mix. This a truth that the company has admitted and faced up to today, announcing their “Way Forward” strategy.

Ford was profitable world-wide for 2005, but in America reported major losses. The reasons are many and complex, but for the most part land on the fact that they have too much production capacity for the amount of cars they are selling. Sales of large trucks and SUV’s slowed at a much faster pace then they had planned for while small cars and cross over vehicles have taken off. A segment in which Ford has few competitive or new products. It is simple math.

Achieving a lean corporate structure and significantly improving Ford’s assembly capacity overages are critical components of the Way Forward plan. “We’re now well past the point in which one or two hit products can correct the overcapacity we have or justify the staffing levels we maintain – even with the significant actions we’ve taken during the past couple of years,” Anne Stevens said. “Sadly, this isn’t just a Ford issue. It’s an issue for our domestic competitors, as well.” Ford announced a number of balanced strategies that have both positive and negative impacts. New product investment for the near future is a major cornerstone of the plan as are significant and deep cuts in both blue and white collar jobs. “As hard and painful as it is to idle plants and reduce our work force, we know these sacrifices are critical to set the stage for a stronger future,” she added.

Trimming Excess:

Cuts are planned to bring capacity in line with expected demand and to reduce fixed costs. To start with, 14 manufacturing facilities will be idled and cease production by 2012, including a total of seven vehicle assembly plants, reducing capacity by 1.2 million units or 26 percent by the end of 2008. This translates to 25,000-30,000 manufacturing jobs and somewhere near 4000 management and administration jobs to be cut. The ranks among officers are also expected to be reduced. The following are some of the manufacturing plant re-alignments:

• St. Louis, MO Assembly Plant which currently builds the Explorer, Mountaineer, and Lincoln Aviator will be shut down. An additional plant in Louisville, Kentucky also builds the Explorer and Mountaineer and will take up the slack. The Aviator is moving to another platform and will be built elsewhere.

• Atlanta, GA Assembly Plant built the Ford Taurus and Mercury Sable which is now out to pasture. The plant will idle with a complete closure or will await a new model to be announced.

•Wixom, MI Assembly Plant has been the home of the Lincoln Town Car, Lincoln LS, at one time the Thunderbird and most recently a portion of the plant was reserved for production of the Ford GT. The two Lincoln models are being replaced by 2008 and will likely be built elsewhere. The Ford GT is ending production.

• Batavia, OH Transmission Plant builds automatic transmissions and will close pending future product needs.

• Windsor, ONT Casting Plant is famous for the family of Windsor engine blocks that Ford enthusiasts have come to know. The Romeo, MI plant will likely take up the slack.

In a less descriptive bullet-point Ford announces long range plans to build a new “low-cost manufacturing site” for the future. What this means we can only surmise to be a new plant in Mexico or perhaps China. While it would be great to see a new “low-cost” plant be pioneered here in the States, the political, regulatory, and labor climates don’t really make a fertile garden for it.