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Ford may close 3 plants
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September 6, 2001: 10:56 a.m. ET
Automaker combines car and truck engineering units; mum on plant plans
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NEW YORK (CNNfn) - Ford Motor Co. announced consolidation of its car and truck engineering units and a published report said the ongoing review of its operations may close as many as three North American plants.
The world's No. 2 automaker said in August that it was conducting a strategic review of its operations as it moves to cut about 10 percent of its North American managers through early retirement in a cost-cutting effort.
The Wall Street Journal reported Thursday that interviews with suppliers and union officials suggest that as many as three plants could be in danger of closing – the Lorain, Ohio, that makes large vans; one of two small pickup truck plants in Edison, N.J., and St. Paul, Minn.; and an Oakville, Ontario, plant that makes the larger F-series pickup.
Ford spokesman Jim Vella said the Journal's report on potential plant closings was "pure speculation" and would not comment further. Shares of Ford (F: down $0.28 to $19.69, Research, Estimates) fell in early trading Thursday following the report.
The plant closings would certainly spur a fight with the United Auto Workers union, which has a contract that prevents layoffs before its expiration in September 2003. The company would have to pay much of the salary of laid-off employees of the affected plant until that time even if it closes them, greatly limiting the cost-saving opportunity from the closure.
The only move announced Thursday was that Chris Theodore, Ford's vice president of car product development for the last two years, will now be responsible for both car and truck development. The company said Gurminder Bedi, vice president truck product development, is retiring after 30 years with the company.
The two units have about 4,500 employees between them. Ford's Vella said that job cuts due to combination will not be significant.
"There will be some, but I can't put a number on it," he said.
At the conference call for investors last month when the early retirement program and strategic review was announced, Ford Chief Financial Officer Martin Inglis denied the company was looking at cutting product development programs, which he said were crucial to the company's future growth.
He also conceded that plant closings would be difficult to accomplish during the life of the current contract.
"I've said nothing is off-limit," he told analysts and reporters in a conference call. "But we do not have any near-term specific plans on plant (closures)."
In an interview with the Journal last week, Ford CEO Jac Nasser said he did not see any signs of relief from economic and competitive pressures, and that additional job cuts were being weighed.
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On Tuesday, Ford announced that its U.S. sales in August were off 7.6 percent from year-earlier sales, although that was better than the 10-to-15 percent decline that Inglis warned about in August when he lowered earnings forecasts for the year. 
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Ford Motor Co.
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