By Barry Wood
23 January 2006

The Detroit-based Ford Motor Company, which has been until recently the world's second-biggest automaker, says it is restructuring its North American operations, which includes closing 14 manufacturing plants during the next six years.

William Clay Ford Jr., addresses the media during a news conference in Dearborn, Mich., Jan. 23, 2006. Ford chairman William Clay Ford says his company is determined to restore profitability to its ailing North American operations.

In a televised news conference, Mr. Ford conceded that the company had been caught off guard by a shift in consumer sentiments and had too many large, fuel inefficient vehicles that people no longer wished to buy. He promises to recast Ford as innovative and market-driven company.

Mr. Ford spoke indirectly of the company's intention to reduce its North American work force by up to 30,000 during the next six years.

"I appreciate the fact that winning will require sacrifices by the people of Ford and there will be fewer of us here in the future than are here today," he said. "We take these difficult steps with a sense of compassion and gratitude to those who have served us with all their hearts."

Initial market reaction to the Ford restructuring was positive. The company share price, which has been near a 30-year low, rallied more than six percent on the announcement of cuts that were deeper than had been predicted.

David Cole, the head of the Center for Automotive Research in Ann Arbor, Michigan, says Ford had little choice but to implement a drastic restructuring.
"They are [Ford] looking at it as change or die. They have to shrink to a profitable platform to grow," he said.

The restructuring plan, which also emphasizes product development, will have little immediate cost savings. Ford is bound to costly wage agreements with the autoworkers union and will have to pay laid-off workers for many months after they have been terminated.

The restructuring also does little to address Ford's huge health-care costs, which are similarly tied to its agreement with the union.
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ABOUT THE AUTHOR

Russell Wilcox is a retired college professor who spends several months in Florida and several months in Rhode Island each year, and whose interests include boating and sailing, political activism, ballroom dancing and bridge. He has an MBA from Harvard, a Computer Systems CAGS from Bryant and a BS from Northeastern. He has worked in industry for EG&G and Texas Instruments, operated his own business with more than 200 employees, and served as Director of the Computer Information Systems Program for Stonehill College. He is a published author of two technical studies, and is the proud father of four children and the proud grandfather of six grandchildren. A holder of two patents in microchip connections and a true product of the melting pot, his father is the son of a Yankee farmer, and his mother the second generation daughter of Italian immigrants who retained their culture, but strove mightily to become Americans, sending four sons to fight against Hitler and Mussolini.