The Way Forward may be concrete in the minds ofMotor Co. executives, but it resonates for its vagueness with many others.
Althoughis promising to close 14 manufacturing plants and return its North American automotive operations to profitability by 2008, the restructuring plan only identifies a handful of the plants and sets few business or financial milestones.
In fact, CEO Bill Ford admits the company will become even less forthcoming with Wall Street, saying the auto maker will discontinue publishing its annual earnings guidance in an effort to establish more long-term thinking and risk taking within Ford.
Bill Ford drops the hatchet at Ford, with five announced plant closings, tens of thousands of layoffs.
As for the $5 billion the company says it will save from the recent health-care deal with the United Auto Workers union, Chief Financial Officer Don Leclair declines to say where it will go and how it will help push the Way Forward. (See related story: Slim Majority of UAW Members OK Concessions to Ford )
And plans for a new North American assembly plant, subtly mentioned in a lengthy talk by Mark Fields, president of the Americas, also is short on detail. The plant will be based on â€ślow cost, (but) not necessarily geography,â€ť Fields says. The auto maker is not disclosing timing or likely products for the facility.
In a question and answer session following the formulaic announcement of five plant closings and the termination of between 25,000-30,000 jobs between now and 2012, analysts and reporters were turned back more often than they were given a straight answer.
Assembly plants in St. Louis, Atlanta, and Wixom, MI, all will get the axe, with St. Louis slated as the first to go sometime this quarter. Wixom is next, Fields says, in the second quarter of 2007. (See related story: Ford Closing Seven Assembly Plants )
A transmission plant in Batavia, OH, where Ford not long ago spent untold millions to retool for a new generation of continuously variable transmissions used in Ford Five Hundred sedans and derivatives, also will go, as will the Windsor, Ont., Canada, casting plant, the closing of which was announced previously. The St. Thomas, Ont., assembly plant will be reduced to one shift.
The plants marked for closing account for 7,469 hourly and salaried employees, according to Ford data. The shift cut at St. Thomas will affect another 1,200 people, the Canadian Auto Workers union says. (See related story: CAW Not Giving Up on St. Thomas Future )
The spate of closings also includes two additional assembly plants to be announced later this year and two more slated to close between 2008-2012. Overall, 14 manufacturing facilities will be idled by 2012, including seven assembly plants, cutting annual vehicle-making capacity by 1.2 million units, or 26%, by 2008. Ford would not disclose which assembly plants were on the shortlist for closure.
â€śWe will be announcing two more (this year),â€ť Fields says. â€śAnd a lot of work goes into these decisions. We know this causes stress for employees and for the communitiesâ€¦.â€ť
But, he says, the decision will be based on the demand for product, easy access to materials and each individual plantâ€™s place in the overall business plan.
The plants slated to be announced later this year for closing have yet to be determined by Ford, sources say, in hopes of encouraging the plants to compete against each other on production goals.
The auto maker cut 10,000 jobs in 2005, about 8,000 salaried and hourly workers from the automotive side and another 2,000 from Ford Motor Credit. In November, it announced plans to eliminate another 4,000 salaried workers.
Still, there are promises that resound: Hybrid versions of the Ford Five Hundred, Mercury Montego, Ford Edge and Lincoln MKX will be delivered between 2008-2010 as part of its previous vow to build 250,000 hybrids a year by 2010.
The company also says it will achieve a net material cost reduction of $6 billion by 2010 while promising more global vehicle architectures.
The movement to global vehicle architectures â€śis led by the effort in Europe,â€ť Jim Padilla, Ford president and chief operating officer, says, â€świth the (Premier Auto Group) teams, with the B-cars and C-cars being the best example. We started with passenger cars and have pretty much consolidated them.â€ť
The companyâ€™s action is failing to generate any great enthusiasm on Wall Street, despite the announcement sending Fordâ€™s stock piece upward slightly by about 5.3% near the end of the day.
â€śI think this is dĂ©jĂ vu with what they did in 2002,â€ť says one Wall Street analyst who asked not to be named. â€śThey are delusional if they think they can maintain market share. I think they need to consider shrinking the company.â€ť
The inability of these auto behemoths to regroup stems from their age and size, says Earl J. Hesterberg, a former Ford sales executive and current president and CEO ofAutomotive Inc.
â€śThey (Ford andCorp.) have to size their companies for their level of business,â€ť Hesterberg says. â€śAnd they haven't been able to do that in recent history.
There are a lot of constraints facing these companies that are 100 years old. And they don't have the complete freedom to do whatever they want.â€ť
In a release, Citigroup cites the lack of specifics in the Ford plan, noting, â€śfinancial guidance for â€™06 provides little detail.â€ť Citigroup holds onto its sell status for Ford.
The auto maker refuses to address its critics in specifics, though, as Leclair calls 2006 â€śa year of transition.â€ť
â€śThe path to profitability will not be linear or smooth,â€ť Leclair says. The auto makerâ€™s 2006 projections show pre-tax losses for both its North American operations and total automotive operations
Ford unveils its Way Forward plan as it reports a 19.2% gain in fourth-quarter earnings.
At the same time, the company reports a 2005 pre-tax loss in 2005 of $1.6 billion in North America, a drop of $3 billion from 2004, blaming dwindling U.S. market share, lower dealer inventories and a poor exchange rate.
Fordâ€™s North American sales totaled $81.4 billion in 2005 compared with $83 billion in the prior year.
Overall in 2005, Fordâ€™s worldwide automotive sector reported a pre-tax loss of $1 billion, compared with a pre-tax profit of 850 million year-ago.
Fields preemptively acknowledged skepticism of the effectiveness of the plan following the failure of 2002â€™s revitalization program to bail out the auto maker. That plan, too, was unveiled with themes of a new vitality and aggressive pursuit of excellence.
â€śMy request, including to those of you who have written us off, is to keep an open mind and to ultimately judge us by our results â€“ not our words,â€ť Fields urges.
Bill Ford, as well, addresses the skeptics, saying that the company has â€śnever seen this level of cuts taking place; never seen this level of innovation.â€ť
â€śItâ€™s worked with Ford of Europe, worked at, and itâ€™s working at Land Rover as weâ€™re sitting here,â€ť Bill Ford says. â€śA lot of the levers weâ€™re pulling were pulled before, and itâ€™s worked.â€ť
â€“ with Cliff Banks