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Ford Closing Minn., Va. Truck Plants


 

 

An official announcement wasn’t expected until later in the year, but Ford Motor Co. was forced to confirm plans to close two truck plants when union officials leaked details to the press on Thursday. Despite the decision to close assembly lines in Virginia and Minnesota , Ford President Mark Fields insisted the automaker has no plans to scale back production of its best-selling F-Series pickup, or drop its struggling little Ranger truck.

 

The official announcement wasn’t expected for weeks, perhaps even months, but union officials in the Minneapolis suburbs forced Ford Motor Co.’s hand, on Thursday, when they leaked a memo announcing the decision to close the company’s Twin Cities assembly line, which produces Ford’s Ranger pickup. In a hastily convened news conference, Ford President Mark Fields confirmed the planned move, as well as the decision to shutter a plant in Norfolk, Va. , which builds Ford’s best-selling F-Series pickup.

 

The announcement was not entirely unexpected. Back in January, as part of its Way Forward turnaround plan, Fields revealed that the number-three automaker needed to close 14 parts and assembly lines by 2012. At the time, it identified only three targeted assembly lines, and said two more would be announced before the end of this year. Both Norfolk and Twin Cities will be idled sometime in 2008.

 

“This is a very difficult decision for all of us,” Fields asserted, during a telephone news conference, “but also a very necessary action needed to restore our North American operations to profitability by 2008.”

 

The big surprise was the planned closure of Norfolk , one of five factories producing the F-Series. Ford sold more than 900,000 copies of the pickup in 2005, for the second year in a row, and with that in mind, few observers had expected the automaker to cut any of those plants. But Fields’ top lieutenant, Anne Stevens, stressed that there were several factors considered in making the decision. These included flexibility, productivity, location, and logistics. Norfolk is a bit too far out of the automotive mainstream.

 

Asked whether the closure might mean a cutback in F-Series volume, Fields quickly countered that “We are reducing the number of plants, not F-Series capacity.” Stevens echoed that point, stressing that increased productivity should allow the losses from Norfolk ’s closure to be made up by the four remaining F-Series plants.

 

The demise of Twin Cities, on the other hand, was hardly a surprise, considering it was on the shortlist of most industry analysts, who pointed to steadily declining demand for the aged Ranger. During the news conference, Ford officials hinted that a new version of the pickup would likely come after Twin Cities closes, but it would be squeezed into another, more flexible plant in the Ford system.

 

Analyst Joe Phillippi noted that the earliest version of Ford’s Explorer SUV was derived from the Ranger, adding that with Ford’s newfound focus on flexible manufacturing, the next Ranger, “will go the other way,” and be based on the Explorer.

 

Flexible manufacturing means that a carmaker like Ford can produce a variety of different models on the same assembly line, shifting the production mix according to market demand. That has been a hallmark for the best Japanese makers, such as Toyota and Honda. As recently as 2004, only 38 percent of Ford’s North American plants could be classified as “flexible.” At that time, the automaker set a goal of reaching 75-percent flexibility, but the target has been increased to 82 percent, as part of the Way Forward plan.

 

While Ford watchers continue to wait for word on the other planned plant closings, Fields will have more positive news to reveal. The automaker is looking at its options for a new “low-cost” manufacturing facility in North America. That announcement is likely to come, the Ford executive promised, before the end of 2006.

 

 
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