Monday, January 23, 2006

Ford Wixom plant to close

From the Detroit News

Ford to shut Wixom and 13 other plants

"""Restructuring to cut up to 30,000 manufacturing jobs and 4,000 salaried positions.

Ford Motor Co. today unveiled a sweeping North American restructuring plan that includes slashing up to 30,000 manufacturing jobs, cutting 4,000 salaried positions, and closing 14 factories, including an assembly plant in Wixom.

The long-awaited plan titled "Way Forward” is designed to return Ford's North American operations to profitability by 2008. Those operations posted a pre-tax loss of $1.6 billion last year, the company said.""""

This comes as no surprise, but it's sad to see. My dad's retired from Ford's, and other family members also work there.

Many Wixom workers commute from Livingston County so the fallout will hit here as well, particulary the Brighton area. That'll mean less money will be spent in the county, particulary restaurants and retail. More for sale signs will probably go up as well, lowering the tax base of the community. The suppliers are also going to be affected by this. It's simply bad news for Michigan. The trickle down effect will be noticed.

Lastly, Buy American.


CWB said...

Thank you NAFTA

Keith Richards said...

This has nothing to do with NAFTA. The problem is that a huge chunk of the car buying public now buys foreign (mostly Asian, some European) cars, and the last time I checked there were NO Asian countries in North America. Furthermore, the majority of these foreign cars are now assembled in the U.S., although they only have a U.S. content of about 30% compared with a U.S. content of about 70% in "Big 3" built cars.

We need to ask why people are buying brands other than the Big 3. I hear people whining all the time about how foreign companies have an advantage because they don't have all the overhead from medical and pensions that the Big 3 has. This may be true but it has nothing to do with why people by cars. When people go into a dealership, they don't say "Gee, I don't like this Ford because Ford is spending too much money on retiree pensions.", they say "I don't think the seats are comfortable", or "I don't like the way the car looks", or "The fuel economy of this vehicle is not good enough", etc . . . . . Consider that in many categories American cars can be purchased for thousands less than their foreign competition, but that people prefer the foreign brand anyway. Obviously, vehicle pricing has little to do with the decision of foreign car buyers.

Everyone has their own reasons but the ones that I hear are 1) Did not like styling/interior of American Car; 2) Buyer believes that American cars are inferior quality; 3) Believes that foreign cars are more cool; 4) Buyer believes that foreign cars get better gas mileage. Some of these issues are valid. People have been complaining for years that many American cars are too plain and too boring, and I think that many of these buyers have voted with their feet and moved to other brands. But some of these problems are only image, for example the complaint about fuel economy and reliability. The truth on quality is that most brands of the "Big 3" are now in the top 50% in quality surveys, and many brands are close to the top. And quality is so good on modern cars that there is very little difference between the best and worst, not at all like it was 20 years ago. And on fuel economy, when vehicles are compared model by model across all brands, GM actually has more fuel economy leaders than any other manufacturer. That's right, many GM cars get better economy than their counterparts at brands like Toyota and Honda.

I personally believe that most of the problem is image. Look at Cadillac. 20 years ago everyone was laughing at them because of all their quality problems and their market share was declining rapidly. Today Cadillac is the most vibrant brand that GM has, because they have top notch quality and cool styling. When the Big 3 build a good product, people will buy it.

These days American companies create a design and then they try sell it for 6 years, with only a few minor modifications to the front and rear end halfway through the cycle. Often a design will get a lot of positive attention when it first comes out but after a year or so people lose interest as other companies bring out even newer designs. The older a car model gets the more that sales drop off. In the ideal world, car makers would come out with a new design every 2 years or so. For those of you who are old enough to remember, up until the mid-1960's car makers did come out with new designs at least every 2 years, with a major refresh after the first year.

Anther problem is that there is so much competition. Never have Americans had more brands and models to choose from. Every car company is chasing after market share so most have started making many models that are aimed at a specific market segment. So it is possible that Ford may make an excellent small car, but instead of competing against a half dozen brands like they used to, they now have to compete against a couple of dozen different brands, all highly targeted at a specific market segment. This is tough to compete against, even with an excellent product.

So we need to quit trying to find excuses to blame our problems on and get to work building competitve products!

By the way, I have never worked for the auto companies but I haved owned and only buy only American brand cars because I choose to support the workers in my home state.