Saturday, March 31, 2007

Fordfare: Fletcher’s Vanity

From the Louisville Courier-Journal:

The odds that Ford Motor Co.'s Louisville Assembly Plant will survive the next round of plant closures improved this week after union workers approved a set of cost-cutting moves, analysts said yesterday. But it's too soon to predict whether the plant and its more than 3,000 jobs are safe - even with the added promise of $200 million in state incentives available if Ford invests in its two Jefferson County factories.

Winning the United Auto Workers concessions, which had already been approved at 35 of Ford's 42 plants in North America, "improves the chances of the plant's staying open," said Art Spinella, president of CNW Marketing Research in Bandon, Ore. The agreement at least lets Louisville Assembly "stay in the game" as it competes against other plants for survival. Having the cost-cutting agreement is better than not having it, said Catherine Madden, an analyst with market-research firm Global Insight in suburban Boston. "Unfortunately, I don't believe it guarantees a facility will stay open. … Nothing can change the fact that Ford is not selling enough vehicles to fill the capacity that they have," Madden said.

The Dearborn, Mich., automaker wants to reduce North American employment by 29 percent, to about 92,000 by the end of next year, from about 130,000. Ford has said it will close seven assembly plants across the country by 2009, but hasn't identified two of them. "I would think that Louisville would be one of the last on the list to go," Spinella said, calling it a historic linchpin for Ford. But that's no guarantee of security, he said.

"You hate to give up on something that has such longstanding history with the company - but they've done it before," he said. "Ford has a long history of closing down plants that they've had for a long time." The Louisville Assembly Plant on Fern Valley Road opened in 1955. Ford lists the Edsel, LTD and Ranger among the products in its history. "The auto industry has just changed so dramatically in the U.S.," and Ford "has gotten the brunt of that change," Spinella said. "That being the case, they have to make some decisions as to what they can and can't afford." Madden said she thinks a more car-like version of the Explorer will be made at the Chicago Assembly Plant, but Louisville Assembly could be assigned production of a different vehicle.

The 2007 Kentucky General Assembly approved an incentives package that would cover much of the cost of retooling the Explorer plant for a new vehicle even if employment doesn't increase. The measure, signed into law last week by Gov. Ernie Fletcher, provides tax incentives for investments in both Louisville Assembly Plant and Kentucky Truck Plant operations and retraining local employees to work there. The Kentucky Truck Plant, Ford's largest factory, builds the F-Series Super Duty trucks.

While F-Series sales have suffered from high fuel prices and a downturn in home construction, analysts believe the Chamberlain Lane plant is safe. Louisville Assembly is considered vulnerable because of the weak sales of the Explorer, Madden said. Unless the plant gains a new product line, it could face a shutdown, she said. "Overall, the state incentives are all well and good, and obviously they have a place in the decision-making," Spinella said. "But the reality is that Ford has too many plants. And all the concessions in the universe won't keep that plant running if they don't have the sales to back it up."

Despite Fordfare’s passage, employment remains unstable. The aforesaid codifies the incentives’ absurdity. No workers were saved. No employment was assured. The plant was not guaranteed. Fletcher merely passed legislation for legislation. Ultimately, his egotism will devastate Kentucky and Ford.

No comments:
KYConservativeBlogs Network
Another Opinion
Bluegrass Institute Blog
Blue Grass, Red State
Conservative Edge
Conservative Musings
Elendils Blog
Jefferson Review
Jim Clarks Muckraker
Kentucky Club for Growth
Kentucky Pachyderm 2
Kentucky Progress
On the Right!
Osi Speaks!
The Pure Investor
Right Foot Forward
Right in Kentucky
Steele's Kentucky
Tri-County Consulting
Vere Loqui