August 19, 2003

Ford Plant Finds Efficiency Is No Protector

ETROIT, Aug. 18 — The Ford Motor Company's assembly plant near Atlanta is one of the most productive car factories on the continent, but a top union official there said today that its future was in doubt.

Ford told union workers at a meeting in June that no new product is scheduled for the plant in the Atlanta suburb of Hapeville, which employs 2,300 hourly workers and produces the aging Ford Taurus and Mercury Sable sedans, according to Mitchell Smith, the top United Automobile Workers official at the plant.

Workers were also told that plans to build a new factory in Georgia were also suspended, Mr. Smith said.

Coming during a summer of labor contract talks, these developments reinforce the challenge that unions face in stemming the flight of domestic manufacturing jobs and the struggles of domestic automakers to bring costs in line with foreign rivals.

The development was reported today by The Detroit News, and some details of the meeting were previously reported by The Atlanta Journal-Constitution.

The local union had expected that the plant would be used to produce either the Futura, which comes out in 2005 and will be one of two family sedans to begin replacing the Taurus, or a new sports wagon. Ford has decided to build these vehicles in Mexico and Canada, Mr. Smith said, where labor costs less.

The Atlanta plant will continue to produce the Taurus and Sable — whose sales have been sagging — through the 2009 model year.

"I think it's a slap in the domestic market's face," Mr. Smith said. "They've got the best work force in the world here, they indicate they're going to stake the future on the work force, and then they give them the status quo and the new product goes to the Mexicans and Canadians."

Ed Lewis, a Ford spokesman, said, "the work force has done a good job and Ford wants to continue its presence in Georgia, but we're not in a position to discuss our future product plans or manufacturing strategy."

The future of the Atlanta plant is not likely to be clear until contract negotiations are completed.

Ford's comments to the union about the plant's future could simply be a negotiating tactic, though analysts say that such a hard-line approach would make it unlikely that Ford would be chosen the lead company in the negotiations, which are expected to conclude next month. In past years, the union chose Ford as its target company precisely because it had a history of being conciliatory on job security issues. But Ford's shaky financial standing means it is not in position to offer any guarantees this year, analysts said.

In the contract talks, which take place every four years, the union selects one company to focus on and the deal they reach there sets the pattern other carmakers follow.

The Atlanta plant was among the five most efficient assembly plants in North America, according to the most recent Harbour Report, a closely watched study of labor productivity.

But the plant itself is an older one, and Ford is trying to catch up to the so-called flexible manufacturing systems prevalent among Asian automakers. Such systems allow different kinds of vehicles to be produced on the same assembly line.

In a recent interview, Roman Krygier, a Ford vice president, said that 75 percent of Ford's plants would have flexible body shops by the end of the decade, saving $1.5 billion to $2 billion in manufacturing costs.

"Flexibility does give you better capacity utilization," he said, because a particular plant would not be restricted to producing a single product that might fall out of favor.

Another consideration is that domestic automakers are reluctant to build new passenger car plants in the United States, where labor costs are high, because whatever slim profit they make from the automotive business comes almost entirely from sport utilities and pickup trucks.

Ford, which lost $6.4 billion in 2001 and 2002, is struggling to compete. In a turnaround plan announced in 2001, the company said its 5.7 million vehicles of North American production capacity was nearly a million too much. The company laid out five plants for closing, including four in the United States. The Atlanta plant was not among them.

Getting the union to agree to such plant closings will be crucial to the Big Three's survival, analysts say.

"Their market share is going down and their costs are not competitive," said Maryann Keller, a longtime auto analyst. "This is the 11th hour for the auto industry."

Workers at the Georgia plant discussed the recent developments between shifts today.

"For years, we were No. 1 in production and No. 1 in sales in North America," said Brian O'Brien, a 50-year-old electrician who has worked at the plant for 18 years. "The work force here can compete with any work force in the world if we're given the right equipment."

Dressed in dark blue coveralls and holding a lunch box, Mr. O'Brien said that he loved his job and would like to see Ford produce new models at the Hapeville plant, rather than create jobs overseas.

"We've got workers here making good hourly wages," he said. "Think of the effect it has on the American economy."

"More and more jobs are going overseas," he added. "If you take this plant and move it to Mexico, all of that money goes there."

Paul Malizia, 48, a pipe fitter at the plant since 1986, said that what might be good for the company was bad for plant workers.

"It's no matter how hard workers work," he said. "If a company doesn't want your plant, they don't want your plant. It's all about money.

"After 30 years in the auto industry, you learn you've just got to go with what's happening. Such are the ups and downs."

Jimmy Dorton, 60, a slender white-haired millwright who retires in October, said he had two sons in college, one at Georgia Tech and the other at Georgia Southern. Their degrees will be worth having, he said, because he believes the days of high-paying manufacturing jobs are numbered.

"Probably, the union is on its way out," he said. He added: "You can't find a good $30-an-hour job. That's why I keep telling mine to stay in school, getting the education that they need."