The Way Forward

From Wikipedia, the free encyclopedia

Ford Motor Company's restructuring plan, made public in 2006, is known as The Way Forward.

Ford is attempting to reduce fixed capital costs while maintaining a special focus on cars and car-based crossover vehicles. Over time, it hopes to make more of its product line profitable instead of relying on a limited portion of the products for profit. Making good profits across the product line requires that the company reduce the costs of development and production, while introducing new products that connect with consumers.

In the latter half of 2005, Chairman Bill Ford asked newly-appointed Ford Americas Division President Mark Fields to develop a plan to return the company to profitability. Fields previewed the Plan, dubbed "The Way Forward", at the December 7, 2005 board meeting of the company; and it was unveiled to the public on January 23, 2006. The plan was revised on September 15, 2006 to accelerate plant closings.

"The Way Forward" includes resizing the company to match current market realities, dropping some unprofitable and inefficient models, consolidating production lines, and shutting down seven vehicle assembly plants and seven parts factories. Among these are plants in St. Louis Assembly (near St. Louis), Atlanta Assembly (near Atlanta), Batavia Transmission (Batavia, Ohio), Windsor Casting (Windsor, Ontario, Canada), and Wixom Assembly (Wixom, Michigan). Up to 30,000 hourly and salaried jobs (28% of the total workforce) in North America over the next six years are expected to be eliminated, which is comparable to similar cutbacks previously announced at General Motors. These cutbacks are consistent with Ford's roughly 25% decline in U.S. automotive market share since the mid-late 1990s.

Ford's realignment also included the sale of its wholly owned subsidiary, Hertz Rent-a-Car to a private equity group for $15 billion in cash and debt acquisition. The sale was completed on December 22, 2005. A joint venture with Mahindra and Mahindra Limited of India ended with the sale of Ford's 15 percent stake in 2005.

1 Plant closings
2 Product replacements
3 Staff reductions
4 Divestment
5 New products
6 References
- 6.1 Notes

[edit] Plant closings

Ford reportedly plans to close 14 manufacturing plants by 2012 including 7 that assemble cars. Short-term results (by 2008) will reduce Ford's assembly capacity by 26%.

The first closures were announced on January 23, 2006^[1]. Ford announced on April 13, 2006 that two more plants would close as well^[2]. The plan was accelerated with a mid-September announcement which accelerated the closure of the Norfolk plant and added the Essex engine and Maumee stamping plants to the list^[3].

Date announced	Plant name	Location	Date of closing	Products	Employees
January 23, 2006	St. Louis Assembly	Hazelwood, Missouri	2006	Ford Explorer Lincoln Aviator Mercury Mountaineer	1,445
	Atlanta Assembly	Hapeville, Georgia	Oct. 2006	Ford Taurus Mercury Sable	2,028
	Batavia Transmission	Batavia, Ohio	2008	transmissions	1,745
	Windsor Casting	Windsor, Ontario, Canada	2008	Engine blocks, parts	684
	Wixom Assembly	Wixom, Michigan	June 2007	Lincoln Town Car Lincoln LS Ford GT	1,567
April 13, 2006	Twin Cities Assembly	St. Paul, Minnesota, USA	2008	Ford Ranger Mazda B-Series	1,885
April 13, 2006	Norfolk Assembly	Norfolk, Virginia, USA	2007	Ford F-Series	2,433
September 14, 2006	Essex Engine	Windsor, Ontario, Canada	2008	Ford Triton engine Ford Essex V6 engine
September 14, 2006	Maumee Stamping	Maumee, Ohio	2008	body panels
Total					11,787

[edit] Product replacements

The following products are currently assembled at the Wixom (Michigan) Assembly plant, which is closing. They will be replaced by future vehicles. In June 2006, Ford announced that it will not move production to St. Thomas, Ontario, Canada (where its body-on-frame platform-mates Ford Crown Victoria and Mercury Grand Marquis are produced), likely meaning that Town Car production would end permanently. Ford eventually changed its mind, and the company reversed this decision, announcing in September that it would move the Town Car after all.

Date announced	Product	End of production	Replacement
January 23, 2006	Ford GT	September 21, 2006	Shelby Cobra GT500
	Lincoln LS	April 2006	Lincoln MKZ Lincoln MKS
	Lincoln Town Car	June 2007	Assembly to be moved

[edit] Staff reductions

Up to 30,000 factory jobs would be eliminated with the downsizing envisioned in The Way Forward. The company is also eliminating 4,000 salaried, contract, and agency jobs during the first quarter of 2006, and the company is eliminating 6 or 7 corporate officer positions out of 53 immediately.

Ford is reportedly offering severance packages of up to $100,000 for workers who are willing to give up all future benefits except their pension. The company will also pay up to $15,000 in tuition for workers returning to school. Workers over 55 can reportedly get a $35,000 bonus to retire early, provided they have 30 years of service with the company, and those with 28 years can get leave and 85% pay for two years^[4].

[edit] Divestment

Ford's plan called for divesting in some businesses in order to raise cash.

Jaguar Cars and Land Rover — Ford is packaging the successful Land Rover with the money-losing Jaguar Cars for possible sale
Aston Martin — purchased by a British consortium led by Dave Richards of Prodrive for £479 million.
Automobile Protection Corporation — Extended warranty company APCO will also be sold

[edit] New products

Ford will also reportedly invest in new products and productions sites to better compete in the marketplace. The company plans to build a new low-cost manufacturing site in North America, possibly in Mexico.

Product plans reportedly call for more crossover SUVs, compact cars, and hybrid vehicles. The company announced the Ford Five Hundred/Mercury Montego and Ford Edge/Lincoln MKX hybrids as part of the plan.

Ford also intends to revive the Lincoln and Mercury brands. Although Lincoln will become the larger seller of the two, Mercury is intended to become an upscale alternative, marketed especially toward women.

Aston Martin was put up for sale in 2006. Jaguar will launch several new vehicles such as the new XF and updated XJ to increase the sales of its vehicles and ensure that it no longer cancels out the profits made by Land Rover and Volvo.