DesRosiers on Ford and Buzz
Ford Motor Company had their big announcement today and as expected they are making significant cuts across their North American operations. Somewhere between 25 and 35,000 blue collar and white collar jobs to be cut through to 2012, most of these front end loaded into the next quarter and no later than 2008. The first hour of the press conference was telling everyone how great a company these 35K workers worked for and to tell you the honest truth, this hour was quite tedious. They talk of having a new 'candour' yet they obfuscate on virtually every issue. Indeed, we are still missing most of the details.
Here are some key points focusing primarily on Canada.
Three assembly plants to close, none in Canada. St. Louis, Atlanta and Wixom will close. St. Thomas as expected loses a shift which will affect at least 1,200 workers. Exact numbers to come. St. Thomas employs 2,500. The $200 million investment for St. Thomas promised last year in the labour talks will go ahead which gives this plant some short term hope. Two more assembly plants to close and will be announced by the end of the year and we do not know if St. Thomas is on this list. Probably not. But who knows.
One of the things I didn't like about this press conference besides the "spin" was the lack of details and credibility. This means that we in the analyst community and media community will be focusing for months on the "black cloud" hanging over Ford rather than the turnaround strategy. GM at least laid it all out and now most stories on GM focus on what they are doing right rather than what plant they will close next. Ford talked about changing the culture in the company to one of speaking candidly about their issues and then spend a whole hour doing the exact opposite. Nothing, absolutely nothing to hang our hats on... Lots of appetizers, no meat and potatoes and certainly no scrumptious desserts. Why didn't they do this
announcement last fall and get it behind them?
Additional information. The Windsor Essex engine plant will not close and will get a new engine. No details. This also gives this plant some short term hope as well. There are 650 workers on temporary layoff at this plant and these workers are unlikely to be recalled. This is my speculation not Ford's.
Was Canada hit hard or light. Hard to say. Certainly this is within our expectations and is relatively light compared to other plant situations in North America. But remember that Ford has decimated their Canadian operations over the last few years so additional cutbacks on top of already serious cutbacks for Canada is quite troubling and indicates that Ford has been quite hard on Canada over the last few years. In 1999, Ford produced 685,535 vehicles in Canada representing 15 percent of their North American operations. This past year they produced only 221,809 vehicles in Canada or 7.1 percent of their North American operations. The flexing of Oakville
will help Canada, cutting a shift in St. Thomas will take all this away. Can't say it was a good day for Ford Canada but it could have been a lot worse. It certainly was no "Ford Canada Light".
Still a lot of water to flow under this bridge. At the end of the day they have to turn this company around with great product. They can't cut themselves to success. OEMs get themselves into trouble with product, product and product and they get themselves out of trouble with product, product and product. I've talked with about a dozen analysts today after the Ford press conference. Not a lot of confidence with this group on this topic. Still a credibility gap. Over promise and under deliver.
Ford desperately needs to get out from under this black cloud so that the media and analyst community can start focusing on their product and on what they are doing right rather than what they are doing wrong. Adding to this credibility gap was their announcement today that they will no longer provide annual financial guidance to the market. They cut quarterly guidance a year or more ago. If they are so convinced they have the right strategy then why don't they have the confidence to give the financial community regular guidance on their progress.?
One last thing. Buzz is running around today saying this industry is in crisis. Well the Ford announcements confirm that the CAW is in crisis but Toyota and Honda alone will go a long way to replacing both the GM cuts and the Ford cuts. This may take more than Toyota and Honda but the Canadian auto sector is not in crisis, just certain companies and the unions of course. Buzz wants to "stop the Japanese". I ask, where would we be if Toyota, Honda and Suzuki had not invested in Canada. Michigan spent most of the last two decades bad mouthing the Japanese and they as a result didn't get any (except Mazda) investment from these companies. Go figure.
Canada has gotten five assembly plants and about a hundred parts plants from the Japanese and Europeans. Buzz's solution is to open the markets in Japan. Markets by the way that are already wide open without any restrictions. Indeed less than the Japanese face in North America. We still charge duties on vehicles from Japan for instance. Well Canadians and Americans won't buy his workers vehicles, isn't that a bigger problem? Buzz is out to lunch on this one. Hope the Liberal lose today so that he has no power base. Watch him run back to the NDP when his buddy Paul goes
down in flames. Over the last five to eight years and with the cuts at GM and Ford in Canada over the next two years he will have thrown about 20,000 of his workers overboard. In the same timeframe we have picked up between 40 and 50,000 non union workers. Someone explain to me again why he has such a presence in Canada's media and political circle?
Here are some key points focusing primarily on Canada.
Three assembly plants to close, none in Canada. St. Louis, Atlanta and Wixom will close. St. Thomas as expected loses a shift which will affect at least 1,200 workers. Exact numbers to come. St. Thomas employs 2,500. The $200 million investment for St. Thomas promised last year in the labour talks will go ahead which gives this plant some short term hope. Two more assembly plants to close and will be announced by the end of the year and we do not know if St. Thomas is on this list. Probably not. But who knows.
One of the things I didn't like about this press conference besides the "spin" was the lack of details and credibility. This means that we in the analyst community and media community will be focusing for months on the "black cloud" hanging over Ford rather than the turnaround strategy. GM at least laid it all out and now most stories on GM focus on what they are doing right rather than what plant they will close next. Ford talked about changing the culture in the company to one of speaking candidly about their issues and then spend a whole hour doing the exact opposite. Nothing, absolutely nothing to hang our hats on... Lots of appetizers, no meat and potatoes and certainly no scrumptious desserts. Why didn't they do this
announcement last fall and get it behind them?
Additional information. The Windsor Essex engine plant will not close and will get a new engine. No details. This also gives this plant some short term hope as well. There are 650 workers on temporary layoff at this plant and these workers are unlikely to be recalled. This is my speculation not Ford's.
Was Canada hit hard or light. Hard to say. Certainly this is within our expectations and is relatively light compared to other plant situations in North America. But remember that Ford has decimated their Canadian operations over the last few years so additional cutbacks on top of already serious cutbacks for Canada is quite troubling and indicates that Ford has been quite hard on Canada over the last few years. In 1999, Ford produced 685,535 vehicles in Canada representing 15 percent of their North American operations. This past year they produced only 221,809 vehicles in Canada or 7.1 percent of their North American operations. The flexing of Oakville
will help Canada, cutting a shift in St. Thomas will take all this away. Can't say it was a good day for Ford Canada but it could have been a lot worse. It certainly was no "Ford Canada Light".
Still a lot of water to flow under this bridge. At the end of the day they have to turn this company around with great product. They can't cut themselves to success. OEMs get themselves into trouble with product, product and product and they get themselves out of trouble with product, product and product. I've talked with about a dozen analysts today after the Ford press conference. Not a lot of confidence with this group on this topic. Still a credibility gap. Over promise and under deliver.
Ford desperately needs to get out from under this black cloud so that the media and analyst community can start focusing on their product and on what they are doing right rather than what they are doing wrong. Adding to this credibility gap was their announcement today that they will no longer provide annual financial guidance to the market. They cut quarterly guidance a year or more ago. If they are so convinced they have the right strategy then why don't they have the confidence to give the financial community regular guidance on their progress.?
One last thing. Buzz is running around today saying this industry is in crisis. Well the Ford announcements confirm that the CAW is in crisis but Toyota and Honda alone will go a long way to replacing both the GM cuts and the Ford cuts. This may take more than Toyota and Honda but the Canadian auto sector is not in crisis, just certain companies and the unions of course. Buzz wants to "stop the Japanese". I ask, where would we be if Toyota, Honda and Suzuki had not invested in Canada. Michigan spent most of the last two decades bad mouthing the Japanese and they as a result didn't get any (except Mazda) investment from these companies. Go figure.
Canada has gotten five assembly plants and about a hundred parts plants from the Japanese and Europeans. Buzz's solution is to open the markets in Japan. Markets by the way that are already wide open without any restrictions. Indeed less than the Japanese face in North America. We still charge duties on vehicles from Japan for instance. Well Canadians and Americans won't buy his workers vehicles, isn't that a bigger problem? Buzz is out to lunch on this one. Hope the Liberal lose today so that he has no power base. Watch him run back to the NDP when his buddy Paul goes
down in flames. Over the last five to eight years and with the cuts at GM and Ford in Canada over the next two years he will have thrown about 20,000 of his workers overboard. In the same timeframe we have picked up between 40 and 50,000 non union workers. Someone explain to me again why he has such a presence in Canada's media and political circle?
posted by JoeBlog at 3:25 p.m.
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