A Tale Of Two Companies: Ford Prepares Cuts, GM Celebrates Plant

DETROIT Reuters reported that Ford Motor Co. on Wednesday put to its board of directors a plan to slash thousands of jobs while rival General Motors Corp. celebrated a new assembly plant, highlighting the diverging fortunes of the world's two largest automakers.

The other of Detroit's Big Three, DaimlerChrysler AG's Chrysler unit, told Wall Street analysts on Wednesday that it would shave spending on new vehicles over the next five years, another sign of the pressures on the industry.

It has been a tough week for the Detroit automakers and the news was only expected to get worse, as GM and Ford prepared to announced job cuts at the conclusion of the industry preview of North America's largest auto show.

The U.S. automakers have been hit by the U.S. recession, rising competition from Europe and Japan, too many assembly plants for the demand, and quality problems compared with some competitors.

FORD'S TOUGH MEDICINE

Ford has the most acute problems and is preparing the toughest medicine. William Clay Ford Jr., the great-grandson of the founder Henry Ford, was huddling with the board of directors Wednesday and Thursday, and with top managers from around the world, to put the finishing touches on a sweeping package that is expected to cut thousands of assembly line jobs and close plants in both the United States and Canada.

The plants reported to be at risk include the Edison, New Jersey truck plant, the F-series pickup truck plant in Oakville, Ontario, and a joint venture assembly plant in Avon Lake, Ohio, that makes the Mercury Villager and Nissan Quest minivans.

Edison Mayor George Spadoro was so worried that he rushed to Detroit to meet Jim Padilla, Ford's chief of North American operations, on Thursday to try to rescue the New Jersey plant.

Details of the Ford plan will be revealed to Wall Street analysts starting at 9:15 a.m. (EST/1415 GMT) on Friday.

Ford officials have declined to comment on reports that the company plans to eliminate up to 20,000 jobs, mostly in the United States, including about 4,000 white-collar positions already announced.

``If the company is able to handle this the way I think they're attempting to, through providing some incentive for early retirement, it's going to be a lot less of an impact than it might have been,'' Michigan Governor John Engler told reporters.

GM JOB CUTS THURSDAY

But before Ford wields the job ax, the world's largest automaker GM will do so. On Thursday in its presentation to Wall Street analysts beginning at about 8:30 a.m. (EST/1330 GMT), GM will announce an early retirement offer to its white-collar employees, part of its efforts to cut white-collar and contract jobs by about 5,760 or about 10 percent this year, officials said. GM employs some 360,000 people worldwide.

GM will be the only one of the Big Three to post a profit for 2001 when the books are closed in the next few weeks.

While it is suffering from the economic downturn along with its competitors, GM officials took time on Wednesday to celebrate the opening of its first new plant in the United States in more than a decade.

The $560 million Lansing, Michigan, Grand River Assembly Center will employ about 1,500 workers, hundreds fewer than facilities also capable of producing the plant's capacity of 130,000 units a year. The opening of the plant came as others in the U.S. auto industry are slashing capacity. GM Chief Executive Officer Rick Wagoner insisted that the plant was not increasing capacity because it was replacing older, less efficient facilities.

CHRYSLER CUTS NEW VEHICLE SPENDING

Chrysler was the first of the Big Three to make its case to Wall Street analysts. Its executives said on Wednesday that Chrysler would spend $30.2 billion on new vehicles between 2002 and 2006, less than projected in the company's turnaround plan announced a year ago.

But Chrysler also said it had added five new vehicles to its long-range plan, including three higher volume models.

``We increased the efficiency of the plan,'' Chrysler President Dieter Zetsche said. ``This is what will make us a different company than we were in the past.''

Under the turnaround plan announced last year, Chrysler aims to reduce its total development costs by $6.1 billion over three years, which when coupled with a previously expected $2.1 billion increase in revenues would return the unit to break-even for 2002 and healthy profits in 2003.

The Detroit automakers are facing an onslaught of competition from Asia and Europe, and at the auto show this week foreign manufacturers made clear they will be stepping up the pressure.

Asian automakers are targeting the lucrative light truck segment -- which includes the popular sport utility vehicles, minivans and pickup trucks -- where much of the growth in U.S. sales is expected to be in the next few years.

In what would be a key milestone, Toyota Motor Corp. may either late this year or next year overtake Chrysler for third place in sales in the U.S. market. The weakness of the Japanese yen has added to the problems as it makes Japanese-produced cars less expensive here.

At the luxury end of the market, European automakers vowed to offer new products that expand their foothold in the United States.