Ford's investment and incentives worth $1 billion to improve production at six Detroit area plants

By Martha Hindes
Detroit Bureau
TheAutoChannel.com

Detroit, January 9 -- Ford Motor Company announced today it is making a major investment in six Southeast Michigan plants, worth as much as $1 billion dollars including state tax incentives. The investments, largely aimed at improving production of the upcoming F-150 pickup truck, Explorer and Expedition large truck-based sport utilities, indicate that Ford has no intention of losing ground in that hotly competitive market to competition, including Toyota with its newly redesigned Tundra full-size pickup and General Motors with its next generation award-winning Silverado.

The announcement was made by Mark Fields, President of the Americas, who has been a leader in much of Ford's accelerated "Way Forward" restructuring efforts. The company's initial investment of $866 million will help Ford expand its small car lineup and bring transmission manufacture back to the U.S. that had been done in other countries, including Japan. The announcement fulfilled a promise by Ford last August when the company said it would make major financial investments in Michigan manufacturing facilities needing updates to improve production efficiencies and remain more competitive. It addresses some of what Fields said the company needs to achieve in that direction through the end of 2008.

In addition to Ford's initial commitment, a partnership with the Michigan Economic Development Corporation (MEDC) will add as much as $151 million in state business tax incentives to the deal should Ford's investment reach $1 billion over the 20-year period of the agreement. Ford also will be seeking property tax abatements from communities where the six plants are located.

Michigan Gov. Jennifer Granholm, who was expected to make the announcement but missed it because of a funeral for a close family friend, had said in prepared remarks that the investment package would help protect Michigan jobs. "Ford's commitment to flexible manufacturing, designing and producing the vehicles that people want and solidifying their market leadership in truck manufacturing bodes well for Michigan's economy in the immediate future," she said. The beleaguered number Two U.S. auto maker has been struggling to trim expenses, including massive reductions in hourly and salaried workforces.

According to James Epolito, CEO of the MEDC, it is estimated that every job saved at the plants will save three to four additional jobs in the state.

The announcement was welcomed with loud applause from hundreds of workers at Ford's Livonia Transmission Plant, in Livonia, Michigan, one of the six facilities scheduled to receive investment dollars. The plant, which currently can manufacture about 450,000 rear-drive transmissions a year, will increase production by about 124,000 units. The investment there of $88 million will allow expansion and tooling for a high performance, more fuel efficient six-speed rear-drive transmission for the 2009 Ford F-150 pickup truck.

Other Ford facilities, all in the metro Detroit area, receiving an infusion of investment dollars are:

Wayne Stamping and Assembly Plant in Wayne, getting $130 million for equipment and new tooling to produce the 2008 Ford Focus compact auto;

Van Dyke Transmission Plant, in Sterling Heights, receiving $320 million for a fuel-efficient, front- drive, six-speed transmission for the 2008 Ford Escape small SUV;

Woodhaven Stamping Plant, in Woodhaven, getting $89 million to improve stamped parts for the 2009 F-150;

Dearborn Stamping Plant, in Dearborn, with $31 million earmarked for improving door and hood stampings for the upcoming F-150 model;

Dearborn Truck Plant, in Dearborn, scheduled to receive $208 million for additional tooling and equipment for F-150 assembly. A portion of the Dearborn Truck investment will be used to convert a nearby historic glass plant facility at the massive Rouge complex into a launch center for the vehicles.

"Clearly our investment here is to drive our product-led recovery. And then we'll let the customers decide from there," said Fields. "It's all about making sure we invest in our future and the products and making sure we're making the right investments."

With worldwide competition expected to push Ford out of its current Number 2 U.S. ranking, perhaps within months, Fields added that for auto makers, "nobody's safe because there is no finish line in this business. We have lots of competitors here and around the world wanting to come here and take our business. And we're saying with this type of investment we can compete."

The investment program did not address the possibility of a new low-cost, rural "greenfield" plant, rumored to be in the works. "A greenfield plant, a low-cost plant, is still in consideration and we're still working through the business case on that," Fields added.

While Fields would not speculate on how many hourly jobs would be saved because of the investments, they should help Ford's UAW workforce, according to Bob King, vice president of the UAW's Ford Department. Job security is expected to be a major concern as the giant auto union faces negotiations on a new contract during 2007.

"Our members really understand the competitive situation we are in," said King. "We've had more than 750 million dollars of operating savings for Ford through just changes at the local level, more productive work practices...in less than 12 months. In return we've got to have capital investments in our plants, in products that will sell, in products that will really appeal to what consumer's want. I feel much more confident that the leadership team today at Ford understands that more clearly and is really focused."