Ford plant workers get a reprieve
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Ford decided to spare the Ranger, despite a long and deep dive in the sales of the compact truck. Since 1999 the truck's sales have fallen by almost 80 percent.
But this year, the Ranger has been one of the cheerier points on the company's spreadsheets. Ranger sales were down about 4 percent through June of this year, while overall truck sales were down about 18 percent.
The Ranger owes its better performance in part to the fact that the pickup trucks can get up to 26 miles per gallon, which is about twice as much as some of Ford's bigger trucks.
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As a result, the Ranger, which is manufactured exclusively at Ford's St. Paul plant, is getting its life extended.
Politicans and union officials hailed the decision. But outside the Ford plant earlier today, reaction from workers was mixed.
Mark Anderson has worked at Ford for 21 years. He took a buyout offer last year. Now he rues his decision.
"They said you got a one time shot, if I had known then what I know now, I wouldn't have taken it, but when they say you got one shot, that's that, and you go 'Oh geez, I got a family.' What do you do," asked Anderson.
Anderson doesn't think he has the option to stay beyond 2009. As he understands it, he'd have to reapply and come in making $14 an hour, the new entry level pay. Anderson says he's currently earning in the low $20 an hour range.
Ford spokeswoman Kristen Kinley says she's not aware of any plans to amend the buyout packages to permit workers to stay on. And she wouldn't specify how Ford will staff the plant through 2011 without those workers.
"There are no plans to make any changes there," said Kinley. "We'll continue forward, at least what we know right now, with the 1,000 temporary employees currently working at the plant."
Kinley said the plant is currently hiring people.
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"They're hiring people on as we speak right now. What will they do with other individuals, I can't comment on that, because I don't know," said Kinley.
Roger Terveen is the President of the United Auto Workers Union local 879. He says he's very happy the plant will stay open a few years longer, but he knows that the 1,000 or so workers that have taken buyouts over the last two years are likely upset.
He says he can't make any promises, but the union will negotiate to retain currently employed buyout takers without subjecting them to major pay cuts.
As for the Ranger plant's prospects beyond 2011, Terveen won't speculate.
"You got a crystal ball? Because I don't," said Terveen.
Ford won't say if it has any plans for after 2011.
Aaron Bragman, research analyst for the economic consulting firm Global Insight, says Ford is trying to figure out what to do with the Ranger: Design a new generation, or stick with the current one.
Bragman says it's unclear what Ford will do after 2011, but some of the economics argue for keeping production of a lower-priced truck in St. Paul.
"The UAW contract that they signed last year does actually work in the plant's favor, in that it allows them to build less expensive vehicles in the U.S. at lower cost and actually make some profit on it," explained Bragman. "The tariff that's actually in place, it's called the chicken tax, it's a 25 percent tariff on imported trucks, that also prevents them from making the truck overseas and bringing it here."
St. Paul Mayor Chris Coleman says he'll keep pushing for new ways to keep the plant open even after 2011.
"There will be some investment in the plant, because they have to make some safety upgrades to the Ranger, and you never know," said Coleman. "The retooling of a plant to put out a new line is very expensive. But that's certainly something we'll continue to work with Ford on."
Ford's decision allows the company to keep a compact truck on dealer lots as the company shifts its product lineup away from big gas thirsty trucks.
In addition to extending the Ranger's life, the company also said it's converting three North American truck and SUV plants to small car production. And it's adding some fuel efficient vehicles from its European lineup.
The company is under tremendous financial pressure to change. It lost nearly $8.7 billion in the second quarter. Despite the moves announced today, Ford's share price fell 15 percent.