By CP Staff
By Olivia LaVecchia
By Chris Parker
By Jesse Marx
By John Baichtal
By Olivia LaVecchia
By Jesse Marx
By Olivia LaVecchia
Rick Albrecht has worked at the Ford automotive assembly plant in St. Paul for 28 years. For most of that time Albrecht toiled on the assembly line, helping to manufacture LTD station wagons, F-150 pickup trucks, and Ford Rangers. But for the last five years--after earning a welding degree from St. Paul College--he's served as a "breakdown welder."
"My job is to make sure the line never quits," says Albrecht, whose brother and cousin are also employed at the plant. "When something breaks, we have to be there immediately and we have to fix it as fast as we can."
Maintaining constancy on the line is one thing, but during Albrecht's three decades on the job he's witnessed many ups and downs in the auto industry. He's seen years like 1979, when the plant couldn't produce vehicles fast enough to meet market demands. And he recalls dire years in the early '80s, when the plant ground to a halt for weeks owing to an economic downturn.
That's why Albrecht shrugs off persistent rumors that the 80-year-old Highland Park facility will soon be closed by the struggling automotive giant. "I've heard that rumor since 1977, but you just don't know what's going on," says the 50-year-old father of two. "You'll hear 15 rumors a day. You can't take nothing to heart until the boss comes down and tells you."
Even so, this has been a particularly grim year for U.S. auto manufacturers. While most attention has focused on the dreadful fiscal performance of General Motors (the company lost $850 million in the first quarter of this year and has reduced 2005 earnings projections by 80 percent), Ford hasn't fared much better. The country's second-largest auto manufacturer saw earnings drop by 38 percent--from $1.95 billion to $1.21 billion--in the first quarter of 2005, and its North American automotive division is now expected to lose at least $100 million for the year. Last month, sales of Ford vehicles continued to slide, down 11 percent from the previous year.
But the Highland Park facility's problems have been further aggravated by its particular product line. In recent years the factory has solely produced the Ford Ranger pickup truck. Faced with stiff competition from newer compact trucks, such as the Toyota Tacoma and the Nissan Frontier, sales of the Ranger have plummeted recently. Last year purchases of the Ford truck tumbled by 25 percent, with sales off by another third so far in 2005.
The immediate impact of this slump has been a dramatic reduction in the production of Rangers at the St. Paul plant. So far in 2005, the plant has been idle for 11 weeks--or roughly half the year--and it's slated to be shut down again for all of July. The end result is that a plant that has the capacity to churn out some 225,000 vehicles annually will be lucky to produce 100,000 this year.
The furloughs affect some 1,800 workers at the Ford plant. The economic blow has been cushioned by unemployment benefits and supplemental pay provided by the company. Bob Killeen, financial secretary of United Auto Workers Local 879, which represents the plant's employees, estimates that workers are getting two-thirds of their salaries while on furlough. "There's a lot of hardship being created out there with all these shutdowns," he says. "It's not a paid vacation. Our people are paying the price for Ford's problems."
The shuttering of the Highland Park plant has long been rumored, but more recently there's been reason to believe such speculation. In 2002, local Ford workers were left unscathed by a massive company-wide restructuring that resulted in some 22,000 layoffs. At that time the company opted to close down its plant in Edison, New Jersey, the only other facility that constructed Ford Rangers.
Ford spokeswoman Becky Sanch says that the company currently has no plans to either renovate or shut down the Highland Park factory. She points out that last year the company spent $50 million improving the plant. Local 879's current labor contract runs out in 2007.
But other trends in the automotive industry point to a grim future for the St. Paul facility. Over the last decade, vehicle manufacturers have shifted many of their operations to the South. A 2003 study by Kim Hill and Emilio Brahmst, of the Center for Automotive Research, found that assembly plants capable of building 1.3 million additional cars in the U.S. were slated to come online by 2006. All but 200,000 of those new vehicles were to be constructed in Southern states.
Part of the South's allure for automobile manufacturers is lower-wage, nonunion workers. But the biggest enticement for the industry is massive subsidies offered by state governments. According to the Center for Automotive Research, between 1998 and 2003, municipalities in the South offered incentive packages that averaged $143 million per factory, or roughly $87,000 for each job created. Since 1993, Alabama, for instance, has lured three large automotive assembly plants by offering more than a half-billion dollars in tax abatements and other handouts.
Nowadays, it's unheard-of for an automobile manufacturer to construct a new plant--or even extensively renovate an existing facility--without receiving a large government subsidy. The companies, of course, often play communities against each other to see which one will pony up the biggest chunk of change.
Members of UAW Local 879 and many industry observers believe that the St. Paul plant will need to be renovated to accommodate a different vehicle line if it is going to survive. They contend that the state of Minnesota will have to provide some kind of financing package to help pay for such a project. "State incentives will have to be offered," says Killeen. "The auto industry doesn't invest money in states that aren't willing to invest in the auto industry. It's a give and take."
While these municipal extortion schemes are strikingly similar to those engineered by professional sports teams in recent decades, automotive plants offer a decidedly better return on investments. The average wage for such work is roughly $70,000, and industry experts estimate that each automotive assembly position creates an additional 7.5 jobs in the community. This is in part due to the proliferation of automotive parts suppliers necessary to produce the vehicles.
"It would probably take employment of at least 10,000 people to make up for that plant if it were to go," says Fred Zimmerman, a professor of manufacturing systems engineering at the University of St. Thomas. "I've long felt that Minnesota needed to attend to the Ford plant because it's such a font of prosperity. We're very fortunate to have it. If we lose it we are not likely to get another plant."
But Zimmerman and others estimate that it would cost roughly $800 million to $1 billion to retool the St. Paul plant to manufacture a different vehicle line. With Ford floundering financially and the state government mired in debt, the prospects of that kind of financing being ginned up look grim.
Even some employees of the St. Paul plant are dubious about the prospects of state aid. "I agree that they need a different product," says Mark Nelson, who has worked on the assembly line for 27 years. "I just don't think they're going to get any money for it." He's not convinced that the automotive behemoth--which made $3.5 billion in 2004--deserves the assistance anyway. "I'm against any kind of public subsidy for Ford or for any other company," Nelson says.
The 48-year-old father of two is eligible to retire from the plant in just three years, so he's not particularly concerned about his own future. But he worries about the continuing erosion of decent manufacturing jobs for blue-collar workers. "All the blue-collar jobs with good benefits are really under pressure. I don't know where it's all going to lead," says Nelson. "It's happening all over the country."