Ford to cut 500 workers at Ontario crossover plant

By: AP
By: AP

NEW YORK (AP) -- Ford Motor Co. said Wednesday it will eliminate 500 employees at its crossover assembly plant in Oakville, Ontario, as sales of the vehicles designed to woo SUV and truck buyers continue to slump.

Ford of Canada spokeswoman Laura More said the company will phase out the third shift in the plant's body and paint work areas over the next several weeks.

"It's due to, as you're very aware, an overall softening of vehicle sales in the U.S.," More said.

Ford is offering additional retirement incentives to eligible workers at the plant as a way to achieve the cuts. The package includes a $7,500 retirement allowance and a $3,500 voucher to purchase a Ford vehicle, More said.

"It would be too soon to say how many people will be taking the retirement incentives because we are just offering them," More said.

Gary Beck, president of Canadian Auto Workers Local 707, which represents the Oakville plant's employees, estimated about 650 of the plant's more than 3,000 workers would be eligible for the package.

The cuts come at a time of weakening sales for crossovers, which are truck-like vehicles built on car frames that many automakers saw as a way to hold onto traditional truck and SUV shoppers seeking more fuel-efficient alternatives. The Oakville plant makes three crossover models: the Lincoln MKX, the Ford Edge and the Ford Flex.

U.S. crossover sales fell 12 percent industrywide in August from a year earlier, according to figures compiled by Autodata Corp. Sales of the Edge slipped 2 percent, while MKX sales are down 23 percent. Although the Flex, which debuted this summer, hasn't been around long enough to make a year-over-year comparison, sales declined 9 percent from July to August.

Dan Luria, an economist at the Michigan Manufacturing Technology Center in Plymouth, Mich., said the slump in crossover sales reflects a growing distaste among consumers for vehicles with middling fuel economy.

"Consumers basically decided that if it doesn't get close to 30 miles per gallon," they don't want it, he said. "It's a consumer overshoot."

The Oakville plant began shipping crossovers just two years ago, when Ford touted the segment as a major component of the Dearborn, Mich., automaker's turnaround plan.

The latest job cuts mark the second major reduction at the facility in recent months.

In August, Ford scrapped plans to add 350 new hires and 150 workers from Ford's facility in Windsor, Ontario. Those employees had been told they would be put to work as part of the plant's third shift, Beck said.

Many of those employees had already relocated to Oakville before they were told they would not be employed, said CAW President Ken Lewenza.

"Some people relocated and some people left low-paying jobs or jobs with less security, and boom, this hit them over the head with a frying pan," Lewenza said.

Lewenza said the CAW would meeting with Ford executives Wednesday to discuss terms of the most recent cuts, including severance packages for employees who would be asked to leave.

"We were all very much excited about the investment in this plant," Lewenza said. "But it came out at a time when consumer confidence and consumer buying power, especially in the United States, is at an all time low."

Ford shares gained 1 cent to $4.41 in afternoon trading.

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