Ford gearing up for strong 2015 sales
Ford Motor Co. is likely to have robust sales in 2015 after enjoying a strong 2014, thanks in part to the Escape SUVs and F-250 pickup trucks made in Louisville, analysts said.
In the coming year, the Louisville Assembly Plant on Fern Valley Road and the Kentucky Truck Plant in eastern Jefferson County will probably run at the highest volumes of all of Ford’s North American operations next year — after a stretch of months where both plants “are running near capacity seven days a week,” said John Savona, Ford’s director of manufacturing and former plant manager at the Fern Valley Road plant.
As the annual holiday shutdown starts Christmas Eve, Savona’s upbeat assessment was tempered by weary hourly employees who said that while they’re proud to have been part of Ford’s turnaround, they want a bigger slice of the pie in profit-sharing checks and a new contract next year.
“I’m happy for my job … (but) I’m living check to check,” said Jeff Garlock, 48, a Lebanon Junction resident who installs carpet in SUVs at the assembly plant.
“I’m hoping things will be better next year,” he said.
Ford’s local facilities have steadily returned to near full capacity after the economic downturn between 2007 and late 2011. The shutdown — from Dec. 24 to Jan. 4 — provides paid time off for both hourly and salaried workers while production line equipment gets a deep clean and overdue maintenance and repairs.
At the Louisville Assembly Plant, 4,790 hourly workers fill three shifts turning out Escapes and the new Lincoln MKC, which the company first rolled off the line starting last summer. The company sold 280,609 Escapes this year, compared with 271,531 last year at this time. It has also delivered 10,800 MKCs, according to year-to-date sales figures.
To beef up production, Ford hired 300 additional employees and sank $129 million into modifying work stations and adding new manufacturing equipment for the MKC, which was the automaker’s first step into the highly competitive compact SUV segment.
It has been part of an overall infusion of $6.2 billion in Ford’s U.S. manufacturing plants in which more than 14,000 job have been added since the end of the recession in 2011, according to Ford spokesman Judd Templin.
Savona said during a recent phone interview that production at the Louisville Assembly Plant should remain the same or increase slightly based on demand next year.
The same goes for the Kentucky Truck Plant, where Ford builds F-Series Super Duty trucks, the Expedition and Lincoln Navigators. The company has invested $80 million to enlarge the facility and increase the plant’s production hours from 110 to 120 a week.
It hired 350 permanent employees — many of whom had been on temporary status — within the last year to bring the hourly workforce to 4,260. Rotating crews work two shifts in some areas, and three in others.
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The Expedition has been the strongest seller, hitting 40,393 so far this year, compared with 34,025 during the same period last year.
Ford is expected to end the year with profits, or net income, of $6 billion to $7 billion, compared with $7.15 billion last year — a dip blamed on recalls and new product launches, including the MKC and the new F-150.
That means smaller annual profit-sharing checks for hourly employees — which reached $8,300 two years ago and paid about $8,000 last year. Estimates are they’ll drop to $5,000 to $6,000 when money is divvied up early next year, said Sean McAlinden, chief economist and vice president of research with Center for Automotive Research, a not-for-profit institute in Ann Arbor, Mich.
The question for hourly workers is how Ford and fellow automakers General Motors and Chrysler deal with United Auto Workers’ demands next year to increase base wages of veteran employees and narrow the gap between workers laboring now under a two-tier wage structure in the 2015 contract.
Workers like Garlock are Tier 2, making $17.53 an hour, compared with Tier 1 or “legacy” employees who earn $28 an hour and more. Tier 2 workers make up 15 percent of the workforce at KTP and 44 percent of the hourly force at the Fern Creek site.
Garlock said he’s intensely aware of how much more pocket change Tier 1 co-workers have. He overheard one talking recently about buying 100 pounds of summer sausage for the holidays. “I hardly have money left to go the grocery store,” he said.
Both Ford and UAW leaders asserted that wage concessions were crucial to helping the company survive the downturn, compete with Asian competition and reinvest in new products.
Now that the overall economy and Ford have recovered, it’s time legacy employees and Tier 2 workers received raises, UAW President Dennis Williams said during a roundtable discussion in Detroit.
Williams and other UAW leaders are gathering comments from workers across dozens of auto plants to prepare for contract talks that begin in summer 2015. The pact reached in 2011 expires in September.
Savona said that executives understand that workers are looking for answers. “Our goal is to make sure we can share in the profits and remain competitive,” he said.
For now, Savona didn’t rule out adding more employees at the eastern Jefferson County truck plant, but said any increase will depend on demand for F-series and other products next year. “We’ll be watching the market very closely,” he said.
McAlinden expressed optimism that local Ford workers will cheer the new contract because the company, which has the best labor relations of the Big 3, can afford to approve a contract that delivers raises for at least three of the four years in the pact.
Sales will increase next year and in 2016, he said, so “why would it be a weak agreement?” For Ford, paying 47,000 hourly workers more money now “is not the cost level it used to be.”
“I think (workers) are going to be made happy,” added McAlinden. After exacting concessions for years, “now it’s the time to ramp up” wages.
Reporter Grace Schneider can be reached at 502-582-4082. Follow her on Twitter @gesinfk. Information for this story was provided by the Detroit Free Press.