Chicago Ford plant shuts down for 3 weeks

1,400 Chicago workers temporarily laid off
March 31, 2009 6:00:09 AM PDT
Slow sales have led a Chicago Ford plant to temporarily lay off 1,400 workers.As Chrysler and GM scramble to resubmit restructuring plans to secure government money, some Ford plants are pausing production. Union reps say the Chicago area assembly plant which makes Taurus, Sable and the Lincoln MKS models will be shut down for the next three weeks. That means 1,400 workers will be temporarily laid off because of slow sales.

"That's mainly what our down time is based on. If there is not an actual demand for our products, then our plants will see down time. In the past, we did business in a sense of well, we'll always sell them type of situation," said David Schoenecker, Chicago UAW Local 551.

But there's potential good news for the plant. The union reps say it is not confirmed, but the Chicago plant may be in line to produce a new version of the Explorer sport-utility vehicle next year. That could replace the Sable production, which is to be discontinued.

"How much would we need this? Let me put it to you like this, I would most likely see 800/900 people getting their jobs back, and we'd probably have to go back to two shifts," said Schoenecker.

Things don't look as good for GM and Chrysler. Area manufacturers and dealers are left guessing what their fate may be.

UIC Professor Bob Bruno says frustration with the failing auto makers is understandable. That frustration led the White House to force GM Chairman and CEO Rick Wagoner out.

"GM particularly has been a failed company since Wagoner took over. The stock is really, really down. Most people have questions about his leadership," said Prof. Bob Bruno, UIC.

Chrysler has about a month to submit a restructuring plan. G.M. has about two months to submit its restructuring plan.

The Ford plant should be back up and running April 20th

Chicago-area reaction to bailout

Local GM and Chrysler dealers are watching and waiting to see how the latest developments will impact the future of the US auto industry and their jobs.

VIDEO: Watch Sarah Schulte's report

While some Republican lawmakers are blasting the president's plan, local car dealerships say the auto plan is good news for business. The bailout not only forces the automakers to become leaner and more competitive, but the plan also includes several incentives for car buyers. And the administration says it will protect consumer warranties from GM and Chrysler vehicles.

GM car dealerships have been holding their breath for the past few months hoping for the survival of their industry. Brian Weinberg, with Grossinger City Cadillac and Chevrolet, says dealerships can now exhale with the government's new auto bailout plan.

"I think it's going to reassure the confidence in consumers to get back, buy a car, with everything that's coming out, the government guarantee on the warranties, tax breaks, interest rates," said Weinberg.

President Obama's bailout plan includes an incentive program to increase car sales. Consumers would get a credit when they replace older less fuel-efficient cars with a new cleaner vehicle. In addition, buyers may be able to deduct sales and excise taxes for cars bought between February 16 and the end of the year.

But the meat of President Obama's plan involves billions of dollars for General Motors and Chrysler as long as both companies dramatically restructure.

"It sounds like he's basically saying, in GM's case, we will basically probably force you into chapter 11 bankruptcy after 60 days if you don't make a deal," said Dave Whiston, auto equity analyst.

The president is giving GM 60 days to make a deal with its creditors and the United Auto Workers. Chrysler is being given 30 days to complete a deal with the Italian automaker Fiat.

Some Republicans are saying let the automakers go bankrupt.

"They are shucking that all aside in favor of government bailouts and political control from the White House by people that have never run a business," said Cong. Mark Kirk, (R) northern suburbs.

But auto industry experts argue bankruptcy is likely to cost taxpayers even more money.

"You can let the whole company liquidate and have unemployment sky rocket because millions of people will lose their jobs," said Whiston.

Experts say, if automakers emerge as leaner and more competitive companies, their next big challenge is to overcome a consumer perception that American cars are not as efficient and well made as foreign cars. Dealers say that simply is not true anymore, but they admit it may take years before consumers completely embrace the American car again.

Meantime, outgoing GM CEO Rick Wagoner is walking away with a $20 million retirement package.