Ford plant's extended shutdown triggers concerns

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Ford plant
The Ford Assembly plant, in St. Paul, is slated for closure but officials hope good sales of the Ranger pickup truck, which is made at the plant, will help get the plant a reprieve. (MPR photo/Tom Weber)
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Ford told workers a couple days ago that the holiday shutdown would be extended by about 3 weeks.

The St. Paul Ranger plant has seen a lot of ups and downs over the past few years. Ever since the company's initial announcement a couple years ago that the plant would get shut down altogether, it's had a few extensions of its life.

If you feel like you can't keep up with all the moves, Roger Terveen, the president of the United Auto Workers union Local 879, which represents workers at the plant, is sympathetic.

"I know a lot of people are sick and tired of hearing about the auto workers," Terveen said.

But the Ranger saga may have something new to teach us this time around about how broad economic trends are hitting home.

Usually, the plant's ups and downs are tied to weak consumer demand. But, Terveen said the extended December shutdown is due to customers cancelling 6000 orders for fleet vehicles because they could not secure financing. That's the most visible sign Turveen has seen so far of the 'credit crunch' playing out at the Ranger plant.

"With this sudden big 6000 units, it made huge hits on us," Terveen said. "If there was anything before on the credit issue, I don't know if individuals have been affected by that."

However, though Ford spokeswoman Angie Kozleski would not confirm that the credit crunch is driving the extension of the plant closure, she said consumer demand continues to drag.

"Ford has been very aggressive in insuring that our production capacity is aligned with real consumer demand, which often means adding down weeks into the production schedule," Kozleski said. "We have been doing this throughout the course of the year, at a number of plants around the country."

Regardless of what's driving the Ranger plant shutdown, other businesses with ties to Ford will likely feel a pinch.

"Freight is measured by the week, so truckers talk about having a good week or a bad week," said John Hausladen, president of the Minnesota Trucking Association. "So any week we miss is important."

Hausladen said it's unlikely that any trucking companies serving the Ford Ranger plant will have to furlough their own employees because of the Ranger shutdown. But, he said December is not a good time for trucking companies, or anyone else, to lose business.

"Really, the fourth quarter of the year is an important quarter for companies if they're going to make profits that they're going to make them now," Hausladen said. "So that when you lose freight volumes at this time of the year it has more impact because you're trying to recoup from some of the slower months.

State economist Tom Stinson
Minnesota's state economist, Tom Stinson. (MPR Photo/Tim Pugmire)

Minnesota State Economist Tom Stinson said the Ford plant's month-long shutdown will aggravate the weakness in the state's economy, but it will not bring the state's economy to its knees.

Still, if the Ranger plant's union leaders are correct, that the credit crunch is driving the shutdown, Stinson said that may well portend more credit trouble.

"This is just a big dramatic example of what is likely to affect other suppliers of other products over the next few months," Stinson said. "What we know is that retailers' ability to finance inventory has been affected for the Christmas season, so that's obviously going to have an impact as well, and it's going to have an effect on retail profits in the fourth quarter."

That's despite the fact that the federal government has recently injected hundreds of billions of dollars into financial institutions in order to get credit flowing again. Stinson said it's hard to tell how long it will take for those government programs to take effect.

In the meantime, Ford's local UAW president, Roger Terveen, is likely going to scale back his Christmas shopping given the temporary layoffs. And, as he looks around at the deteriorating economy, he's starting to fret that the plant might not make it to its 2011 shutdown date.

"I'm not going to lie," Terveen said. "I thought were in the toilet. But right now we're in a cesspool."

A Ford spokeswoman said there are no plans to shutter the plant early at this time.