[Speed Gibson,
Saturday April 15, 2006 at 3:32pm]
St. Paul Ford Plant Closing
It's closing after all, it seems, in 2008. We should at least be happy for the extended time for its workers and their families to plan their transition to retirement, new jobs, and new careers.
There are a number of reasons for the closing as we've heard, that it's main product, the Ford Ranger, will soon be retired as well. The plant is old and therefore more expensive to retool, assuming Ford even needs this additional line capacity.
But all of this was known in January, when Ford made the first round of such announcements. The only reason I see to wait three more months was to assess the local reaction, either from the government and/or the unions. The latter seldom make proactive moves, and none was really warranted here.
But the Governor and the Legislature did react, in fact, overreacted. Rather than just offer the usual package of tax breaks and subsidies, they couldn't help tossing in some "free" "advice" as well.
Not only will you make something else, you will make something else that "we" like: hybrids. OK, they are selling, and as the engineering catches up with the technology, they are increasingly attractive to American consumers. Rising gasoline prices will make believers of still more.
Not only will you make hybrids, you will make them use E-85 Ethanol. Since this fuel isn't widely available, cross a large number of those potential buyers off the list.
Not only will you make E-85 hybrids, you will also provide a plug-in to charge the battery while in your garage. This was in bills introduced March 22 by the DFL with GOP support. It sounds nice, but the number of consumers who will buy this fancy hybrid, but not the plain E-85 hybrid has to be very small, more than offset by the customers lost to the its still higher cost.
Look at it from Ford's side. Even with incentives, you're looking at a marginal case for retaining and retooling this plant. Further, it is sitting on some rather valuable riverfront property in Highland Park. Then you consider the requirements of those incentives, which are significant business risks. What if you go ahead and make E-85 hybrids, only to see them rot on the sales floor while cheaper non-green hybrids fly out of your competitor's showrooms?
Even if the Legislature's fancy E-85 hybrid does prove successful, they can be built anywhere, not just St. Paul. If Ford needs to close additional plants, St. Paul seems an obvious choice. It eliminates a product and capacity you don't need, and avoids a complex, meddling deal with the State and City.
Remember when GM shopped the Saturn plant in the late 1980's? Dozens of states offered packages, some worth over a billion dollars. The winner was Tennessee, which had submitted no offer at all, but also had a good pro-business record. Ford may have used the same logic here.
There are a number of reasons for the closing as we've heard, that it's main product, the Ford Ranger, will soon be retired as well. The plant is old and therefore more expensive to retool, assuming Ford even needs this additional line capacity.
But all of this was known in January, when Ford made the first round of such announcements. The only reason I see to wait three more months was to assess the local reaction, either from the government and/or the unions. The latter seldom make proactive moves, and none was really warranted here.
But the Governor and the Legislature did react, in fact, overreacted. Rather than just offer the usual package of tax breaks and subsidies, they couldn't help tossing in some "free" "advice" as well.
Not only will you make something else, you will make something else that "we" like: hybrids. OK, they are selling, and as the engineering catches up with the technology, they are increasingly attractive to American consumers. Rising gasoline prices will make believers of still more.
Not only will you make hybrids, you will make them use E-85 Ethanol. Since this fuel isn't widely available, cross a large number of those potential buyers off the list.
Not only will you make E-85 hybrids, you will also provide a plug-in to charge the battery while in your garage. This was in bills introduced March 22 by the DFL with GOP support. It sounds nice, but the number of consumers who will buy this fancy hybrid, but not the plain E-85 hybrid has to be very small, more than offset by the customers lost to the its still higher cost.
Look at it from Ford's side. Even with incentives, you're looking at a marginal case for retaining and retooling this plant. Further, it is sitting on some rather valuable riverfront property in Highland Park. Then you consider the requirements of those incentives, which are significant business risks. What if you go ahead and make E-85 hybrids, only to see them rot on the sales floor while cheaper non-green hybrids fly out of your competitor's showrooms?
Even if the Legislature's fancy E-85 hybrid does prove successful, they can be built anywhere, not just St. Paul. If Ford needs to close additional plants, St. Paul seems an obvious choice. It eliminates a product and capacity you don't need, and avoids a complex, meddling deal with the State and City.
Remember when GM shopped the Saturn plant in the late 1980's? Dozens of states offered packages, some worth over a billion dollars. The winner was Tennessee, which had submitted no offer at all, but also had a good pro-business record. Ford may have used the same logic here.