Editorial: GM, Ford in four-wheel dive

Tuesday, Jan. 24, 2006 | 7:36 a.m.

The once-mighty American auto industry, led by General Motors and Ford, has landed hard from a one-two punch. Anyone keeping score would give Japanese automakers credit for the knockdown.

In November General Motors announced it would close nine plants in North America by 2008, an action that would mean trimming 30,000 people from its workforce. On Monday Ford made its own much-anticipated restructuring announcement for North America. It will close 14 manufacturing plants and eliminate up to 30,000 jobs by 2012. The news from Ford was doubly painful, as it meant that a restructuring announced in 2001, which cost 35,000 jobs, didn't work.

Rick Wagoner, GM's chairman and chief executive, cited "global competitors" as a reason for his company's announcement. It was the same for Ford. Last year was the 10th in a row that Ford has lost market share in the United States, largely because of increasing consumer demand for Japanese cars.

Bloomberg News reported a telling statistic: Ford's North American car and truck plants operated at 79 percent capacity in 2005. Toyota's North American plants, for the same year, operated at 111 percent capacity.

It is clear that the tens of thousands of workers losing their jobs at Ford and GM are doing so because top executives at the two companies could not see past the good times of the early and mid-1990s, when SUVs were big sellers and gasoline prices were moderate and stable.

We hope the two auto giants rebound from their mistakes and are now looking ahead to the next decade and beyond. Ford, at least, seems committed to such foresight. In September it announced it would be producing 250,000 hybrid cars and trucks by 2010. GM has announced a much less ambitious hybrid plan, which we believe is a mistake. Imagine where Toyota and Honda, leaders in hybrid production, will be in five years.

There probably is not much that can be done to restore the jobs of the workers being laid off. But as Ford and GM begin building new plants to accommodate their modernization goals, we hope they consider locating them in the same towns and cities that have so long supported the plants being closed. These places shouldn't be permanently punished because Ford and GM spent years asleep at the wheel.

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