June 26: For St. Paul's Ford plant, hopes and caution

  • Article by: DEE DEPASS , Star Tribune
  • Updated: July 24, 2008 - 6:52 AM

State leaders were optimistic about the plant staying open a while longer, but say the decision will turn on economics.

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New Ford Rangers were lined up Thursday in holding lots waiting to be transported from the St. Paul plant, which was scheduled to be closed next year until gasoline prices shot up.

Photo: Bruce Bisping, Star Tribune

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Minnesota elected officials and the state's business development leader said Thursday that there's a real chance that Ford Motor Co. will postpone the scheduled 2009 closing of its Ranger truck plant in St. Paul if the company can convert the factory cheaply enough to make a more fuel-efficient version.

Sen. Norm Coleman, R-Minn., and Dan McElroy, commissioner of Minnesota's Department of Employment and Economic Development (DEED), said Ford officials agreed that the Ranger plant might have a shot at a temporary revival providing the economics can be worked out.

McElroy said a company official told him Wednesday that a decision about the plant's future could come late next month or in August.

The possibility of an extension sent shock waves through Minnesota, which has been trying to save the plant that has operated on the banks of the Mississippi for more than 80 years. Ford has already cut its night shift, bought out 1,600 workers and hired replacement workers at nearly half the prior $28 hourly wage.

The plant was set to close in the fall of 2009, but Ford began to rethink that decision after Ranger sales rebounded in late 2007 and early 2008. Sales are up 2 percent so far this year, even as the public is shunning larger pickup trucks.

"There is no question they are taking a look at this thing," said Coleman, who has been talking to Ford executives. Much of the decision for the automaker, he said, will turn on marketing and production issues. "It's fair to say they're doing their due diligence."

Coleman said he is encouraged that Ford may extend production of the Ranger for a few years. "Is there a greater chance than there was a few months ago?" he said. "Absolutely."

But Coleman warned that before Ford makes any final decisions it will likely take some kind of commitment from the state.

McElroy said a Ford official told him it's unlikely the plant would remain open permanently, but that an extension is not out of the question.

Ford workers remained cautiously optimistic about the news.

"I hope it's true. We can dream," said George Siedschlag, who has worked in the St. Paul plant for 21 years. But he added, "It's not official, so we really can't cheer yet."

Julie Kiihn, who has worked just a year at the plant, echoed that sentiment as she left work Thursday. "They're rumors until they put it on paper," Kiihn said. "We're hopeful, but we need to see it."

Ford shares drop

Wall Street also counseled caution. Shares of General Motors hit a 33-year low Thursday after an analyst slapped a hard sell rating on the company and painted a picture of worsening sales for all automakers. Ford shares hit a 52-week low on a day when the Dow Jones industrials dove 358 points.

While employees and union officials bite their nails, others in the community are more sanguine. The plant's initial closing date already has been extended once, when officials announced last November that it would not close this year. Now the horizon might extend to 2011 or beyond.

Scott Lambert, executive vice president of the Minnesota Automobile Dealers Association, said that if Ford "has even got a glimmer of interest" in a reprieve for the plant, he hopes Gov. Tim Pawlenty and legislators will help make a deal happen.

"It means a lot of jobs, and it's a big piece of the St. Paul economy," Lambert said. "I don't know what it's going to take, but we would be willing to extend every effort to help make that happen."

U.S. Rep. Betty McCollum, a DFLer whose district includes St. Paul, said business would drive Ford's decision. "But they need to know that they will never find a community or state more determined than ours to keep this plant open and these good jobs in St. Paul," she said.

David Morris, vice president of the nonprofit Institute for Local Self-Reliance, lobbied Ford to keep the plant open and worked to secure funding to study the feasibility of a hybrid plug-in Ranger. By his account, Ford would have to invest several billion dollars to retool the plant into a "flexible" factory that can make a range of vehicles in one building.

New life, but at what cost?

But Morris said extending the plant's life for a few years could be done without much investment. The Ranger plant already is profitable, so it doesn't make much sense to close it, he said.

"They should have a light pickup like the Ranger. They have no other light pickup," Morris said.

David Cole, chairman for the Center for Automotive Research in Ann Arbor, Mich., also said the plant could keep going a while longer without much investment. "I think it's a reasonably contemporary facility," he said.

"It could be several hundred million dollars, or it could cost much less, depending on the [final proposed] product," Cole said. "If they do an updated version of the Ranger that was not largely different than what they have today, it would not be that expensive."

Retired University of St. Thomas manufacturing professor Fred Zimmerman applauded Ford for considering extending the life of the plant. "A pickup like the Ranger makes sense. I think it's good news."

Asked what it will take for high hopes to become reality, Zimmerman said Ford will probably need to consider three key things.

"I suspect that for practical reasons Ford's [decision] will center around two technologies we don't already have, at least in volume. One is a highly efficient, clean diesel engine, and the other is plug-in hybrid," Zimmerman said. He added that Ford probably will also look at its metal stamping operations so as to use more local suppliers and reduce transportation costs.

Flex-fuel or electronic?

Morris, an advocate of electric and hybrid vehicles, said the Ranger already has proven technology that's just been sitting backstage collecting dust. "One of the marvelous historical notes on the Ranger plant in St. Paul is that at one point the Ranger was a flexible-fuel vehicle, and at one point it was an all-electronic truck -- around 2002," he said.

The electric Ford Ranger, Toyota RAV4 and the General Motors EV1 were all developed to help meet a now-defunct California law that required zero-emission vehicles, he said.

"So one needs to understand that Ford already has made a significant investment" in developing a fuel-efficient Ranger, Morris said. And with the introduction of the Ford Escape hybrid, Ford has that technology as an option for the Ranger. The company might even be eligible for federal funds to help with conversion costs, he said.

But will the technology sell?

Mike Saxon, owner of Inver Grove Ford, said consumers want high-mileage vehicles, "especially with the high gas prices now." Regardless of whether the truck is powered by a hybrid or a more miserly gas engine, consumers will buy it, he said.

"But it's got to be affordable. It won't make sense to make a $75,000 hydrogen fuel vehicle because nobody will buy them," Saxon said.

Staff writers Kevin Diaz, Patrick Lee, Kevin Duchschere and Mary Lynn Smith contributed to this article. Dee DePass • 612-673-7725

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