Twin Cities Ford Plant: The End of an Era
By Annie Tietema
PDF of article (14 pages)
If you have ever driven far enough down Cretin Avenue in St. Paul, you have run right into it. Located on a street bearing its name, Ford’s Twin Cities Assembly Plant (TCAP) is a titan, fitting an 8.4-mile-long assembly line on a 136-acre site. It even has its own hydroelectric plant to supply the power to build its latest product, the Ford Ranger. The Twin Cities Assembly Plant has been a presence in St. Paul for more than 80 years with its first Model T rolling off the assembly line in 1925. Thousands of workers have made their career at the plant, building a variety of vehicles that even included airplanes for the World War II effort. After a rich history of booming business followed by slowing demand and furloughs, the Minnesota Ford plant will close its doors permanently in 2009. In April 2006 nearly 1,800 workers learned they would lose their jobs and began wondering if they would ever recover the wages and benefits they have through Ford.
From an interview with local historian and author Brian McMahon
In 1913 Ford built a 10-story automotive factory in Minneapolis, the tallest automotive manufacturing building in the world at the time. The same year Ford built a three-story factory on University Avenue. Henry Ford’s ambitious expansion plan brought him to Minnesota, home of his second automotive dealership. Ford liked the cheaper rail rates in the Twin Cities and loved the idea of using hydropower to produce automobiles, which ultimately drove his decision to build the Twin Cities Assembly Plant in St. Paul, where he had received a license from the federal government to operate a hydropower plant.
FOUR WHEELS AND A GAS ENGINE
The automobile is one of the most significant inventions in human history. While several independent German inventors were working on a gasoline-powered internal combustion engine in Europe, Henry Ford was busy tinkering with engines on his kitchen table. The result was the invention of the Quadricycle, known as the first “horseless carriage,” in 1896.1
Ford’s story is the classic American dream. He was raised on a farm and, in spite of little formal education, became one of the most influential businessmen in American history. The public’s interest in the Quadricycle propelled Henry Ford into business, and in 1903 he and 11 other investors incorporated Ford Motor Company. The company had a modest start in a converted wagon factory on Mack Avenue in Detroit with $28,000 in capital raised from friends and neighbors.2 The Model A with a two-cylinder, eight-horsepower engine was Ford Motor Company’s first vehicle.
Under Ford’s leadership the Ford Motor Company pioneered a concept that assured United States dominance in manufacturing for decades: the automated assembly line. Before Ford Motor Company, no business had used the automated assembly line concept on such a large scale. By having each worker specialize in one task, Ford was able to achieve cost efficiencies that made the automobile affordable for the average American.
THE CAR THAT STARTED IT ALL
Thanks to the efficiency of the assembly line, Ford Motor Company was able to drive a Model T off the line every 10 seconds. The Model T sold for $825 in 1908 (about $17,200 in today’s dollars) and for a mere $590 by 1912 when 100 Minnesota Ford workers began building Model Ts using hand tools in a downtown Minneapolis warehouse.3 The price of the Model T fell over time thanks to the reduction in production costs as a result of Ford’s use of the automated assembly line. Because automobiles were not widely owned before the Model T, this car created automobile standards such as left-hand drive and lead-acid rechargeable batteries. Henry Ford once famously said of this model, “Any customer can have any color he wants, as long as it is black.” Other colors were too expensive to produce.
Believing that sales of the Model T could not reach their full potential unless Ford Motor Company employees could afford to buy the car, Henry Ford in 1914 established the country’s first minimum wage of $5 for an eight-hour day — doubling his workers’ former pay rate.4 To put this into perspective, the average upper middle-class professional working during this time earned about $5,000 a year (or $2.40 an hour) and grocery bills for the week averaged between $5 and $8.
Ford called this program “profit sharing” because he postulated that paying his workers more would be good for business. Over 15 million Model Ts were produced nationally before 1927 (the highest production of a single automobile model for the next 45 years) when Ford Motor Company shut down its plants, including the Minnesota plant, to retool so it could address its first serious competitive threat from General Motors. By 1932 Ford Motor Company was manufacturing one-third of the world’s automobiles. Ford had grown so powerful that Germans coined the term “Fordism” to epitomize American capitalist development.
SIBLING RIVALRY—THE HISTORY OF THE TWIN CITIES ASSEMBLY PLANT
Minnesota was using the Mississippi River to generate power long before the quest for environmentally-friendly energy began. In 1920 Minneapolis and St. Paul were engaged in a bitter dispute to obtain a hydro-electric contract from the federal government, and Henry Ford saw an opportunity. A plant next to the Mississippi River appealed to Ford not only because hydropower was a lifelong interest of Ford’s, but because of the plentiful riverbank silica deposits that could be used to make window glass. Rather than wait for the cities to work it out, Ford went straight to the federal government and was granted a license to run the power plant in 1923.5 Ford built his assembly plant right next to the power source, the Mississippi River in St. Paul.
The first Model T cars and Model TT trucks rolled off the TCAP line in May 1925. The plant was originally designed by Albert Kahn, about whom Smithsonian Magazine wrote, “Function was foremost for the modest architect to Detroit’s auto czars, but his clean lines and airy spaces had a beauty ahead of their time.” Today TCAP boasts more than 2 million square feet, which makes it about average among Ford Motor Company’s 33 U.S. plants.6 Since TCAP opened in 1925, over 7 million vehicles have rolled off the assembly line including Phaetons, Sportsmans, Crown Victorias, Fairlanes, Country Squire Wagons, Galaxys, LTDs, and (since 1992) Rangers and Mazda B-series trucks.7
TCAP is Minnesota’s only automotive assembly plant. Minnesota was producing a wider variety of automobiles in the early days when Ford decided to build Model Ts in Minneapolis. By the mid-1920s more than 45 makes of automobiles and trucks had been built in Minnesota.8 Thirty of those were intended for mass production — the remaining 15 were one-of-a-kind attempts by private inventors. As a result of competition from mass-producing automotive giants like Ford, automobile manufacturing in Minnesota did not survive in these smaller firms.
Ford’s hydropower plant produces enough power to provide energy to TCAP and to sell excess to Xcel Energy. According to Xcel, a little less than 5 percent of total energy sales in Minnesota are renewable. As a result of a state law signed under Governor Tim Pawlenty, Minnesota will need to reach 25 percent renewable energy by 2025. Unique when it was built, the Ford hydropower plant contributes to Minnesota’s continued efforts to go green.
A SAD DAY FOR TWIN CITIES FORD WORKERS
After more than 80 years of operation, Ford Motor Company announced on April 13, 2006, that it would close TCAP in 2008. The date recently changed to 2009 as the result of a contract negotiated between Ford and the United Auto Workers (UAW).9 Rumors of the closing had been circulating among TCAP workers for some time before April 2006, but that did not lessen the sting for the approximately 1,750 production and 135 salaried workers who learned they would lose their jobs. Job loss is never easy, but for these workers it would be especially challenging because of the limited manufacturing re-employment prospects in their wage bracket.
The assembly plant has not changed much in terms of architecture and basic mechanics since it was built in the 1920s. TCAP is not fitted for flexible manufacturing, which allows an assembly plant to retool quickly for a new model in response to shifts in consumer preferences. The plant’s inflexibility and the Ford Ranger’s sluggish sales made it a target for closing. The St. Paul plant is the only U.S. plant producing the Ford Ranger, and sales of the Ranger have declined over 65 percent from their peak of 348,000 trucks sold in 1999.10 Even though Ford introduced a new Ranger model in Bangkok, Thailand, in mid 2006, it says that it has no plans to sell those vehicles in the United States because of the 25 percent tariff it would face.
Although Minnesota made a proposal to Ford to keep the plant open, in the end Pawlenty noted that “Ford indicated its decision [to close the plant] was not about subsidies or bailouts, but about larger economic trends.” UAW Local 879 officials, who represent the production workers at the plant, have suggested that global economic pressures, including the disparity in employees’ health costs between U.S. and foreign competitors, and increases in gas prices are partly to blame for the closing. In addition, recent competition from Toyota in the light truck market is affecting sales of the Ford Ranger, which, through the mid-‘90s, had been part of the company’s overall resurgence.
Whatever the reasons specific to TCAP, this closing is part of a larger corporate plan aimed at returning Ford Motor Company to profitability. Ford’s Detroit headquarters introduced its “Way Forward” in early 2006, expanding it since to include 16 plant closings. The company has announced nine of the 16 planned closings so far. In addition to TCAP, the Atlanta Assembly, St. Louis Assembly, Norfolk Assembly (Virginia), Wixom Assembly (Michigan), Windsor Casting (Canada), Essex Engine (Canada), Maumee Stamping (Ohio), and Batavia Transmission (Ohio) will all close.
These 16 closings will mean the loss of 30,000 production jobs and 14,000 salaried positions by the end of 2009, reducing the company’s North American workforce by 29 percent. Buyouts, which allow Ford to end its financial responsibility to an employee, have been offered to all 75,000 active hourly workers in the United States, regardless of plant location.
Worldwide, Ford employs approximately 260,000 workers across more than 100 plants.11 Salaried jobs represent about a third of that workforce.12 Ford’s North American workforce, salaried and hourly, makes up about 122,000 of that 260,000.
TROUBLED TIMES FOR FORD
This is not the first time Ford has navigated troubled waters. The company survived two World Wars, the Great Depression, changes in management and direction, an oil crisis in the 1970s, and some very public and costly product recalls. Ford has closed plants in the past in response to large losses. In early 2002 Ford conducted a major restructuring effort that resulted in the closing of five plants, the elimination of 35,000 jobs, and over $9 billion in cost-cutting measures.13 Minnesota’s Ford plant managed to miss the cut that time in spite of rumors to the contrary. These cuts turned out not to be enough to curb Ford’s dramatic loss in market share over the last decade. Last year Ford lost $12.7 billion, shaking shareholders’ long-term faith in the company.
Strong global competition, particularly from Asia, has been a primary force behind Ford’s troubles for decades. Asian automakers began selling cars in the United States in the late 1960s and have been cutting into domestic automaker profits ever since. Americans began to demand better gas mileage from their automobiles in response to the 1973 oil crisis. This demand for higher gas mileage and changes in emissions standards, which proved costly for domestic automakers, helped Asian automakers gain ground throughout the 1970s and 1980s.
More recently, the economic recession in the early 1990s crippled domestic automakers. In 1992 Ford posted a $7.4 billion loss, but thanks to its heavy investment in its minivan and sport utility vehicle production (the fastest-growing sector of the automotive market at the time), Ford recovered once again. Since then, consumers have been demanding more fuel-efficient vehicles, which has reduced Ford’s sales considerably.
DOES THE PLANT CLOSING ENDANGER MINNESOTA’S ECONOMY?
Automotive manufacturing is a small industry in Minnesota with a total of 10 establishments employing an average of 2,132 people in 2006. Most of these workers are employed at TCAP, the only auto manufacturer in Minnesota that produces finished automobiles. Last year auto manufacturing represented less than 1 percent of manufacturing jobs statewide and a drop in the bucket of the over 2.7 million jobs in Minnesota.14 The plant closing also represents a loss, albeit less than 1 percent, to Minnesota’s foreign trade economy. TCAP is responsible for $100 million in annual exports to Canada. Minnesota’s total exports in 2006 were valued at $22.4 billion.
Employment in manufacturing has stabilized since the 2001 recession, but transportation equipment manufacturing, where automotive manufacturing is classified, has seen decline, down 17 percent between 2000 and 200615 (see Figure 2).
TCAP’s closing represents a lost market for local suppliers. However, the Minnesota Department of Employment and Economic Development (DEED) estimates the impact on suppliers to the plant will be relatively small, especially compared to other states with plant closings. DEED declared workers from 17 supplier businesses eligible for the Dislocated Worker program. Impacted supplier industries include manufacturing, professional/technical services, and transportation and wholesale trade.
Retail and food service businesses in Highland Park, where the Twin Cities Assembly Plant is located, will also feel some impact from the closing. Many of the workers will no longer eat lunch in the area or shop in the stores nearby. If the closing leads to reduced income in the short term for Ford workers, the communities in which these workers live may also feel some impact in retail and food service industries. Based on 2004 data, 17 percent, or about 380 Ford workers, live in St. Paul, 8 percent live outside of Minnesota, most likely in Wisconsin, and another 7 percent live in Minneapolis. The remainder are spread around suburban Twin Cities, primarily to the north and east.16
WHERE WILL THE ROAD LEAD FOR TWIN CITIES FORD WORKERS?
The first wave of layoffs at TCAP occurred with the elimination of the second shift on Jan. 2, 2007. On Sept. 14, 2006, Ford Motor Company issued a collection of buyout options for over 75,000 active Ford hourly workers, TCAP workers among them. Hourly workers at the plant had until late November 2006 to decide whether to take a buyout that would end their employment on a date determined by Ford.
Packages ranged from lump sum payments of up to $140,000 to educational packages that provide $15,000 a year for four years toward tuition and 50 percent of the worker’s previous wages during that time. Many of the buyout packages included years of service and age requirements. Over 95 percent of Twin Cities Ford employees applied to take a buyout package. The most popular package, selected by almost 50 percent of workers, was the $100,000 lump sum payment that includes six months of basic medical benefits and pension benefits upon retirement for those who would otherwise qualify.
Read about the plant closure from the perspective of a Twin Cities Ford worker.
In June 2007 Ford reported that over 27,000 U.S. hourly workers across North America had left the company under a recent buyout. Initially 37,000 workers signed up for the buyouts, but not all have left. Ford reports that about half of the 27,000 were not eligible for retirement. Had those workers stayed with Ford, Ford would be required to pay some portion of their retiree health care costs. According to Ford’s 2006 annual report, its unfunded health care and life insurance liability was $25.9 billion.17
The average seniority of the TCAP workforce is about 22 years, so many of the workers have known only a career at Ford. The typical TCAP worker has a high school diploma and earns about $28 an hour working 40 hours a week in a production job — 20 percent more than the average Minnesota production worker earns working the same amount of hours. When considering total compensation (wages and benefits), the gap widens. TCAP workers are overwhelmingly the primary wage earner for their households so they are focused on finding new jobs with comparable pay and benefits and on obtaining any training necessary to get that next job.
Most production workers at Ford are team assemblers, welders, inspectors or painters (all Rangers and Mazda B-series trucks are painted on site). Of these four occupations, the occupational outlook in the seven county Twin Cities is strongest for team assemblers, with employment growth of 10 percent projected by 2014. This is still slightly below the projected 12.8 percent growth for all occupations in the Twin Cities over the same period. Team assemblers is also the largest occupation in Minnesota of the four listed above, employing more than 21,000 people statewide. The Twin Cities median wage for team assemblers is $12.74, about 45 percent less than the average TCAP worker makes now. Welders, which have a higher median hourly pay at $19.56 per hour, can expect to see almost no growth in jobs in the Twin Cities between now and 2014 although growth of 5.3 percent is projected statewide. Table 1 provides more information on the wages and employment outlook for these production occupations.
|Minnesota Outlook for Selected Manufacturing Occupations
|Occupational Outlook for Minnesota Ford Production Workers
2nd Qtr 2008
|Painters, Transportation Equipment
|Total, All Occupations
|Source: DEED, Minnesota Occupational Employment Statistics and Projections. Short-term outlook, not available for Twin Cities.
Despite slow growth in production occupations in the Twin Cities, almost 30,000 jobs are projected to become available between 2004 and 2014, primarily as a result of retirements within the current workforce. Throughout Minnesota an unprecedented number of workers will reach retirement age over the next 10 years. Overall, 20 percent of jobs in Minnesota will be held by new entrants coming into the workforce behind workers who have left, primarily from retirement. The production workforce is no exception: Over 23 percent of production jobs in 2014 will be held by new entrants to the field. Retirements will open up opportunities for TCAP workers as well as many other workers interested in production occupations in the Twin Cities and throughout the state.
Some TCAP workers may elect to get training with an eye toward a new career in a high-demand field. Many of the occupations with the highest number of job vacancies in Minnesota according to the fourth quarter 2006 Minnesota Job Vacancy Survey are in health care occupations like registered nurses, home health aides, nursing aides and LPNs. Some of the highest paying among the high vacancy occupations are computer software applications engineers and network administrators, with median wages from $25 to $36 an hour. There are no production occupations among the top 25 highest-vacancy jobs.
The Minnesota Dislocated Worker (DW) program has been working with TCAP to identify future job opportunities. The Minnesota Job Skills Partnership Board, which oversees DEED’s administration of the DW program, declared all people working at TCAP at the time of the April 13, 2006, closing announcement eligible for the program. Through DW, workers are eligible to receive career counseling, resume writing and interview skills assistance, training (up to two years at a certified educational institution), and support services. The blend of services depends heavily upon the individual and his or her needs. Career counselors help each worker create a customized employment and training plan.
On Dec. 19, 2006, the federal government declared the TCAP site to be Trade Adjustment Assistance (TAA) eligible. All required costs of a two-year training program for a high-demand field at a public vocational school can be paid for through the TAA program for workers who have lost their job as a result of foreign competition. TAA can extend a dislocated worker’s training resources beyond $3,800, the average per participant award. For TCAP workers who accepted an education buyout, TAA will pay all costs not covered by the buyout. There are other benefits possible through TAA as well, such as health care credits and job relocation cost reimbursements. The package of services depends on individual circumstances. Ramsey County Workforce Solutions and Quality Career Services have been providing on-site DW and TAA services to Minnesota Ford workers since June 2006.
WHAT IS TO BECOME OF SOME OF THE MOST VALUABLE REAL ESTATE IN MINNESOTA?
In late May 2007 Ford agreed to sell the hydroelectric plant next to its Twin Cities Assembly Plant to Brookfield Power, based in Canada. What will become of the 136-acre site, on which TCAP and its rail yard sit, is not yet certain. The redevelopment project is a self-starter because of the site’s dramatic river bluff views five miles from the Minneapolis/St. Paul International Airport, and location in the highly valued Highland Park area. Although the current Ford site value is listed at $21 million, a Pioneer Press study of land use in the surrounding area estimated the land and development to be worth about $196 million if it were simply redeveloped to mirror the homes and businesses in adjacent southwestern Highland Park.18
A task force of citizens and planning experts, including a representative from Ford, was assembled by the St. Paul Planning Commission to look at development options for the site once the plant closes in 2009. The five mixed-use proposals, presented to the community in June, were for heavy industry, light industry, office space, single-family homes (urban village) or high-density housing (urban transit village). The estimated job creation from each of the five proposals ranged from 1,500 to just over 3,000 jobs.19
Ford Motor Company will ultimately decide to whom to sell the site. Ford could choose to honor one or none of the ideas presented by the task force. In light of these recommendations from the Planning Commission, the St. Paul City Council will likely decide to rezone the property next year from its current industrial use to something else that will give Ford greater flexibility in selling the property. The future of Ford’s Little League fields on Cleveland Avenue is also uncertain.
UAW 879 worked for months to stop the eventual sale of the Twin Cities Ford property in an effort to protect jobs. In support of their efforts Minnesota State Sen. Richard Cohen, DFL-St. Paul, and Minnesota State Rep. Carlos Mariani, DFL-St. Paul, sponsored a bill during the 2007 legislative session that would have required Ford to hold the property and keep the plant in operating condition for as long as five years. Ford opposed the effort not only because it would tie its hands, but because the property is worth much more as commercial and residential land than as industrial. The bill did not become law. In another effort to save the plant, the UAW approached Ford in July about keeping the plant open in response to improved Ranger sales in May. Their hopes were dashed when Ranger sales fell 29.3 percent in July to 5,662, down from 8,014 in the same month in 2006.20 Ford attributed the drop to intentionally reduced sales of its vehicles to rental fleets. Retail sales also fell during that time.
However, the UAW and Ford recently came to an agreement to keep the plant open until an unspecified date in 2009. The new closure date was part of an agreement that set up a $15.4 billion health care trust fund for retirees and a two-tier wage system for new hires. Ford may have been amenable to keeping TCAP open longer with $15.4 billion in health care liability off its books (the union will manage it), lower wage costs as a result of buyouts, and the recent increase in Ranger sales in Canada. State and city government efforts continue to keep the plant open, preferably as a green manufacturing facility.
Regardless of the buyer Ford selects for its Twin Cities property, it will likely have some cleanup to do. Environmental standards have gotten tougher over the eight decades Ford has operated its Twin Cities plant. Arcadis, Ford’s environmental consulting firm, identified 70 possible areas that could be contaminated by waste solvents, paint sludge, batteries, gasoline, diesel and other compounds. The investigation used environmental records, two walk-through inspections and interviews with Ford employees to determine the possible locations of the contaminants.21 Ford has issued a statement that it is “100 percent committed to ensuring that the land is cleaned up” and has enrolled in the Minnesota Pollution Control Agency’s Voluntary Investigation and Cleanup program, which requires a complete soil and groundwater investigation of the site and appropriate cleanup measures. State officials in New Jersey, where another Ford Ranger truck plant was recently closed, reported that required cleanup was minimal.
SAYING GOODBYE TO A PIECE OF MINNESOTA HISTORY
Behind all of the redevelopment proposals, sales figures and occupational data lies a story about workers. The people who built the plant and worked in it have created history in Minnesota. When the last piece of that history rolls off the assembly line, it will be a day to look both back at what made the plant great and forward to what these same people can and will accomplish in Minnesota’s diverse economy.
The author acknowledges Pat Fenton and Dru Frykberg, DEED librarians, for their invaluable research assistance; Mike Goldman, rapid response labor liaison, for his information gathering and assistance with worker contact; Yujie Bao, Dislocated Worker Intern, who spent hours on market share analysis; Bob Killeen, Joan Johnson-Killeen, Jim Reinitz and Brian McMahon who agreed to be interviewed and share their thoughts and feelings about the closing.
Thanks to UAW 879 for providing photos of the TCAP workers. Recent, exterior TCAP pictures by Barb Kucera.
1 Ford Motor Company website: www.fordmotorcompany.com/en/heritage/fordFamily.
2 “Ford Motor Company.” International Directory of Company Histories, Vol. 64, St. James Press, 2004.
3 Kennedy, Patrick, “A Historical Tour of Ford’s Twin Cities Assembly Plant.” Minneapolis Star Tribune, April 13, 2006.
4 International Directory of Company Histories.
5 Hawley, David, “Henry Ford’s Power Play.” St. Paul Pioneer Press, October 15, 2006.
6 Kennedy, Patrick.
7 “An Era Ends – From Model T’s Through Crown Vics and Rangers, It’s Been a Good Ride.” St. Paul Pioneer Press, April 14, 2006.
8 Ominsky, Alan, “A Catalog of Minnesota-Made Cars and Trucks.” Vol. 43, No. 3, Pages 93-112, Fall 1972.
9 DePass, Dee, “Ford, Union Reach Deal; St. Paul Plant Gets Extension.” Minneapolis Star Tribune, November 5, 2007.
10 Welbes, John, “Ford Reveals ’08 Shutdown—1,900 Workers Will Lose Jobs.” St. Paul Pioneer Press, April 14, 2006.
11 Ford Motor Company website: http://www.fordmotorcompany.com/en/company/about/overview.htm
12 “Ford Cutting Jobs, Closing Plants.” WCBS Newsradio 880, September 15, 2006.
13 International Directory of Company Histories.
14 BLS Quarterly Census of Employment and Wages, DEED, 2006 data.
15 BLS Current Employment Statistics Non-Seasonally Adjusted Employment, DEED, June 20, 2007.
16 LED Workers Origin/Destination and Workplace Area Characteristics Files, 2004, from M3D at http://map.deed.state.mn.us/m3d/
17 “Ford says 27,000 U.S. hourly workers have left automaker under buyout offers.” St. Paul Pioneer Press, June 14, 2007.
18 Nelson, Tim, “Developers Watch, Wait.” St. Paul Pioneer Press, January 22, 2006.
19 For more information on the Ford plant site proposals, visit http://www.stpaul.gov/depts/ped/fordsite/
20 Welbes, John, “Ranger Sales Optimism Short Lived.” St. Paul Pioneer Press, August 2, 2007.
21 Meersman, Tom and Medcalf, Myron, “Ford to Clean House Before Land is Sold.” Minneapolis Star Tribune, July 29, 2007.