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Ford Cuts and Closings; Saving St. Paul Ford Plant; Mine Safety; College Cost Tips

Aired January 23, 2006 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

SOLEDAD O'BRIEN, CNN ANCHOR: We're out of time.
MILES O'BRIEN, CNN ANCHOR: Here's Daryn.

DARYN KAGAN, CNN ANCHOR: I hope your January 23 goes better than the mathematical empirical formula says that it's supposed to.

SOLEDAD O'BRIEN: Sure hope so.

KAGAN: Yes, you guys have a great day in New York City.

MILES O'BRIEN: So far so good.

SOLEDAD O'BRIEN: You too, Daryn.

KAGAN: All right. We're going to go ahead and get started.

There is a much anticipated announcement from the nation's number two automaker. It is just minutes away. Ford expected to announce several plant closings and, with that, layoffs for thousands of workers. Which plants will be shutting down? That's the big question everyone wants answered right now. We will find out when the chairman of Ford reveals the news in a live news conference this hour right here on CNN LIVE TODAY.

We will have live coverage leading up to the announcement. First, though, let's go ahead and check on other stories happening right "Now in the News."

And you're looking at the aftermath of a five-story building collapse in Nairobi, Kenya, today. Hospital officials report at least two people are dead and dozens injured. The cause of the collapse is unclear but foul play is not suspected. Many in Nairobi blame shoddy construction work, a controversial topic in the capital.

This hour, President Bush is en route to the nation's heartland to address the war on terror. His speech will be at Kansas State University. It kicks off a week-long offensive to explain the controversial NSA domestic spying program. CNN will have live coverage of the president's remarks, now scheduled for 13:30 p.m. Eastern.

And then later today, advisors to the Food and Drug Administration will consider whether a prescription diet pill should become available for over-the-counter purchase. Xenical has been available with a prescription for six years. An over-the-counter version would have half the dosage. It would be named Alli. Both pills block the absorption of fat.

And good morning to you on this Monday morning. Thank you for starting your week with me. I'm Daryn Kagan at CNN Center in Atlanta.

We are going to start the week and the day and the hour with a big blow to Ford workers all across North America. The automaker is expected to announce thousands of job cuts at a news conference today. CNN will bring you that announcement live at the bottom of the hour. The layoffs and plant closings are part of a long-term restructuring plan. Ford has been hit by falling sales and rising costs. CNN's Ali Velshi joins us from the company headquarters. He is in Dearborn, Michigan.

Ali, hello.

ALI VELSHI, CNN CORRESPONDENT: Daryn, this is where Ford started. Henry Ford started this company in Dearborn in 1903 and now his great grandson, Bill Ford Junior, is inside talking about the company's financial. This company didn't lose money in 2005, but it's auto making operations did. This company made more money in finance than it did in selling cars.

Now today we are expected to hear in 30 minutes an announcement of up to 25,000 workers laid off across North America, maybe 10 plants closed. One in Canada, one in Mexico, the rest here in the United States. One in Georgia, Hapeville, Georgia, where they make the Taurus and the Mercury Sable. In St. Louis, where they make the Ford Explorer, in St. Paul, Minnesota, where they make the Ranger and the Mazda B-Series Trucks. We're expecting to hear right here in Michigan one or two plant closures where they make Expedition and Navigators.

Ford has not been able to sell enough cars. Their factories are working at 80 percent -- 75 to 80 percent capacity, where Toyota is working at 100 percent capacity. The other thing we want to hear from Bill Ford in about half an hour is, what this company is doing to reinvent itself.

It's calling this new plan "the way forward." Well, the way forward can only be, to some degree, about cutting costs. It's got to be about new inventions, about what they're going to do to make the Ford name once again preeminent. Make people want to go out and buy Ford.

So it's a big announcement, a big restructuring, but it is going to mean a lot of layoffs. We will have that word in about half an hour.

Daryn.

KAGAN: Picking up on something that you're saying, Ali. He's not just talking about closing plants and losing jobs, he's trying to talk about completely changing the whole culture and focus of this company.

VELSHI: Yes. I mean, Ford has had such a great history. It was the first assembly line. It was the Model T. It was the Mustang. You can see over my shoulder, that's the new redesigned Mustang from 2005. That car has done well for them. But Ford was also the Explorer, the biggest -- the beginning of the SUV craze.

Well, the SUV craze is disappearing. In November, the Explorer had its worse month ever. The Taurus, which competed against Japanese imports, well that car is struggle now. It's got to come up with some new ideas. It's got to decide what's happening for the next 10 or 15 years, not just keeping afloat. We saw what happened to GM, 30,000 layoffs just a couple of months ago. Ford is going to do that now. But hopefully there's a plan for the future that we're going to hear about within the next hour.

Daryn.

KAGAN: All right. Well, we're going to be listening to that and we'll have you standing by to help put into perspective what we do hear from company executives in about 25 minutes.

Thank you, Ali.

Right now, though, let's take a look at Wall Street's reaction to Ford's expected announcement. Susan Lisovicz has us covered there at the New York Stock Exchange.

Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Daryn.

Well, this is where Wall Street and main street diverse because it's, obviously, terrible news for the tens of thousands of workers who may be affected by this massive restructuring at Ford. But it may be good news to investors, people who own Ford shares, because they think that this may be the only thing Ford can do to survive this crisis.

Right now Ford shares are rallying big time at a time when the overall market isn't doing much at all. Take a look at Ford shares over the past year. You can see how far they've fallen. Ford shares, however, right now are up 8 percent or 64 cents at $8 and change. Ford shares closed Friday at $7.90, down 40 percent over the past 52 weeks. In early 2001, for instance, Ford shares were above $30.

The car maker, as Ali pointed out, also came out with four quarter earnings today and the numbers beat Wall Street's estimates. Strong results at its credit unit, which provides auto loans, and the sale of its Hertz rental car unit offset weak car sales. And that's something that Ali pointed out and it bears repeating that it's core business is suffering. For all of last year, Ford earned $2 billion. That was the third straight year of profitability for Ford, but earnings still fell 42 percent from 2004.

So let's take a look at the overall market and see what's happened since that massive sell-off here on Friday. Dow Jones Industrial, you could hardly call this buying on the dip, up just three appoints right now. It was the worst sell-off in nearly three years for the Dow Jones Industrials. It was the worst for the Nasdaq in more than three years.

The Nasdaq right now is below water, down 5.5 points or a quarter of a percent. And, Daryn, one of the reasons why there's so much nervousness is that this is the crunch week. You have nearly half of the Dow 30 companies reporting this week. So there's still a lot of nervousness and fear about whether we're going to have more disappointments. But I should say that oil prices right now are dipping slightly from what we saw on Friday, so that's a relief.

Back to you.

KAGAN: All right. Thank you, Susan. We will check back with you throughout the next couple hours.

Well, continuing on this story. Four years ago, the Ford plant in St. Paul, Minnesota, avoided a round of closures. Today, though, workers are hoping a couple of key factor will save the plant again. Reporter Ellen Galles of our affiliate KMSP has that story.

(BEGIN VIDEOTAPE)

ELLEN GALLES, CNN CORRESPONDENT, (voice over): Since the days of the Model T, the Ford plant has been a fixture along Mississippi Boulevard in St. Paul. Monday morning, we'll know if that will continue to be the case. The "Detroit Free Press" is already reporting five likely plant closures because of their age, the products they make, their lack of flexibility, or other factors. And St. Paul is on the list.

Here in St. Paul, they produce Ranger pickup trucks. But demand for the compact truck has been waning. In fact, sale for the Ranger dropped 23 percent in 2005. And employees have hoped all along that's not a warning sign.

JIM KINDE, FORD EMPLOYEE: Granted it doesn't look too good, but we've been through better, we've been through worse.

TONY TRAYNOR, FORD EMPLOYEE: Well, my son works here, my brother works here and my dad worked here, you know. And it's been a long line of us working here and we all enjoy it and it's been a loft job security for us.

GALLES: Although there are factors in St. Paul's favor. It's the only North American manufacturer of the Ranger. And it's the only plant that produces its own electricity. The plant harnesses water power from the Mississippi River, which is a major economic plus for a company looking to cut costs.

Back in 2002, the St. Paul plant avoided an equally gruesome round of cuts and the hope is it can happen again.

(END VIDEOTAPE)

KAGAN: So you know they'll be listening in at the bottom of the hour. That report from Ellen Galles with our affiliate KMSP. Stay tuned for the announcement from Ford. It will be live at 10:30 a.m. Eastern.

News from Iraq now. A father pleads once again for his daughter's life as the U.S. and Iraq continue efforts to secure the release of kidnaped American journalist Jill Carroll. It has been 16 days since kidnappers abducted Carroll from the streets of Baghdad. They're demanding the release of Iraqi women held by the U.S. military. Last night, CNN's Soledad O'Brien spoke with Carroll's father. In this CNN exclusive interview, Jim Carroll has a message for his daughter's kidnappers.

(BEGIN VIDEO CLIP)

JIM CARROLL, FATHER OF AMERICAN HOSTAGE: I wish to speak directly to the people holding my daughter. I hope that you heard the conviction in Jill's voice when she spoke of your country. That was real. She is not your enemy. When you release her alive, she will tell your story with that same conviction. Alive, my daughter will not be silenced. Your story is one that can be told by Jill to the whole world. Allowing her to live and releasing her will enable her to do that. You already know that my daughter is honest, sincere, and of good heart. Her respect for the Iraqi people is evident in her words that she has been reporting. Jill started to tell your story, so, please, let her finish it. Through the media, if necessary, advise her family and me of how we might initiate a dialogue that will lead to her release.

(END VIDEO CLIP)

KAGAN: The kidnappers have not been heard from since they made their demands last Tuesday.

Also out of Iraq today, Saddam Hussein's trial is due to resume tomorrow in Baghdad. And a new chief judge will take over amid tight security in the Iraqi capital. Insurgents continued their attacks on Iraqi police and U.S. patrols. Look at this scene here near the Iranian embassy and inside the heavily fortified green zone. A suicide car bomber blew up an Iraqi police checkpoint killing at least three people.

Elsewhere in Baghdad, another suicide car bomber attacked a joint U.S. Iraqi army checkpoint.

And the U.S. military says two airmen were killed by an improvised explosive device. The incident happened yesterday about 18 miles north of Baghdad. The military says a roadside bomb exploded near the convoy. Another airman was injured in that blast. So far, more than 2,200 U.S. troops have died in Iraq since the war began.

Pakistan's prime minister describes the U.S. reason for a bombing in his country is bizarre. More than a dozen civilians were killed in a CIA strike 10 days ago. U.S. officials believe the attack did kill between four and eight al Qaeda members attending a dinner meeting. But Pakistan Prime Minister Shaukat Aziz rejects the scenario. He says that top terrorist leaders wouldn't meet for dinner in a small Pakistani village. Mr. Aziz told CNN's Wolf Blitzer his government had no advance word of that strike. (BEGIN VIDEO CLIP)

SHAUKAT AZIZ, PAKISTANI PRIME MINISTER: We had no idea that this would take place. We generally are aware that there's activity in this area and the normal standard operating procedure is because we have the people on the ground. You can rely on electronic intelligence up to a point, but you need human intelligence and you need people there to capture. That is why 13 people who were apparently civilians have died and we have -- we are still investigating the whole area, combing the area.

(END VIDEO CLIP)

KAGAN: U.S. politicians have expressed regret over the civilian deaths, but they say the attack was justified by the initial report that al Qaeda's number two man was on the scene. CNN's "Late Edition with Wolf Blitzer" airs Sunday at 11:00 a.m. Eastern.

We are 12 minutes past the hour, standing by for an announcement from the Ford Motor Company. The number two U.S. automaker expected to reveal a number of plant closings. And with that, there could be thousands of layoffs. Live coverage at the bottom of the hour here on CNN.

Also ahead on CNN LIVE TODAY, high drama on the high seas. U.S. sailors intercept pirates off of Somalia's coast.

And one mom goes up against the junk food phenomenon. She is fed up and she is taking her case to court. Wait till you hear who she says is to blame for teaching kids unhealthy eating habits.

(COMMERCIAL BREAK)

KAGAN: The issue of mine safety is at the center of a political debate this morning. It comes after back-to-back tragedy this is month claimed the lives of 14 miners in West Virginia. Now, the governor there wants state lawmakers to act today on mining reforms. And it doesn't end there. In the nation's capital, senators are holding hearings today on whether enough is being done to protect American coal miners. CNN's Gary Nurenberg has the story.

(BEGIN VIDEOTAPE)

GARY NURENBERG, CNN CORRESPONDENT, (voice over): The hearing Monday is the first since 14 miners died in West Virginia accidents in the last three weeks.

SEN. JOE LIEBERMAN, (D) CONNECTICUT: We took a quick and urgent look to make sure that the laws to protect those miners are all that they should be.

NURENBERG: Senators toured the site of the fatal Sago Mine accident Friday and got safety recommendations from relatives and friends of the dead.

SEN. JAY ROCKEFELLER, (D) WEST VIRGINIA: I mean there's such a rich resource of ideas. People were -- (INAUDIBLE) were just scribbling down ideas one after the other.

NURENBERG: The Bush administration said over the weekend it wants specific ideas within 60 days to improve ming safety.

On the list of possible reforms, better technology to enhance survival after an accident, better tracking equipment to communicate with miners, better oxygen supplies and rapid response plans that would get rescue workers into the mines more quickly.

Senior West Virginia Senator Robert Byrd asked for Monday's hearings, saying he doesn't believe the federal government is doing enough to protect miners. Massachusetts Democrat John Kerry blames the Bush administration for relaxing mine regulation.

SEN. JOHN KERRY, (D) MASSACHUSETTS: I think it's inexcusable and I'm confident that Congress is going to move, as are the states.

NURENBERG: But Virginia Senator George Allen warns against going too far.

SEN. GEORGE ALLEN, (R) VIRGINIA: You can't have it so over regulated that no one can economically mine coal in this country and therefore have to import it from Columbia or somewhere else around the world.

NURENBERG: And the ming industry plans to tell senators to keep the recent fatalities in perfective.

BRUCE WATZMAN, NATIONAL MINING ASSOCIATION: Since 1990, fatality ratings have come down 60 percent. Since 1970, fatality rates have come down 92 percent. And we've seen a commensurate reduction in injuries as well.

NURENBERG: West Virginia Governor Joe Manchin said over the weekend he will propose state reforms and plans to visit Washington this week to urge congressional action as well.

ALLEN: But we need to learn from these disasters so that we, if possible, and I believe there's bound to be a way we can make it safer so such accidents and deaths do not occur in the future. And I think that's in the industry's interest, as well as, obviously, the coal miners and their families.

NURENBERG: Monday's hearing is just the beginning. Expect specific legislative proposals in the days that follow.

Gary Nurenberg, CNN, Washington.

(END VIDEOTAPE)

KAGAN: And then there is this story out of Utah. A very long and cold night for hikers stranded on top of Mount Olympus in Utah. The group fell while scaling a steep, slippery slope on the back half of the mountain. A search and rescue team found them but lifting the injured ones off by helicopter before daybreak was too risky. They were airlifted to safety on Sunday morning. Other than some broken bones and a bit of frostbite, they are expected to be OK.

All right. Jacqui Jeras is here looking at . . .

JACQUI JERAS, CNN METEOROLOGIST: Hiking in the winter?

KAGAN: I guess it's like the next step, you know. Like some people like to go ice climbing and that kind of thing.

JERAS: Extreme sports, right?

KAGAN: You know, in the summer, just too boring or something.

(WEATHER REPORT)

KAGAN: And we have news just in to CNN. It has to do with Blackberry users. You still have reason to be nervous about your Blackberry working or not working. The Supreme Court today refusing to hear an appeal from the maker of Blackberry. This is the long running battle over patents for this handheld wireless e-mail device. The justices had been asked to decide on whether U.S. patent law is technologically out of date in the age of the Internet and the global marketplace, but the high court say, no, they won't hear it. So it gets kicked down -- back down to a lower court. So that drama continues for the makers of Blackberry and the many, many users across the country.

Also, a drama for thousands of Ford Motor Company employees today. They are expected to get some very bad news in just a few minutes. An announcement coming from the automaker about closing several plants in North America. CNN will bring that announcement to you live.

First, though, the cost of higher education is skyrocketing. Gerri Willis is here with some advice for parents on how to save and get ready for that mega cost.

GERRI WILLIS, CNN CORRESPONDENT: Daryn, good to see you.

Don't panic. Solutions for keeping your college costs under control. "Five Tips" is next.

(COMMERCIAL BREAK)

KAGAN: Let's go ahead and check the markets. They've been open almost an hour. The Dow moving up slowly but surely. It is up 28 points. We're watching the markets to see how they respond to news from the Ford layoffs that we're expecting in just a few minutes. Also, the Nasdaq, not much movement there. It is just up just over a point.

Let's talk about saving for college. Parents can tell you it is very difficult to do that. Saving for a child's college education can never start soon enough. Tuition costs far outpace inflation and student loans will soon be far less than attractive. Oh, gloomy. Here to explain and help out our Personal Finance Editor Gerri Willis with her "Top Five Tips." WILLIS: Hey, Daryn. Good to see you.

By the way, I got the maroon memo.

KAGAN: Yes, you did. Good girl.

WILLIS: I did, indeed.

Tip number one. The cost of borrowing, as you just said, is climbing. Check out these numbers. Public education up 40 percent over the last five years to almost $5,500. If you're going to a private school, you're obviously paying much more, over $20,000 a year. Those costs up about 18, 19 percent over five years. So you're going to have to save. You're going to have to save a lot. And if you can get help in terms of financial aid, that's where you need to go. So check out finaid.com. They have calculators there that will help you figure out how much you might be eligible for.

KAGAN: Now the timing of when you turn in a lot of these applications is very important.

WILLIS: Timing is important. You want to get -- and I have to read this because this name is so long, the free application for federal student aid. You need to get that form in as soon as possible because the more -- the earlier you get it in, the more money you might get. This is the form that everybody needs. And, Daryn, I've got to tell you, about 8 million students each and every year are not getting the money they otherwise might be due in terms of loans, financial aid. So it really pays to fill out these forms and see exactly what you can get, because the alternative is having mom and dad borrow from their retirement and that's never a good thing.

KAGAN: No.

Yes, now it seemed like not that long ago the hot thing were these 529 accounts. Now maybe that's not such a good thing. What are they and why not?

WILLIS: Well the problem is, these are tax advantage savings accounts. But the trouble is, they've always been terribly convoluted. Now there are shading broker dealings with some of these. And the fees are through the roof. The fees are, in fact, so high that sometimes they eat up all your gain. So what I'm saying today is, if you're starting saving for your child, let's not think about 529s right now, let's get a Coverdale education savings account open. You can set aside about $2,000 each and every year. Or you might even want to save outside of one of these tax advantage programs.

KAGAN: And, boy, it gets more and more of a burden. It's not just tuition that your kid's going to need.

WILLIS: I'm telling you, the costs are astronomical just for living, for getting the books. Kids are typically spending over $800 for books every year. That's a lot of money. We have some numbers here for you to take a look at. Entertainment, $46 a month. Video games, $41 a month. Somebody pointed out to me we don't have beer on the list, Daryn.

KAGAN: I know. So if someone's spending all that money on video games and no beer, geek, probably.

WILLIS: A true geek, right?

KAGAN: They can raise their own money for the video games.

WILLIS: Well, you want to make sure that you're spending as little as possible. There's a great Web site at ebayhalf.com can help you spend less on books. And that's where a lot of this money goes, because they are really expensive. And then, even when you resell them, you don't get all your money back. So you've got to find ways to save at the margins.

KAGAN: Let's end on a positive note. There is some free cash out there.

WILLIS: I love free cash. Scholarships are available to so many people. There are scholarships, Daryn, for tall people.

KAGAN: All right.

WILLIS: Yes. I didn't make the cut, though, 5'10".

KAGAN: Oh, an inch too short.

WILLIS: Yes. Tall people, short people, people who ski. You name it, you can get scholarships out there but you're not going to know unless you really shop for them. Give you some Web sites to check these out. Fastweb.com, collegeanswer.com, even finaid.com, the Web site I mentioned a second ago. These are all Web sites that will help you find free money. And even though it may not be a ton of dough, at least you're putting something against that ultimately huge bill.

Daryn.

KAGAN: Gerri Willis, as always, great tips. Thank you.

WILLIS: You're welcome.

KAGAN: Well, last month it was General Motors that announced the closing of numerous plants and the layoff of thousands of workers. Just minutes from now, Ford expected to deliver similar bad news. We will go live to Detroit when that announcement happens.

Right now, a quick break.

(COMMERCIAL BREAK)

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