Sales slump causes Ford to close plant that makes 2 SUV's for nine weeks
06-17-2008 | 12:13 AM
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Sales slump causes Ford to close plant that makes 2 SUV's for nine weeks
DETROIT: Sagging demand for large sport utility vehicles has forced Ford Motor Co. to close a Michigan factory for nine weeks starting June 23.
The Michigan Truck Plant in Wayne, west of Detroit, makes the Lincoln Navigator and Ford Expedition. It will be idled until Aug. 25, Ford spokeswoman Angie Kozleski said Monday.
Expedition sales are down 31 percent for the first five months of the year, and Navigator sales are off 22 percent, according to Autodata Corp. Ford had a 124-day supply of Navigators and a 100-day inventory of Expeditions, according to Ward's AutoInfoBank.
Ford had previously announced that it would close the Michigan Truck Plant for five weeks during the summer, including the company's normal two-week summer shutdown in July.
"We are going to do what we need to do to make sure our capacity is in line with demand," Kozleski said.
The factory employs about 1,400 hourly workers. They will be laid off but get roughly 95 percent of their pay under their contract with the United Auto Workers.
Ford Chief Executive Alan Mulally said last month that the U.S. market had rapidly shifted from trucks to cars because of $4 per gallon gasoline, and that Ford views the shift as permanent. The company plans to increase car production and decrease truck production, with specifics coming in July, he said.
Kozleski said the Michigan Truck Plant shutdown is not part of the July announcement.
"We're still working through our plans and nothing is finalized yet, so I would not link the two," she said.
However Greg Gardner, an analyst with the Oliver Wyman Group, said the announcement casts doubt upon Michigan Truck's future. The company, he said, could retool pickup truck plants in another Michigan facility, in Missouri or in Kentucky, to make both the new F-150 pickup and the large SUVs.
Ford now is operating too many truck factories on one shift and likely will close some of them, he said.
He could not recall a temporary shutdown longer than nine weeks, although he said one may have occurred during the downturn of 1991 or 1992.
Ford managers told United Auto Workers officials on Friday that the automaker will have to reduce its factory work force further to deal with the rapidly shifting U.S. auto market.
The company already has said it will cut its salaried work force costs by 15 percent by Aug. 1.
Ford has said it will offer additional buyout and early retirement offers at specific factories.
Earlier this year, Ford announced corporate-wide buyout and early retirement offers for U.S. hourly workers, but only 4,200 took the offers, far below what the company had wanted.
Ford also announced in May that it will not reach its goal of returning to profitability in 2009.
Ford shares rose 23 cents, or 3.7 percent, to $6.50 Monday.
The Michigan Truck Plant in Wayne, west of Detroit, makes the Lincoln Navigator and Ford Expedition. It will be idled until Aug. 25, Ford spokeswoman Angie Kozleski said Monday.
Expedition sales are down 31 percent for the first five months of the year, and Navigator sales are off 22 percent, according to Autodata Corp. Ford had a 124-day supply of Navigators and a 100-day inventory of Expeditions, according to Ward's AutoInfoBank.
Ford had previously announced that it would close the Michigan Truck Plant for five weeks during the summer, including the company's normal two-week summer shutdown in July.
"We are going to do what we need to do to make sure our capacity is in line with demand," Kozleski said.
The factory employs about 1,400 hourly workers. They will be laid off but get roughly 95 percent of their pay under their contract with the United Auto Workers.
Ford Chief Executive Alan Mulally said last month that the U.S. market had rapidly shifted from trucks to cars because of $4 per gallon gasoline, and that Ford views the shift as permanent. The company plans to increase car production and decrease truck production, with specifics coming in July, he said.
Kozleski said the Michigan Truck Plant shutdown is not part of the July announcement.
"We're still working through our plans and nothing is finalized yet, so I would not link the two," she said.
However Greg Gardner, an analyst with the Oliver Wyman Group, said the announcement casts doubt upon Michigan Truck's future. The company, he said, could retool pickup truck plants in another Michigan facility, in Missouri or in Kentucky, to make both the new F-150 pickup and the large SUVs.
Ford now is operating too many truck factories on one shift and likely will close some of them, he said.
He could not recall a temporary shutdown longer than nine weeks, although he said one may have occurred during the downturn of 1991 or 1992.
Ford managers told United Auto Workers officials on Friday that the automaker will have to reduce its factory work force further to deal with the rapidly shifting U.S. auto market.
The company already has said it will cut its salaried work force costs by 15 percent by Aug. 1.
Ford has said it will offer additional buyout and early retirement offers at specific factories.
Earlier this year, Ford announced corporate-wide buyout and early retirement offers for U.S. hourly workers, but only 4,200 took the offers, far below what the company had wanted.
Ford also announced in May that it will not reach its goal of returning to profitability in 2009.
Ford shares rose 23 cents, or 3.7 percent, to $6.50 Monday.
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