The company said 10 North American plants, including the 2,400-employee Norfolk facility already scheduled to be shut down in 2008, face more “down time†this year as part of Ford’s accelerated turnaround plan.
Ford will slash vehicle-building by 21 percent in North America in the last three months of the year. The planned 168,000-vehicle drop in production is the steepest since the early 1980s and is focused mainly on F-Series trucks such as the F-150 assembled in Norfolk.
Ford’s big trucks have piled up on dealers’ lots, with more than three months of accumulated inventory.
“We are determined to match production and inventories with consumer demand,†said Mark Fields, president of Ford’s Americas division, in a statement. “In doing so, we’ll reduce incentive spending and inventory carrying costs for our dealers.â€
The idle weeks represent another jolt for Norfolk Assembly and its local suppliers, which are caught amid falling big truck sales, increa sing gas prices, a slowing construction market, and Ford’s plans to cut as many as 30,000 jobs by 2012. The redesigned Chevrolet Silverado and GMC Sierra trucks, as well as the Toyota Tundra, which the Japanese automaker has started building at a massive plant in Texas , are challenging Ford’s dominant market share.
For years, F-Series trucks such as the F-150 have been the company’s bestselling products and some of its most profitable. S ales, however, have slumped in the United States by more than 12 percent so far this year. The company’s troubled North American automotive operations posted a $797 million pretax loss in the second quarter this year.
Production at Ford’s Norfolk plant fell by more than 13 percent , or about 16,000 trucks, through the first seven months of 2006.
Ed Hay, chairman of United Auto Workers Local 919 at the plant, said local union leaders would try to meet with Ford’s managers at the plant first thing Monday morning to find out how drastic the idling will be.
The plant already has been halted for unusual down weeks this year, including an extra week in July and three weeks in September. The plant was idled this week, and its parking lot for hourly employees was nearly empty Friday afternoon.
“I kind of want to wait and see what happens,†Hay said when asked how long downtime could be. “People are already upset – their families are upset.â€
George Pipas, Ford’s U.S. sales analysis manager, declined to say how much production would fall at Norfolk or how many weeks of downtime workers can expect.
All four U.S. plants that build F-Series trucks – including facilities at Kansas City, Mo.; Louisville, Ky.; and Dearborn, Mich. – will experience down time before the end of the year, according to the plan announced Friday.
“When they bring them all down, that would indicate to me that that’s a pretty dramatic cut for the F-Series,†said Erich Merkle, director of forecasting for IRN Inc., an automotive consulting company in Grand Rapids, Mich. “This isn’t a good sign for Norfolk.â€
Larry Hadley, chairman of the union’s branch at a Visteon Corp. gas tank plant in Chesapeake, said a meeting next week with the Visteon plant manager might provide some details.
“Nothing’s confirmed, and everything’s a rumor,†Hadley said. “The whole problem is everybody is being left in the dark.â€
Representatives of parts organizer TDS/US and seat maker Johnson Controls Inc., both of which have facilities in Chesapeake that work exclusively with the Ford plant, said the companies still were evaluating the effe ct of Ford’s announcement.
Webster G. Clarke II, UAW chairman for the TDS/US facility on Campostella Road, said he would be surprised if his plant keeps operating on two shifts after December.
“We’re antsy – we’re anxious to see what TDS is going to do,†Clarke said. “Right now, TDS is trying to beat the clock†and find new clients .
Pipas said more than half of Ford’s production cuts in the fourth quarter will come from slowing down F-Series manufacturing. The company also will build 20,000 fewer cars and trucks in the third quarter than it had previously announced.
With Friday’s cuts, Ford officially abandoned its previous goal of selling 900,000 F-Series trucks for the third year in a row. Still, the company this week released details of a nationwide advertising blitz for 2007 versions of
F-150 trucks, including prominent placement in country music concerts starring Toby Keith.
“They’re looking forward to a slowdown in construction and the pickup market,†said George E. Hoffer, an economics professor who specializes in the automotive industry at Virginia Commonwealth University. “They’re ceding market share†to competitors such as General Motors and Toyota, he said.
“The short-term ramifications will be ugly,†said B. Craig Hutson, senior investment grade analyst for New York-based research company Gimme Credit, in a note to investors. “Trucks are Ford’s most profitable vehicles, and the sharp decline in production volumes will make it more difficult to see any signs of a turnaround at Ford.â€
Ford shares dropped 17 cents in heavy trading to close at $8.00 on the New York Stock Exchange.
The company is trying to clear out a heavy build up of unsold trucks, which stood at 277,400 vehicles Aug. 1, according to trade publication Automotive News. It would take Ford dealerships an estimated 101 days to sell the trucks at July’s selling rate.
“That’s way over where trucks should be,†said Catherine Madden, an analyst with Waltham, Mass. -based Global Insight. “We’re talking about a significant oversupply.â€
hamptonroads.com - Bloomberg News contributed to this report.
Reach Jeremiah McWilliams at (757) 446-2344 or jeremiah.mcwilliams@pilotonline.com.
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