Weak passenger car sales have prompted Ford Motor Co. to eliminate a shift at a Michigan assembly line that builds compact and battery vehicles, including the Focus and Focus EV.
With gasoline prices dropping to their lowest level in years, demand for SUVs has been rising while prompting a sharp slide in sales of smaller and alternative-fuel vehicles, like this built at the Michigan Assembly Plant in Wayne, Michigan. The announcement, which will impact 700 Ford workers, comes on top of General Motors’ decision to temporarily idle production of the Chevrolet Volt plug-in hybrid at a plant nearby.
“Ford will be working to redeploy affected hourly employees (affected by the cuts) and they will be considered first for southeast Michigan opportunities as they become available,” the automaker said in a statement.
The news comes as a setback for the maker, which had billed the Michigan assembly plant as a corporate showpiece, able to produce a wide array of products using both conventional gas and electrified drivetrains.
The plant makes three versions of the Ford Focus compact car, including a pure battery-electric model, as well as the C-Max compact hybrid and C-Max plug-in hybrid “people mover.” Focus sales in the U.S. were down 14.5% in March, and for the first three months of the year were up only 2% compared with last year’s first quarter. C-Max U.S. sales were down 23% from last year’s first quarter.
(GM ending production of Gen-1 Chevy Volt as sales come unplugged. Click Here for more.)
Industry observers were generally taking the news in stride, a reflection of the shift in demand that has actually worked to Ford’s advantage by boosting demand for higher-profit trucks and SUVs, such as the all-new F-150 pickup. The same trend has worked for GM, despite the maker’s promise to keep pushing its electrified vehicle line-up.
Analysts also noted that the two Detroit makers have broken from past practices that might have meant keeping production of their high-mileage models going at all cost, even if it meant loading models like the Focus up with costly incentives. Ford CEO Mark Fields has noted on several occasions the company is trying to shift to a market-pull model.
(GM CEO Barra dismisses notion of a merger with Fiat Chrysler. Click Here for more.)
But not everyone is pleased with the cutbacks. United Auto Workers Union Vice President Jimmy Settles termed the Michigan Assembly Plant cutback unfortunate. But also acknowledged it was not completely unexpected. “We are reminded from time to time that our industry is cyclical and volatile to market conditions,” he said.
The layoffs come as the UAW is getting ready to resume contract talks with each of Detroit’s Big Three automakers over the summer. And union leaders have expressed frustration at what they fear is a shift in resources away from the U.S. market.
Last week, the UAW’s new President Dennis Williams expressed disappointment with Ford’s decision to invest $2.5 billion in the expansion of its Mexican operations. He also cited Mexican projects by Fiat Chrysler and General Motors, as well as by non-unionized makers including Toyota, Nissan, Mazda, Honda and Kia.
“The fact is that these companies are taking advantage of slave-like wages and corruption permissible through bad trade agreements,” Williams said. “All Americans should be angered that these products are sold in the United States, where American manufacturing workers could have had good paying jobs that respect basic human dignity.”
(Ford, Toyota investing combined $3.5 bil in Mexico. Click Here for the full story.)
Of the 700 workers impacted by the cuts at Ford’s Michigan Assembly Plant, 673 are covered by the current UAW contract. It is expected that nearly all of the displaced members will return to active employment at other southeast Michigan locations, some by this summer, and all by early 2016, according to UAW VP Settles.
(Paul A. Eisenstein contributed to this report.)