Ford Motor Co. plans to temporarily idle five North American assembly lines to cope with slowing sales and mounting inventories.
The closures are the latest in an expanding series of production adjustments the auto industry – primarily Detroit’s Big Three – has made since the beginning of 2017, the first year since the end of the Great Recession to suffer an auto sales downturn.
Tens of thousands of U.S. workers have so far been impacted, some facing long-term layoffs, others idled for just a week or two at a time. Ford said the factories covered by its latest move employ over 15,000 hourly workers, though it did not offer a breakout indicating how many actually will be idled.
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Ford sales have fallen more than the overall industry so far this year, the numbers declining another 2.1% in August. A handful of models actually gained ground, benefiting from the overall market shift from passenger cars to light trucks – the big F-150 pickup, for example, showing a 15% sales gain last month.
But what went up on the truck side of the ledger has been falling into a deep hole on the other. And that has led to a big buildup of inventory. As of September 1, for example, Ford had 111 days of unsold Mustangs taking up space on U.S. dealer lots, with an 87-day supply of Fusion sedans. Lincoln dealers, meanwhile, had a 162-day backlog of the new Continental sedan, the luxury brand’s flagship failing to generate much market traction. Even in the generally winning Ford truck line-up there were losers, the maker reporting a 103-day backlog of big Transit vans.
The general industry rule of thumb is to maintain a 60 to 65-day supply of vehicles, though that can vary by region and time of year, among other things.
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Coming out of a recession that saw two of them plunge into bankruptcy, all three of the Detroit makers promised to keep production in line with inventory. That has led to a series of short-term plant closures and several longer-term moves. Since November General Motors has trimmed shifts at eight of its U.S. plants.
The latest cuts by Ford impact facilities in both the U.S. and Mexico. Plants being idled include:
- The Cuautitlan facility in Mexico producing the little Ford Fiesta hatchback will be idled for three weeks;
- The Hermosillo, Mexico factory building both the Ford Fusion and Lincoln MKZ will close for two weeks;
- The Flat Rock, Michigan plant building the Ford Mustang and Lincoln Continental also will close for two weeks, as will
- The Michigan Assembly Plant in suburban Detroit producing the Ford Focus. That model is set to shift to China, the plant being converted to produce trucks like the Ford Ranger pickup;
- The fifth plant on the Ford list is the Kansas City line building the Ford Transit van.
Some of the plants will remain open, albeit operating on a reduced schedule. That includes the Kansas City factory which produces versions of the F-150 pickup, as well as the Transit van. Ford did not clarify how many of the facility’s 7,320 workers will be impacted.
Ford said the primary reason for the move in Kansas City is to “catch up” on work resulting from a recall announced in June that covered over 400,000 of the vans.
But the broader production cuts announced this week reflect the slowing pace of the U.S. auto market. Demand slipped again in August, despite early forecasts suggesting the industry might have had a good month. September’s numbers are also expected to be weak, in part, reflecting the impact of Hurricanes Harvey and Irma. But industry analysts see a bright side to those dark storms. With so many vehicles destroyed and so much reconstruction work getting underway car sales could actually gain momentum in the coming months. Demand could be especially high for pickups and other work trucks.
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