Ford Idling SUV Plant in Michigan for Nine Weeks as it Evaluates Future of Truck and SUV Production

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Researched by Industrial Info Resources (Sugar Land, Texas)--For the first time since 1992, Ford Motor Company's (NYSE:F) (Dearborn, Michigan) best-selling F-150 pickup truck was outsold -- and not just by one car, either. Four different cars outsold the truck. In May, Ford's pickup sales dropped 31%, allowing Toyota Motor Manufacturing North America's (NYSE:TM) (Torrance, California) Corolla and Camry and Honda Motor Company's (NYSE:HMC) (Torrance) Civic and Accord to each outsell the former No. 1 vehicle in the American market. In addition, sales of the Expedition and the Navigator, Ford's large SUVs, fell by 31% and 22%, respectively, over the first five months of the year. As a result of these declining sales, coupled with rising gas prices, Ford has decided to idle its truck plant in Wayne, Michigan, for a period of nine weeks this summer while the company evaluates the future of its pickup and SUV production.

The F-150 has been the best-selling truck in the United States for more than 30 years and the best-selling overall vehicle for just about as long. The dramatic dip in sales, not only of the F-150 but of all the platforms of SUVs, has the automaker re-evaluating its reorganization plan across North America. Ford executives recently admitted that the struggling company will not be able to meet its long-standing goal of profitability in 2009. A weak dollar coupled with high oil and gas prices and the lack of recovery within the housing market have caused both pickup and SUV sales to plummet, not only for Ford, but also for General Motors Corporation (NYSE:GM) (Detroit, Michigan) and Chrysler LLC (Auburn Hills, Michigan), causing all of the Detroit Three to rethink production and sales strategies.

Earlier this year, the Wayne truck plant was already forced to extend its traditional two-week maintenance shutdown in July to five weeks; and with the continued slide in sales, the extension to nine weeks was not all that surprising. The 1,400 workers employed at the plant will be laid off for the nine weeks that the plant is idled, but will still receive approximately 95% of their pay due to the contract Ford has with the United Auto Workers union (Detroit).

Ford has also been developing a plan for additional hourly job cuts across its network of facilities in North America. Ford has been meeting with union executives to hammer out the details of additional layoffs and early retirement offers. The need for fewer larger vehicles will also be driving the next round of cutbacks at the automaker. Ford has already announced reductions among its salaried work force in recent months, a reduction of salaried expenses by 15% by August 1. Ford reduced its hourly workforce by 40,000 over the last three years with buyout and early retirement offers, leaving the company with some 54,000 hourly workers.

Ford, much like GM and Chrysler, is struggling to make the conversion from a massive, bulky automaker of large vehicles and trucks to a more compact, streamlined, efficient producer of fuel-efficient vehicles that the public is demanding as a result of increasing prices at the pump. The reorganization programs of all three automakers began somewhat late, and they are all feeling the pain. Ford will continue to cut back on its overall number of employees and potentially close or at least idle additional plants as they attempt to weather this automotive crisis. The best the automaker can hope for at this point is a return to profitability by sometime in 2010.

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