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Cutbacks by Ford not seen as surprise
(Paducah Sun, The (KY) (KRT) Via Thomson Dialog NewsEdge) Aug. 19--Paducah Ford dealer Larry Stovesand said a Ford Motor Co. plan to temporarily shut down plants in Louisville and nine other North American cities because of slumping light truck sales comes as no shock to him.
"They make this sound like a revelation, but this was all planned years in advance," he said. "They have some plants that are old and antiquated, and you have to be more nimble in today's market because of all the competition." Stovesand said Ford has too many aging plants -- such as one in St. Louis that closed earlier this year -- that make only a couple of models. The company is now focusing on newer, more automated plants capable of making four or five models, he said.
Ford said Friday that fourth-quarter production will drop 21 percent, or 168,000 vehicles, from last year as it struggles to boost profits against intense foreign competition. Third-quarter production will be 20,000 units below what was previously announced and 78,000 units below last year.
For the full year, Ford plans to produce about 9 percent fewer vehicles than last year for a total of just above 3 million.
The announcement marked Ford's biggest production cut in more than 20 years, Chairman and Chief Executive Bill Ford said. His Dearborn, Mich.-based firm lost $254 million in the second quarter and vowed last month to speed up its North American restructuring.
Bill Ford told employees the cuts are part of that acceleration and said more changes will be announced in September.
Goodyear Tire & Rubber Co. is awaiting those details before determining how much the curtailment will affect its business, said Jimmy Cagle, spokesman for the Union City, Tenn., plant.
"It's really too early to say what, if any, effect it will have on our tire production."
The 2,400-employee plant, which draws about 20 percent of its workers from far western Kentucky, makes Ford light truck tires as well as various other tires for auto makers and replacement markets.
Goodyear will be affected, but the question is how much, Stovesand said.
"Five or six years ago, Ford had 25 percent of the market; today it's down to about 18 percent. That's 750,000 units they're not selling anymore."
Par 4 Plastics in Marion doesn't expect much downturn in business because it makes plastic interior parts and head and tail lamps for several manufacturers, not just Ford, quality director Tim Capps said. "A lot of our business is with Nissan and Toyota."
Ford, the nation's second-largest automaker, said the cuts are an effort to match inventories to demand and avoid costly incentives. The plan also reflects reduced expectations for big trucks and sport utility vehicles considering high gas prices, the company said.
Louisville Metro Mayor Jerry Abramson said the Kentucky Truck Plant on Chamberlain Lane will lose five weeks of production and the Louisville Assembly Plant on Fern Valley Road will lose six weeks.
Earlier this year, Louisville benefited when Ford rejected millions of dollars in incentives in closing its St. Louis Explorer plant and shifted all that production to the Louisville Assembly Plant.
Stovesand said the reduction in light-truck manufacturing should not affect his inventory because shipments will probably shift from one region to another. He said Ford-150 truck sales have been much steadier than SUVs -- whose sales are down 25 to 30 percent -- because he has a diverse truck inventory including 6-cylinder models.
"The trucks that are off in sales are $40,000 models that are really duded up," he said.
Light truck sales have softened a little at Purchase Ford in Mayfield and Pennyrille Ford in Hopkinsville, co-owner Clay Smith said.
"But I don't have any idea what the long-term implications will be. If I had a crystal ball I could quit selling cars."
There could be a temporary shortage of some models, but the last two months of the year are typically slack times as compared with the spring, he said.
Smith said the car industry is extremely cyclical, and sometimes manufacturers announce production cutbacks and then lessen them.
"When I started in 1979, Chrysler was on the verge of bankruptcy," he said. "I think the worst thing any of us can do is have a knee-jerk reaction.
"I don't see this as the end of the world," he said. "I see this as a business decision made as a result of where the economy is."
Ford is switching more to car production in keeping with current trends and is introducing nine new models over the next year, Smith said.
The Associated Press contributed to this report.
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Copyright (c) 2006, The Paducah Sun, Ky.
Distributed by McClatchy-Tribune Business News.
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