Ford Motor Co.'s latest restructuring plan will accelerate an already alarming loss of business for North American suppliers that count on Ford for large chunks of business.
On Friday, Sept. 15, Ford said that by the end of 2008 it would cut North American production capacity 26 percent from 2005 levels, to 3.6 million units.
But production cuts of 21 percent in the fourth quarter compared with the year-ago period already have suppliers bracing. To make matters worse, General Motors is cutting North American production 12 percent in the quarter, and the Chrysler group is cutting production 10 percent.
Visteon Corp., Lear Corp., Johnson Controls Inc. and Superior Industries International Inc. already have started layoffs in anticipation of the production cuts.
Superior, an aluminum wheel supplier in Van Nuys, Calif., said Friday it will close a plant in Tennessee that supplies the Detroit 3. About 500 people will lose their jobs.
Among the hardest hit could be Visteon, which counts on Ford for about 48 percent of its sales. Says analyst Glenn Reynolds of CreditSights in New York: "With Ford still the overwhelmingly largest customer concentration of Visteon, the production cuts will definitely flow downhill; Visteon is the first stop on that hill."
Visteon CEO Michael Johnston said Tuesday, Sept. 12, at the Reuters Autos Summit that layoffs have begun.
"We've had some announcements at some local plants where we've reduced shifts and laid off some folks, and we'll take the normal actions that any supplier would take given a large customer reducing volumes," he said.
Lear 10 days ago put 107 workers on indefinite layoff at its Strasburg, Va., trim plant. The seat and interior maker expects to put more workers on temporary layoff as the Ford cuts take effect in the next quarter, said a company spokeswoman. The plant employs 770 people.
Johnson Controls began layoffs Sept. 5, according to the Georgia Department of Labor. The Plymouth, Mich., interiors supplier will cut a total of about 180 jobs in the Atlanta area.
Dura Automotive Systems Inc., another supplier that relies heavily on Ford business, is likely to file for Chapter 11 reorganization in a few months, according to a Sept. 13 report by Lehman Brothers. Dura has assembled a team of restructuring firms but has not commented on Chapter 11 speculation.
Also on Friday, Ford said it plans to sell or close 14 former Visteon Corp. plants and six technical centers by the end of 2008.
The plants, taken back from Visteon in 2005, are held by Ford under its Automotive Components Holdings LLC unit. The operations have been on the market for about a year.
You may e-mail Robert Sherefkin at [email protected]
You may e-mail Dave Barkholz at [email protected]