Ford to Close Most N. American Plants in January : Automobiles: The temporary closure will idle 25,000 workers. Detroit is suffering the worst sales slump since the early 1980s.
In the most dramatic sign yet that Detroit’s auto makers are rapidly plunging into a recession, Ford said Monday that it will close most of its U.S. auto assembly operations during portions of January, joining General Motors in a massive shutdown at the beginning of 1990.
With bulging inventories of unsold cars and trucks piling up at dealerships around the country, Ford said it will temporarily idle 14 of its 19 assembly plants in the United States, Canada and Mexico for one to two weeks in January, forcing layoffs for more than 25,000 workers. The closings include 11 of Ford’s U.S. assembly plants, leaving just three operating in early January.
Ford officials said the January idlings represent the largest production cutbacks at the nation’s second-largest auto maker since the 1979-82 recession.
The company said that it had to shutter the plants because it has a 99-day supply of unsold cars; 60 days is considered normal in the industry. Continuing to run its factories would simply force Ford to fill up its parking lots.
“This is sort of like biting the bullet,” said Ford sales analyst Joel Pitcoff.
Meanwhile, General Motors, frantic to cope with disastrous sales, plans to close 25 of its more than 30 North American assembly plants during portions of January.
Although the nation’s largest auto maker didn’t make any public announcement of the planned closings, GM officials confirmed that plunging sales for almost all of GM’s car lines have forced the massive production cutbacks.
Chrysler officials said at least two of the company’s eight assembly plants will be shut down during parts of January, but that they have not determined whether others will be idled as well. But sales are clearly weakening at Chrysler; last week the company announced that it would offer rebates on its popular minivans for the first time since they were introduced.
The cutbacks come as Detroit is girding for its grimmest winter since the recession of the early 1980s, when the Big Three were forced to fight for survival.
“These actions are all preventive medicine for 1990, which everyone expects to be a bad year in the auto industry,” said Cynthia Certo, an automotive analyst with Integrated Automotive Resources, a Wayne, Pa., research firm.
Layoffs have been mounting at GM and Chrysler for months; Chrysler earlier announced plans to permanently close a small car plant in Detroit because of sagging sales.
But the fact that the slump is hitting Ford, which has been the most profitable and successful domestic car company in recent years, indicates just how severe the downturn has become.
The domestic industry reported last week that early December sales fell more than 32% to the lowest levels posted by Detroit in 30 years.
“At the moment, sales are the poorest of the year,” said John Hammond, an analyst with J. D. Power & Associates, an Agoura Hills automotive market research firm.
Yet the slump is not affecting all “domestic” auto makers; the new American operations of Japanese auto companies have had only minor sales difficulties so far this winter. In fact, as Big Three sales and car production fall, the new Japanese-American manufacturers seem ready to pick up the slack.
For instance, Monday’s announcement by Ford of its closings came on the same day that Honda said it was officially beginning car production at its second U.S. assembly plant, in East Liberty, Ohio.
And earlier this fall, another new plant, run jointly by Subaru and Isuzu, opened in Lafayette, Ind.--at nearly the same time that Chrysler announced the closing of its Detroit plant. Now, there are eight Japanese-managed assembly plants operating in the United States with the potential capacity to produce approximately 2 million cars and trucks annually by the early 1990s.
