Production Shuffle: Fewer Large Trucks, SUVs; More Small Cars
June 18, 2008
By Michelle Krebs
More evidence of the global seismic shift in consumer preference
for small cars versus big trucks and SUVs, the result of a weak economy and soaring gas prices, came this week as automakers announced changes in their production plans.
Toyota is cutting production for the second time -- this round includes employee dismissals -- at its new San Antonio, Texas, plant that builds the less than 18-month-old Tundra pickup truck. Toyota also is slowing the line at its Princeton, Indiana, plant, where it makes the newly redesigned Sequoia SUV and Tundra. Ford is significantly extending summer vacations at its Kentucky Super-Duty pickup truck plant and its Michigan Truck Plant that assembles the Ford Expedition and Lincoln Navigator.
Meantime, General Motors is speeding up the addition of a third shift at its Lordstown, Ohio, plant to meet strong demand for its compact Chevrolet Cobalt. Daimler AG announced it has selected low-cost Hungary for its new assembly plant to expand its range of Mercedes-Benz compacts to four models from two. One of the new models may be a small SUV to rival the upcoming BMW 1X. Daimler also said it will upgrade its Rastatt, Germany plant, which assembles A- and B-Class compacts.
Toyota: Even Fewer Tundras, Sequoias
Toyota cut back Tundra production at its San Antonio, Texas, plant from 200,000 a year to 190,000 a year in March. Now it is slowing the line even further as it is at its Princeton, Indiana, plant. Toyota won't say how much production it is cutting, however. This time, Toyota, which rarely if ever lays off workers, will dismiss 200 part-time employees.
Toyota plans to maintain an eight-hour workday but will cap daily output at a level the automaker did not reveal. Once that output is reached, Toyota, in its traditional fashion, will assign workers kaizen continuous improvement tasks and maintenance. In addition, Toyota will idle the line every Friday for the next 14 weeks, with workers again performing kaizen and maintenance activities. However, employees who want full-time work have to sign up to participate in those Friday activities.
Toyota has made similar changes at its Princeton, Indiana, plant that assembles the Tundra as well as the Toyota Sequoia SUV and Sienna minivan. It will cut six production days between now and the end of August. Still, Toyota says it has no plans to consolidate Tundra and Sequoia assembly at its Texas plant.
It is likely that Toyota, which says it is considering all options for making the best use of its production facilities, will scale back production at its Huntsville, Alabama, plant, which supplies engines for the Tundra and Sequoia.
Toyota also has delayed its newest plant in Mississippi going online. It will make the Highlander SUV.
Ford: Extended Summer Vacation
Ford announced it will idle its Louisville, Kentucky, plant that builds the F-Series Super-Duty pickup for an extra week, bringing its summer shutdown to a full month, from July 7 to August 4.
Earlier, Ford announced its Michigan Truck Plant, which builds the large Ford Expedition and Lincoln Navigator SUVs, will close for a nine-week summer break beginning June 23. Originally, Ford had said the plant would be closed for five weeks, including the traditional two-week summer shutdown.
Some salaried workers will get an endless summer. The automaker is expected to cut 15 percent of its salaried work force expenses by August 1. Ford intends to accomplish its goal by eliminating agency work, freezing open positions and firings of white-collar workers. At the same time, the automaker will push more hourly workers to take a buyout.
GM: Fewer Trucks, More Chevrolet Cobalts
General Motors announced in early June it would close four North American production plants beginning in 2009; those plants build large trucks and SUVs.
At the same time, GM said it is accelerating plans to add a third shift at its Lordstown, Ohio, to build more compact Cobalts. The third shift had been scheduled to start September 1, but that date has been moved up to August 4.
Mercedes-Benz: Small Vehicles From Hungary
Germany's Daimler AG announced Wednesday it would invest $1.2 billion to build a new assembly plant in low-cost Hungary and also invest in upgrading an existing plant in Germany so that it can expand the number of compact Mercedes-Benz vehicles it sells, to four models from two.
Daimler is mum on details of the two new models but it is believed one will be a small SUV to compete with BMW's upcoming X1 as well as a possible coupe. Daimler executives did say the four compacts would share a modular system used by other Mercedes models like the new generation four-cylinder diesel making its debut later this year.
Daimler said it would upgrade its Rastatt, Germany, plant, which manufacturers the A- and B-Class compacts. Neither is currently sold in the U.S. The smallest, least expensive car in Mercedes' U.S. line is the C-Class; Daimler began selling the Smart Fortwo in the U.S. early this year.
"Mercedes-Benz is going to offer an even wider range of exciting premium cars -- with the high levels of comfort, safety and overall quality that are characteristic for the brand -- in the particularly fuel-efficient compact-car segment," said Chief Executive Dieter Zetsche in a statement.
The new plant in Hungary, selected over bids by Romania and Poland, is the first in Eastern Europe for Daimler, which lags its Western European competitors in moving into the region for manufacturing. Suzuki, General Motors' Opel and Audi also have plants in Hungary.
The plant will create 2,500 new jobs and produce 100,000 cars a year with the first rolling down the assembly line in 2011. Because of lower wages in Hungary, Daimler hopes to make small cars more profitably.
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