Ford to Slow Production in Effort to Control Inventory
Temporary shutdowns are on tap for five Ford Motor Co. (NYSE:F) North American assembly plants as the company reduces output on several of its slow-selling cars. In addition to the company's two Mexico-based plants, Ford will halt production at its Kansas City and its Flat Rock and Wayne, Michigan, assembly plants.
Ford did not provide dates for the planned shutdowns, but union local 249 said the Kansas City plant's Transit van assembly line will be halted from September 25 to October 1, the first week of a planned two-week shutdown. The plant's F-150 production line won't be affected.
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The Transit van is the best-selling vehicle of its kind in the United States, but Ford recalled more than 400,000 of the vehicles in June to fix a faulty driveshaft. The production stop is intended to "catch up" on work related to the recall. Sales through August are down 21% year over year.
In addition to the Transit van line, Ford will stop production for three weeks at its Cuautitlan Fiesta line and for two weeks at its Hermosillo Fusion and Lincoln MKZ lines in Mexico.
The Flat Rock, Michigan, line where Ford builds Mustangs and Lincoln Continental sedans will be down for two weeks. The Wayne, Michigan, plant where the company assembles some Focus and C-Max models will halt production for one week.
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Ford passenger car sales are down 20% for the first eight months of the year, sport utility vehicle (SUV) sales are up 1% and truck sales are up 2.4%. Overall, Ford brand vehicle sales are down 4.4% year over year.
When Ford reported sales figures for August, the company had 81 days of supply in its inventory, up from 77 days of supply in July and 78 days of supply in August of last year. Car inventories at the end of last month totaled 85 days of supply and truck inventories totaled 83 days. The company's SUV inventory totaled 75 days of supply.
Dealer inventories at the end of last month totaled a more reasonable 67 days of supply, and in order to match its own inventories with those of its dealers, Ford needs to slow down production. A company spokeswoman said in a statement cited by the Detroit Free Press, "We are continuing to match production with customer demand, as we always do, and we are on track for our dealer inventories to remain at planned levels by year-end."
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Ford employs more than 20,000 workers at the five plants affected by the shutdowns, but it is not clear how many of those will be affected.
Ford's share price rose about 0.8% on Tuesday and traded flat in Wednesday's premarket session at $11.72. The stock's 52-week range is $10.47 to $13.27 and the 12-month consensus price target is $11.91.
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