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August 31, 2006
Automotive parts makers are adjusting to the deep production cuts planned by Ford Motor Co., with at least two suppliers announcing layoffs this week. Industry experts expect more job cuts.
Ford's plans to cut production by 21 percent in the year's final three months hit pickup and sport utility vehicle production hard, with the two Louisville plants facing the equivalent of 11 weeks of being shut down between them.
Navistar International and Dana have cut jobs at plants supplying Ford. Navistar, which makes diesel engines for Ford's Louisville-built F-Series Super Duty trucks, said Monday it would lay off 380 blue-collar workers in Indianapolis and make additional salaried cuts due to the rollback. Dana said Tuesday it is laying off about 100 workers at its plant in St. Mary's, Ontario, which makes frames for the F-Series, and eliminating its third shift due to Ford's production cut.
Louisville-area suppliers, including Dana and ThyssenKrupp Budd in Shelbyville, have not returned calls about their production plans.
U.S. auto suppliers have had a rough ride this year as American automakers lost market share to foreign rivals.
General Motors has decided to slow production of its large SUVs in the second half. Chrysler Group, a unit of DaimlerChrysler, is scaling back output of trucks and SUVs.
The Navistar layoffs are a "profound example" of what can happen with suppliers dependent on Ford for a large percentage of revenue, said Craig Fitzgerald, partner and auto analyst at Plante & Moran.
Navistar's layoffs are more pronounced than might be seen at other suppliers because the engines carry higher direct labor costs than most components shipped to Ford.
Fitzgerald said supplier employees will see reduced overtime, the elimination of shifts and some permanent layoffs due to the production cut.
The third-shift elimination at the St. Mary's plant of Dana, which is in bankruptcy proceedings, is an example.
Reporter Robert Schoenberger and Dow Jones Newswires contributed to this story.
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