Filed under: Trends
GM and Ford planning reduction in capacity
Two of the Big 3 plan to reduce their capacity by closing plants. Both Ford and GM have miscalculated production versus demand and now find themselves in situations where many plants are sitting idle. Ford's Wixom, MI plant where the Lincoln LS and Town Car and the Ford GT are built, as well as the St. Louis, KY plant where the Explorer is built, are both potentially under the knife. GM, meanwhile, plans to reduce capacity in North America by 10%, or 500,000 units. Low production was a major factor in GM's second-quarter loss of $1.19 billion in North America due to the fact that many union workers' wages were still being paid despite their plants being idle.
This news hits close to home for me because I grew up and currently live in Cleveland, where Ford operates a number of plants. A Lorain, OH assembly plant where the Mercury Villager and Nissan Quest were once assembled is almost certainly headed for a closing, which hurts an already damaged northeast Ohio economy. Likewise, one of my best friends works at the Wixom, MI Ford as an engineer. While the Wixom plant closing would most likely not result in him being unemployed, it would probably mean a transfer to yet another plant, which would be his third. Many people obviously live in areas that have an economy dependant on the automakers presence in the region. Regardless of which brand you pledge allegiance to, Im sure most of us would like to see each of the Big 3 achieving higher sales, if only for the sake of the many local economies that have their livelihoods directly linked to these auto plants.
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Reader Comments (Page 1 of 1)
Rick 11:06PM (12/18/2005)
why cant ford retool the factories and shut down factories in canada? why shut down american factories? canuckians dont deserve jobs.
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sparc 11:06PM (12/18/2005)
"as well as the st. louis, ky plant where the explorer is built"
actually that would be the st. louis, mo explorer plant. explorers built in ky come from louisville.
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Mike 11:06PM (12/18/2005)
aren't the "big 3" now gm, daimlerchrysler, and toyota, according to the fortune 500?
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Kevin 11:06PM (12/18/2005)
that's great that the union workers get paid wages whether or not they are actually there performing a task. woohoo uaw! i'd like to unionize my office and then stay at home.
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BF 11:06PM (12/18/2005)
rick, it makes sense for ford to retool in canada. they have a national health insurance system which the workers pay into with higher taxes than we have hear in the us. but ford is probaly saving about 30% on health care cost versus what they pay their us workers.
i by no means support national health care, since it is subject to rationing and god knows the government screws everything up, but, i get the concept of a $400-700 a car better margin through health savings in canada.
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BF 11:06PM (12/18/2005)
gm has already idled plants in baltimore, md (astro)and linden, nj (blazer) and have not assigned them new products. they are not officially closed due to the uaw contract and workers get about 95% of their salary and the plants count against gm's output usage numbers.
as i undertstand, gm can't even take any equiptment out of these plants nor can they begin tear down and resale of the property until after the uaw approves.
i suspect these plants will be announced as closed as soon as the uaw contracts expire. also understand that the lansing plants (grand am & malibu classic) closed just this month and a new more flexible, high output plant is being built near by.
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Adam 11:06PM (12/18/2005)
rick:
first off shut your ignorant face. second, canadian plants are much more profitable because of public health care which is present throughout the country. unlike in the states car manufactures don't have to spend insane amounts of money on health care plans for their employees. why do you think toyota chose to open their next big north american plant in woodstock, on?
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rollie demay 11:06PM (12/18/2005)
bf, posts 5&6- you are quite correct. i also admire your restraint in your reply to rick. kudos.
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Dusty 11:06PM (12/18/2005)
rick, your canadian bashing is classic ignorance towards the real problem that exists in your own country. as far as health care costs in relation to automakers, the big 3 and the import brands realize the potential of lower costs associated with our national health care and the quality of the work force up here. don't blame your neighbour, friend, and ally on the problems that exist on your side of the border.
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The Dude 11:06PM (12/18/2005)
"unlike in the states car manufactures don't have to spend insane amounts of money on health care plans for their employees. why do you think toyota chose to open their next big north american plant in woodstock, on?"
that's partially true. the other reason they chose there instead of in the us (south?) is explained by this article:
http://www.cbc.ca/cp/business/050630/b0630102.html
"the educational level and the skill level of the people down there is so much lower than it is in ontario," fedchun said.
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whofan 11:06PM (12/18/2005)
the american worker can`t compete with our health care system. somebody in the health care industry is getting rich, a long with the oil companys. we are being sucked dry.
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Logan Irons 11:06PM (12/18/2005)
you would think they would run out of people to power all their plans in canada. your population is something like 32 mil isn't it? either way, i'm down with my homies to the north.
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md 11:06PM (12/18/2005)
this could be good for them. maybe their will be less cars sitting around at the end of model years that have to be sold at discounted prices. i guess less discounted cars sold might also help with resale value if that is actually a real factor in your purchasing decision as well.
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Brian W 11:06PM (12/18/2005)
#10 ha ha your upset about what rick said? they just said americans are too stupid to work for them! i guess you get what you pay for down south. toyota has really been trying to bullshit everybody.
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whofan 11:06PM (12/18/2005)
toyota has really been trying to bullshit everybody.
why not? their customers believe it.
if the almighty toyota can`t do it no one can. must be nice to have stellar perception even if gm`s quality is as good on most of their cars if not all.
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anon 11:06PM (12/18/2005)
before the 60's we had one of the best workforces in the world and some of the highest standards in education. then come the liberals and their grand schemes of fuzzy feelings for all. after that came political correctness to finalize the death of acceptable standards in america. thanks liberals and boomers for making a mess that the rest of us now get to deal with.
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Bob 11:06PM (12/18/2005)
anon..for a second there i thought you were talking about canada. the liberal thiefs have destroyed the country.
rick, i know you're upset but realize that ford has shut plants in canada as well. truck plant in oakville to be specific, and possibly an engine plant in windsor (to come?). oakville minivan plant is on its knees, and crown vic plant is slow too. ford is hurting on both sides of the border. i hope they turn it around.
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The Dude 11:06PM (12/18/2005)
>#10 ha ha your upset about what rick said?
no, it does not bother me. i was just listing his quote.
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Richard Warren 11:06PM (12/18/2005)
It's all so simple isn't it with the health care.
To the Americans who posted, would you like a national health plan and work within it's parameters?
I'd agree that someone in the health care system is getting VERY rich here in America.
While the Canadians have a great workforce and build a quality product the real question is, whay is our healthcare so expensive?
What does the average Canadian pay in income tax as compared to us.
The fact is nothing is free. Somebody pays somewhere.
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whofan 11:06PM (12/18/2005)
I believe the Canadian health is funded through a government sales tax (GST). I know Canadas system isn`t perfect but ours is eating us up. Everyone benefits from health care, everyone should pay. Somewere their has to be price gouging going on.
Oil companies are doing the same thing. Record prices record profits.
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