Giveth, and taketh away, isn't that always the story? On the taketh away side, GM has recently lost a serious chunk of change. On the giveth side, The General received a $56 milion package of tax credits and grants to keep an SUV factory open in Ohio. It has also just received another package of tax credits from the city of Flint, Michigan to aid its investment in a factory that will build engines for the new Volt and Chevy Cruze. Approved over some constituent disapproval by the Flint City Council, getting GM to build the factory there will keep 300 jobs in the city. GM is now looking to the state of Michigan for more tax incentives.
What's built in the States, stays in the States. At least that is how it used to be with one of the world's largest automaker. (The one exception is the Toyota Avalon sedan -- exported to the Middle East last year.)
Toyota has now announced that it will ramp up U.S. vehicle production in Indiana and begin exporting vehicles to other booming markets around the world. The first to leave our shores will be the Toyota Sequoia, as it heads to buyers in the Middle East later this year. The Toyota Sienna minivan will follow, as it will be shipped to China and other markets as early as 2010. This news should be welcomed by workers and suppliers at the automaker's plants as Toyota recently slowed production at several facilities. This new trend of shifting production towards exporting vehicles may help keep them running at capacity, and keep everyone on their jobs.
Volvo, once the success story in Ford's Premier Automotive Group, has hit choppy waters. And according to Wall Street Journal insiders, Ford is preparing to treat the Swedish automaker the same way it did the English ones: slap some floaties on it and keep the brand bobbing long enough to sell it.
Volvo made $94 million in profit in Q1 of 2007, but lost $151 million in Q1 of this year. In total, over the past two years, the once smiling Swede has lost $1.7 billion, part of which is due to exchange rates, and another is due to selling fewer cars. To combat the decline, Volvo is shedding up to a third of its work force at one European plant, and cutting back on production at another. As you would suspect, both of those plants make the largest vehicles in Volvo's lineup.
A couple of weeks ago, Ford was intriguingly -- or deceitfully -- still in "Volvo's not for sale" mode. Now it appears that Mulally has admitted to some Ford execs that Volvo is about to wear the "Needs a Caring Home" sign. Jerry York, the right hand man of Kirk Kerkorian, maintains that Volvo will probably be sold in 18 months. The way things look now, we'd be surprised if it took that long.
The Italians are coming, the Italians are coming! And when they get here in the guise of Alfa Romeo, they will be looking for a factory where the 8C and other cars wearing the cross and serpent can be built. Alfa is looking at two options regarding a U.S.-based factory: buy one of GM, Ford, or Chrysler's closed factories, or expand a Case New Holland factory.
Case New Holland, which is actually owned by Alfa, makes agricultural machinery and construction equipment. It already has 11 plants in the U.S., and Alfa could simply expand one of them to make cars. The plant, a location for which will be selected in May, will begin churning out Alfas in 2011 or 2012. At capacity, production is expected to be around 150,000 cars for the North American and European markets. Alfa Romeo will decide on the distribution network and particular vehicles to be made within three months, which makes it sound as if the Italians are definitely coming.
VW hasn't yet publicly committed to building one or even two factories in the U.S. (though it's apparently considering the South, specifically South Carolina), but is making statements that sound like it's definitely on the way. VW's head of production, Jochem Heizmann, has said that the requirements for a factory are that: it not be in a hurricane zone, it be near a major airport, and that there be "no other production car in the vicinity" -- or at least, Google Translate said that for him.
The factory that will might be coming in 2011 will also source, according to Heizmann, 80% of its parts locally, or at least, in the dollar zone, which again rules out a factory in Mexico. The first couple of years it will produce up to 150,000 cars, with full production being 250,000. The boon to whatever region is chosen should obviously be significant. The reason for all this, according to Heizmann, is that in addition to developing cars with U.S. tastes in mind, the current Passat is too expensive by at least $4,000.
The weak dollar is driving yet another automaker to the States. On the heels of the announcement earlier this month that BMW will increase production in the U.S, Fiat is considering moving production of both Alfa Romeo cars, and Iveco trucks, to manufacturing plants on our shores. We first broke the news in December, but now it appears Fiat is actively involved in talks with U.S. automakers to build partnerships and share manufacturing facilities with a goal of starting production by 2011 or 2012. This is positive news for consumers as Alfa prepares to once again enter the N.A. marketplace, and great news for the local economies who will benefit from additional jobs and tax revenue.
Ford's not seeing GM-level success in China yet, but its joint venture, Chang'an Ford Mazda, is among the top ten selling automakers in China. The popularity of the Focus and S-Max have bolstered sales by 60 percent since last year, and the new money will be used to facilitate more production. Chang'an Ford Mazda is a three-way split between Ford Motor China, who will throw $20.3 million into the pot, Chang'an Auto, contributing $29 million, and Mazda, which is kicking in $8.7 million. The idea is to sell more than the record 217,000 units sold last year. A new factory was recently opened and can build 160,000 small cars for Ford and Mazda, too. Full-throttle capacity for Chang'an Ford Mazda is a tick over 400,000 cars, and it looks like the Chinese market is the next gold rush for automakers with sales growing by big numbers for Ford, and expected to rise further.
UPDATE:Automotive News is reporting that all 14 of Chrysler's manufacturing plants could be shut down to the Chapter 11 bankruptcy filing of ex-supplier Plastech.
Plastech supplied components like interior trim, engine covers, moldings, door panels, and floor consoles to Chrysler, Ford, GM, and Toyota. The company employed 7,600 people in the US and Canada, and had 2007 sales of $1.4 billion -- including a contract with Chrysler alone that was worth $200 million. Yet due to the rise in the cost of raw materials and lower consumer demand, the company, along with others like it in the past few years, was forced to declare bankruptcy last week.
Chrysler terminated its contract with Plastech last Friday, and is now forced to idle four plants and eliminate an entire shift at another plant while it secures a new supplier. The move sends 10,500 Chrysler employees home. Chrysler hasn't said when it expects those plants to be open again, but workers will find out from plant managers or notices in local media when it happens. So far, no other company supplied by Plastech has indicated it will be slowing down operations.
Volkswagen has been in a marketing and sales funk here in the U.S. over the past few years, but the German automaker plans to drastically change that in the coming decade. A big part of VW's North American growth plan is a brand new plant in South Carolina (actual plant location has yet to be announced) scheduled to begin operation in about three years time, and to get powertrain supplies to the factory, VW is going to build both an engine and a transmission plant somewhere on this continent. Neither Canada or Mexico have been ruled out as potential locations, and Volkswagen USA CEO Stefan Jacoby told the Automotive World Congress that the company needs to localize the plants to be competitive.
VW would like to grow its sales volume in North America to around 800,000 units per year, and a state of-the-art plant in the union-less South will help the German automaker sell vehicles without worrying about fluctuating currencies. Building up to three new plants in the States will give VW the volume it needs to succeed, and we're pretty sure the ability to slap "Made in the USA" on the bumper won't hurt much either.
BMW's running full-bore as it strains to double its profit margin within the next five years. Across all 23 of the company's manufacturing locations, capacity is maxed out at 100-percent, and there's nary an extra Roundel badge to be had. As BMW pushes for a 10-percent profit margin, they're also putting the squeeze on suppliers. To the OEMs, it seems that BMW has shifted its focus from quality and innovative technology to the bottom line. Not helping matters was a public statement by Manfred Scoch, deputy chairman of BMW's supervisory board, criticizing their suppliers for having better profits than the automaker. With their focus on building the Ultimate Driving Machine, BMW has enjoyed a reputation as a favorite customer of automotive suppliers. Scoch's lead balloon didn't go over well with the companies that make parts for BMW, and has stirred further rumblings that there's growing dissatisfaction with BMW's apparent focus shift. Suppliers shot back at BMW, expressing alarm at Scoch's statement and stating that their ability to generate a profit is tied to their innovation and hard work, rather than overcharging BMW. Understandably, suppliers are loath to concede any price breaks on agreements that are already in place.
For its part, BMW's decided that it's more cost effective to increase their ability to make some components in-house. With that in mind, the Leipzig and Regensburg stamping plants are undergoing expansion, and there will be a new Leipzig stamping facility in 2009. At least 200m euros will be invested in Leipzig and Regensburg, but BMW believes it's a better idea to invest its capabilities, rather than pay a supplier to sort it all out. By the time it's all said and done, further integration may happen to keep the slices on the pie chart looking healthy. If they keep ticking off the companies that make the pieces that they bolt together into automobiles, BMW may end up doing it all themselves.
Giveth, and taketh away, isn't that always the story? On the taketh away side, GM has recently lost a serious chunk of change. On the giveth side, The General received a $56 milion package of tax credits and grants to keep an SUV factory open in Ohio. It has also just received another package of tax credits from the city of Flint, Michigan to aid its investment in a factory that will build engines for the new Volt and Chevy Cruze. Approved over some constituent disapproval by the Flint City Council, getting GM to build the factory there will keep 300 jobs in the city. GM is now looking to the state of Michigan for more tax incentives.
Volkswagen has been in a marketing and sales funk here in the U.S. over the past few years, but the German automaker plans to drastically change that in the coming decade. A big part of VW's North American 
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