Claycomo, Fairfax plants to feel sting of auto layoffs
Slumping auto sales at Ford Motor Co. and General Motors Corp. will rip through the Kansas City area this year and next when the automakers idle workers.
Ford on Friday announced looming temporary cutbacks at its Claycomo plant, and GM reported indefinite layoffs for 370 workers starting early next year at its Fairfax plant. Both automakers on Friday reported losses for the third quarter.
The automakers, in another important sign of financial weakness, also said they had burned through $14.6 billion in cash during the period. GM said its financial condition is so dire that it may run out of money next year, but Ford said it had enough cash to make it through the downturn.
Friday’s announcements came the day after leaders from GM, Ford and Chrysler LLCpressed congressional leaders for federal help. Meanwhile, President-elect Barack Obama said Friday that his focus on the economy will include helping the auto industry.
But later this month the bad news from Michigan will start hurting the local economy, where Ford and GM are major local employers.
Ford will shut down the sport utility line of the Claycomo plant starting the week of Nov. 17 when it temporarily idles about 3,000 workers who make the Ford Escape and Mercury Mariner. That cutback had been announced earlier, but on Friday the automaker said it will follow up with similar action the weeks of Dec. 15 and Dec. 22.
The layoffs will not affect the 1,000 workers who make the F-150 pickup truck.
“It’s painful and difficult for employees, but we have to align our production capacity with demand,” said Ford spokeswoman Angie Kozleski.
Sales for the Escape and Mariner have been down slightly this year, while sales of the F-150 have been down more drastically. However, Ford introduced a new F-150 in the fall.
GM announced that starting Feb. 2 it will indefinitely lay off 370 workers at its Fairfax plant, which has about 2,750 employees.
“It’s a shame,” said Jeff Manning, president of Local 31 of the United Auto Workersunion. “It’s a sign of the whole economy.”
GM spokesman Tony Sapienza said GM will slow production at the Fairfax assembly plant in anticipation of sales dropping next year. “We think 2009 will be a difficult year,” he said.
He noted that sales of the Chevrolet Malibu and Saturn Aura have increased this year.
In all, GM plans 3,600 indefinite layoffs at 10 assembly plants starting next year.
The news out of Michigan on Friday put an exclamation point on the sinking fortunes of GM and Ford.
GM reported that it lost $2.5 billion, or $4.45 per share, during the quarter, compared with a record-setting loss of $42.5 billion, or $75.12 per share, a year ago. The automaker said that its cash burn for the quarter accelerated to $6.9 billion and that government aid will be “essential” because of the slow economy and credit crisis.
GM also said it had suspended talks to acquire Chrysler. While it didn’t specifically name the automaker, GM said it was setting aside considerations for a “strategic acquisition.”
Ford said it burned through $7.7 billion in cash and will eliminate about 2,260 more white-collar employees in North America. It wasn’t known whether any Claycomo white-collar employees will be affected.
The automaker said it lost $129 million, or 6 cents per share, for the third quarter, compared with a loss of $380 million, or 19 cents per share, a year ago.
The company posted a pretax loss of $2.7 billion from continuing operations. But it was offset partly by a $2 billion gain as the company shifted retiree health care liabilities to a trust run by the UAW.
Ford’s global automotive operations had a pretax loss of $2.9 billion for the quarter, compared with a pretax loss of $362 million a year earlier.
Sales fell 22 percent, to $32.1 billion from $41.1 billion, due to lower volume and the sale of Jaguar and Land Rover.
Excluding special items, Ford lost $1.31 per share, worse than Wall Street expected. Analysts surveyed by Thomson Reuters predicted a loss of 94 cents per share on sales of $28 billion.
“While Ford has been dramatically affected by the difficult business environment, we remain absolutely convinced that we have the right plan and are taking the right actions to weather this difficult period,” Alan Mulally, president and chief executive, told industry analysts.
Ford’s shares rose 4 cents Friday and closed at $2.02, while GM’s shares fell 44 cents and closed at $4.36.
On Thursday, Detroit’s automakers appealed to congressional leaders for $25 billion more in federal loans, low-interest emergency borrowing and a share of the Wall Street bailout. GM, Ford and Chrysler pledged to work with the leaders “to ensure immediate and necessary funding to keep the auto industry viable and its transformation on track,” according to a GM statement.
Congress approved $25 billion in low-interest loans for domestic automakers and suppliers to retool plants to build fuel-efficient vehicles. But allies of the industry have said the money will not be available quickly enough to help.
<< Home