Here’s Why Ford and Friends Are Looking at a Golden Summer
While auto manufacturer employees have often been able to enjoy a two-week plant shutdown around July, it looks increasingly likely that they won’t get their usual summer break this year, due to increased demand. The Big Three — General Motors (NYSE:GM), Ford (NYSE:F), and Chrysler — will be cutting the shutdown periods in order to boost production for the year.
Ford is hoping in increase its output by 200,000 vehicles in 2013, and although the company has not revealed what its total capacity for production is, it produced 2.8 million cars in the area in 2012, and was presumed to be working at near-full capacity. Shortening its two-week shutdown to one week will increase volume by 40,000 units alone, and overall rates of production at other plants will be increased.
“This sends a strong signal that the industry is in a healthy place,” Jeff Schuster, senior vice president of forecasting at market researcher LMC Automotive, said. “Competitively, automakers don’t want to be caught without vehicles that consumers want.”
Ford, GM, and Chrysler have their North American plants running at or above capacity, meaning nearly all operate two shifts, with many running three. The companies are now trying to leverage every last bit of production they can to meet an auto market that is releasing years’ worth of pent-up demand.
Sales are expected to hit 15.5 million units for this year, following sales gains of nearly 7 percent in April. It would be the strongest sales year for the auto industry since 2007, though the companies were forced to scale back since then, and are now working with fewer resources. Ford sales alone are up 13 percent, almost double the industry as a whole.
Chrysler is intending to do away with the plant shutdown time altogether this year, specifically for its engine and transmission facilities. Ford will pare the vacation time by half at 20 of its 31 North American factories, including six of its assembly plants — up from last year’s 13 plants that underwent a reduced idle time.
GM spokesman Bill Grotz said today’s plant shutdown times are based on vehicle life cycle and market demand. He said the automaker has made “slight tweaks” to its production plans this summer, though he wouldn’t elaborate.
Considering that the shutdown times are vacation times for the employees, members of the United Auto Workers with shorter shutdowns will be able to use their previously scheduled July vacation time later this year.
Here’s how Ford and General Motors have traded so far in 2013:
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