Ford Slashes Production Levels Again

Maker looking to reconcile supply and demand.

by on Oct.18, 2016

Ford plans to shut down the F-150 line at the Kansas City assembly plant as part of a plan to shrink inventory levels.

Ford Motor Co. is moving to trim production of its pickups and sport-utility vehicles as flagging sales in recent months have the maker scrambling to match demand and supply. The company’s sales were off 7.7% in September.

The automaker said it will temporarily close four assembly plants, including two in the U.S. and two in Mexico, as part of what it describes as an effort to meet year-end inventory targets.

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The four plants slated to shut down include the Kansas City assembly plant that builds the F-150 and an assembly line in Louisville, Kentucky, where Ford builds the Escape.

Ford is also shutting the assembly plant in Hermosillo, Mexico, that produces the Ford Fusion and Lincoln MKZ as well as the Cuautitlan plant where the company builds subcompact Fiestas for distribution in Mexico and Central America.

The shutdown in Louisville will extend for two weeks through Oct. 31, and follows the one-week shutdown of an assembly plant in Flat Rock, Michigan, where Ford manufactures the Mustang and new Lincoln Continental.

That shutdown comes at a difficult time because the Continental, which was just reintroduced this fall, is in the midst of its launch cycle. To slow down the line hinders Ford’s ability to shake any bugs out of the system.

Ford is also shutting down part of its Louisville, Kentucky, plant as part of its plans.

(Ford cuts production on Mustang due to slow sales. For more, Click Here.)

Additionally, new buyers are asking for the new vehicle and dealers can’t get them on the lots fast enough to satisfy the demand, according to published reports.

Ford’s passenger car sales have slumped this year – down 12.5% through September – as the consumer shift from cars to trucks and utility vehicles continues. Fusion sales were down 9.1% through September, MKZ sales were down 0.4% and Fiesta sales have plummeted 28%, according to Autodata Corp.

Overall, Ford’s new vehicle sales are up slightly on a year-over-year basis: 0.8%, according to the automaker.

At the end of the second quarter, Ford executives offered a relatively pessimistic view of the U.S. market that warned of difficult times ahead. The moves come as key rivals, Honda and General Motors, have signaled that they plan to expand production of crossover vehicles and sport-utility vehicles.

(Click Here to see the new Annie Leibovitz ad campaign for the Lincoln Continental.)

Honda said last week that it was shifting production of the CR-V from Mexico to the U.S. to meet rising demand for crossover vehicles. Honda’s John Mendel, chief of its U.S. operations, noted the shift of CR-V production to Indiana will also allow the Japanese maker to build more of the smaller HR-V crossovers in Mexico.

GM has announced that it plans to add a third shift at an assembly plant in Spring Hill, Tennessee, and promised, Unifor, the union representing Canadian auto workers, to maintain an assembly line in Oshawa, Ontario, that had once been considered redundant.

Automakers are being closely scrutinized for their production location choices as Republican Presidential candidate Donald Trump has repeatedly chastised Ford for moving production to Mexico, falsely claiming the company was moving all of its jobs to Mexico.

(To see more about Ford and other makers production in Mexico, Click Here.)

While Trump has failed to mention the half dozen other automakers also ramping up manufacturing in Mexico, the negative attention has many executives rethinking their relatively transparency about their manufacturing plans.

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