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Hot sales have Detroit automakers shortening summer shutdowns

Back in May, there was speculation that the Detroit Three automakers would maintain or perhaps even extend their traditional summer shutdowns, mostly due to a bitingly cold winter that saw below-freezing temperatures infiltrate the southernmost reaches of the US, putting a chill on auto sales. Now, though, the numbers are in, and thanks to some promising sales figures, it looks like some domestic line workers are going to be working clear through July, in some cases.
According to Automotive News, Ford has slashed its traditional two-week hiatus for factory workers in half at four of its plants, while both Chrysler and General Motors will keep factories running nonstop (two plants in Chrysler's case and a third of GM's factories).
This is, as we said, thanks to some positive numbers. Chief among those is the Seasonal Adjusted Annual Rate, which was at an eight-year high of 17 million units. Individual figures were less promising. GM, embroiled in its recall scandal, still saw a one-percent increase while Ford dropped six percent in year-over-year sales. Chrysler was the big winner, though, with a nine-percent jump in June.

Ford will lay off 700 employees in Michigan

Lagging sales of compact and electric cars are starting to take their toll on automakers. Ford said Thursday it intends to lay off 700 employees who work at the Michigan Assembly Plant in Wayne, MI, over the next five months. The plant makes Ford Focus and C-Max vehicles. Sales of both have stalled in recent months. The layoffs affect 675 hourly and 25 salaries employees, and will begin in late June and continue through September, according to paperwork filed with state officials. The company expects to re-hire the affected employees elsewhere and use them on temporary basis throughout the summer. Ford spokesperson Kristina Adamski said the affected employees will be "first in line" for other jobs at nearby plants, and UAW vice president Jimmy Settles said he expected all would be re-hired at other southeast Michigan factories by "early 2016." Although industry sales have remained high overall, the growth has come from SUVs and pickup trucks. Conversely, compact cars and alternate-powered vehicles like the C-Max have struggled to find customers amid cheap gasoline prices. Focus monthly sales fell 14.5 percent year over year in March, and C-Max monthly sales dropped 22.9 percent over the same period. It was less than three years ago that Ford hailed the Michigan Assembly Plant as a model for its future, one that would quickly adapt to market conditions through a more flexible assembly process. The plant was retrofitted at a cost of $550 million so that the same assembly line could install electric, plug-in hybrid or gasoline powertrains. Ford produces the Focus, Focus ST, Focus Electric, C-Max Hybrid and C-Max Energi here. At the time, company officials said the flexible line was a way to "not be trapped with dedicated one-trick-pony plants where you have under-capacity or over-capacity situations," said Jim Tetreault, Ford's vice president of North American manufacturing, in November 2012. But that's exactly where Ford finds itself as consumers have turned away from both compact and gas-sipping hybrids and electrics as gas prices have fallen to a national average of $2.49 per gallon, according to Thursday's AAA Fuel Gauge Report. One year ago, gas prices averaged $3.70 per gallon. In perhaps a melancholy twist, the Ford Expedition and Lincoln Navigator that were phased out at Michigan Assembly by the retrofit are once again the types of vehicles that are sought after by consumers.

Ford 2Q profit drops 86% as it restructures overseas

DEARBORN, Mich. (AP) — Ford's net profit tumbled 86% in the second quarter due largely to restructuring costs in Europe and South America. Net income for the April-through-June period dropped to $148 million, or 4 cents per share. Without the charges the company made 28 cents per share. Revenue was flat at $38.9 billion. On average, analysts surveyed by FactSet expected earnings 31 cents per share on revenue of $38.49 billion. Chief Financial Officer Tim Stone says the company had charges of $1.2 billion as it moved to close factories in Europe and South America. He says Ford already is seeing an impact from its global fitness measures that included a reduction of 7,000 white-collar workers. Ford, which released numbers after the markets closed Wednesday, says its results include a $181 million valuation loss on an investment in a software company, trimming 4 cents off adjusted earnings per share. Its stock fell 6.3% in after-hours trading to $9.68. Stone said Ford is in the early stages of its restructuring, but already is seeing improvement in some regions. Free cash flow also improved by 80% to $2.1 billion in the first half of the year, he said. "We're already starting to see some early benefits," he said. "A lot of work to do." The company expects improvement in the second half of the year as more new big SUVs hit dealerships and more of the restructuring takes hold. Ford on Wednesday forecast pretax adjusted earnings of $7 billion to $7.5 billion for all of 2019, compared with $7 billion last year. The company previously had only said that pretax earnings would improve. Full-year adjusted earnings per share are forecast to be $1.20 to $1.35, up from $1.30 in 2018. Previously it did not give per-share guidance. Ford's U.S. sales fell nearly 5% in the second quarter, according to the Edmunds.com auto pricing site, as the company exited most of its passenger car business. But Stone said sales of the new Ford Ranger small pickup offset much of that as its share of the small truck segment rose 14%. Edmunds, which provides content for The Associated Press, said Ford's average vehicle sale price rose 2.8% to $41,328 during the quarter. In North America, Ford's biggest profit center, pretax earnings fell 3% to just under $1.7 billion, which the company blamed on switching its Chicago factory to build new versions of midsize SUVs.