By Robert Sherefkin and David Barkholz.
Detroit, Michigan -- Ford Motor Co.'s accelerated restructuring plan will worsen an already alarming loss of business for North American suppliers that count on Ford for large chunks of business.
Ford said on 15 Sep that by the end of 2008 it will cut North American production capacity by 26 percent from 2005 levels, to 3.6 million units.
But production cuts of 21 percent in the fourth quarter compared with the same period last year already have suppliers bracing.
To make matters worse, General Motors Corp. is cutting North American production by 12 percent in the quarter and the DaimlerChrysler group is cutting production by 10 percent.
Visteon Corp., Lear Corp. and Johnson Controls Inc. have already started laying off employees in anticipation of the production cuts.
Among the hardest hit could be Visteon, which counts on Ford for about 48 percent of its sales.
"With Ford still the overwhelmingly largest customer of Visteon, the production cuts will definitely flow downhill. Visteon is the first stop on that hill," analyst Glenn Reynolds of CreditSights said.
Visteon ceo Michael Johnston said on 12 Sep, at the Reuters Autos Summit, that layoffs have begun.
"We've had some announcements at some local plants where we've reduced shifts and laid off some folks, and we'll take the normal actions that any supplier would take given a large customer reducing volumes," he said.
Lear recently put 107 workers on indefinite layoff at its Strasburg, Virginia trim plant, which employs 770 people. The seat and interior maker expects to put more workers on temporary layoff as the Ford cuts take effect in the next quarter, a company spokeswoman said.
Johnson Controls began layoffs on 5 Sep, according to the Georgia Department of Labor. The Plymouth, Michigan interiors supplier will cut a total of about 180 jobs in the Atlanta area.
Dura Automotive Systems Inc., another supplier that relies heavily on Ford business, is likely to file for Chapter 11 reorganisation in a few months, according to a 13 Sep report by Lehman Brothers. Dura has assembled a team of restructuring firms but has not commented on Chapter 11 speculation.
Ford said it plans to sell or close 14 former Visteon Corp. plants and six technical centres by the end of 2008. The plants, taken back from Visteon in 2005, are held by Ford under its Automotive Components Holdings LLC unit. The operations have been on the market for about a year.
From Plastics News (A Crain publication)