Ford to Pare Production at Small Car Factory in Michigan

By Christina Rogers 

Ford Motor Co. is cutting about 700 jobs at its small-car factory in southeast Michigan, the auto maker's first major U.S. manufacturing layoff since 2009 as Americans shun smaller vehicles amid low gasoline prices.

The workers were notified on Thursday of the workforce cuts at the plant, which builds Ford's compact Focus, as well as electric and hybrid models. The layoffs will begin at the end of June and the Dearborn, Mich., company said it could reassign many of the employees.

The action takes place months before Ford executives kick off labor negotiations with the United Auto Workers union. While UAW officials will push for more compensation, the pain in the U.S. small-car market--also faced by General Motors Co. and Fiat Chrysler Automobiles NV--is a reminder of the cyclical nature of the American auto industry even in the best of times.

As buyers, taking advantage of low gas prices, shift toward larger, roomier trucks and sport-utility vehicles that typically consume more gasoline, auto makers are scrambling to build as many of those profitable vehicles as they can. GM, for instance, is proposing to add workers at an SUV plant in Texas.

Earlier this year, Ford said it would hire 1,500 workers at its truck factories in southeast Michigan and near Kansas City, Mo., to boost production of its F-series pickup trucks.

"While today's announcement of a shift reduction at our Michigan Assembly Plant is unfortunate, it is not completely unexpected," said Ford-UAW President Jimmy Settles. "We are reminded from time to time that our industry is cyclical and volatile to market conditions."

Small vehicle sales fell to approximately 18.5% of U.S. retail car sales in the first quarter of this year, compared with 20% during the same period last year. The result marked the category's lowest first-quarter retail share of sales since 2009.

Detroit's Big Three have been stuck with rising inventories of their smaller, more fuel efficient cars. Ford said in a statement that its making the move to better "match production with demand."

Inventory levels were healthier for the Ford Focus compact car, with dealers having about a 65 days' supply on their lots, but March sales of the car tumbled, falling 14.5% over a year earlier, according to researcher Autodata Corp. Sales of the GM's similarly-sized Chevy Cruze fell 11% in March over the same month a year ago.

GM in November cut production and laid off workers at two Michigan assembly plants to trim inventories of slower-selling passenger cars.

Write to Christina Rogers at [e-mail]

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