Workers at a Ford plant in Detroit assembling the maker's 2012 Focus.
With auto sales rebounding faster than many had anticipated, automakers are struggling to keep up with demand – including Ford Motor Co., which will add an extra 40,000 units to its production schedule by slashing its normal summer break. It’s part of a broader effort that should see the maker increase output by nearly a half-million units in 2012.
The move follows the announcement by Chrysler that it will eliminate its two-week July shutdown at four plants and trim the break to just one week at several other factories. That maker is also racing to add a third shift at its key Jeep plant in Detroit.
Ford says it will cut to one week the summer shutdown at six assembly plants, and seven other component factories – including five facilities in Michigan, two in Kentucky, and one each in Missouri, Illinois, and across the border in Ontario.
“We are working most of our North America plants at maximum capacity and we are adding production shifts in three of our assembly plants this month alone,” said Jim Tetreault, vice president of North America Manufacturing, said in a statement. “Requiring more capacity from our plants is a good problem to have and having the flexibility to add a week of production in our plants goes a long way toward solving it.”
The shortened summer break is part of Ford’s plan to boost overall North American capacity by 400,000 units this year. Other steps include the addition of three production shifts by the end of this quarter and another in the following months. All told, Ford hopes to boost North American capacity to 3.0 million vehicles.
That’s a significant turnaround after years after slashing production capacity but reflects the maker’s promise to better balance capacity and demand than it had in decades past, notes analyst Rod Lache, of Deutsche Bank.
“This (latest) action had to be negotiated with U.S. unions and is in-line with recent Ford comments that inventories are too lean and have negatively impacted market share in 2012,” Lache said.
The maker has seen its sales grow by 4.8% during the first four months of 2012 – with April actually dipping 5.1%. That’s actually a bit less than half the pace of the overall market but Ford officials point to shortages of some key new products holding them back. The maker also says it has been shifting its focus away from low-profit rental and other fleet sales to emphasize the higher-profit retail market.
Among the products affected by the Ford announcement are the new Focus and Focus Electric, produced in the Detroit suburb of Wayne; the Taurus and new Ford Explorer produced in Chicago; the F-150 pickup and other trucks, assembled at two Kentucky factories, and the all-new Escape just going into production.
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All three domestic makers have been struggling to meet demand as the industry recovers. The challenge has been to increase output without over-investing in new brick-and-mortar. The makers are well aware, they insist, that what goes up could come crashing down if the economy again falters. Adding new shifts and trimming the summer break is the most cost-effective alternative.
Nonetheless, the push for more capacity has already created thousands of new jobs in domestic plants and the hiring binge is expected to continue for months to come.