Union says slashing output of pick ups and SUVs will eliminate 300 jobs

The storm battering Detroit intensified yesterday with Ford Motor Co. offering a bleak sales outlook and its second major production cut in less than a month, which will wipe out 300 jobs at its Canadian operations.

Ford said it will delay introduction of a new generation of its F-series pickup by two months, cut production of trucks and truck-based sport utility vehicles even further than it announced less than a month ago and will have difficulty meeting its previous target of breaking even on a company-wide basis next year.

It also reiterated earlier plans to boost output of smaller cars and crossover utilities, including the CUVs made in Oakville, Ont.

“We view the move to smaller, more fuel-efficient vehicles as permanent and we are responding to customer demand,” Ford president Alan Mulally said in a statement.

Union officials said slashing output of trucks and SUVs means 300 jobs will be lost at the company’s Windsor, Ont., engine facility, which puts together V-8 and V-10 engines for pickups and SUVs.

There are about 2,500 Canadian Auto Workers members now at Ford’s engine plants and joint ventures in the city and 738 on layoff, Mike Vince, president of local 200 in Windsor, said yesterday.

The crisis in Detroit is spilling over to parts makers in Canada as well, with Magna International Inc. announcing this week that it will slash 400 jobs or one-quarter of the work force at a plant in St. Thomas, Ont., that makes frames for GM’s pickups. GM revealed in turn that it is delaying development of its next generation of pickup trucks to focus more of its resources on cars and other vehicles that use less gas.

Magna’s U.S. plants will take a hit with the Ford announcement because the parts giant makes many components for heavy-duty pickups assembled at one Ford plant in Kentucky and frames for the Explorer SUV built at another plant in that state. Output is being throttled back at both plants. It will trim a shift of Explorer production and cut the assembly line speed at the pickup plant.

Previous cuts by the Detroit Three are one of the causes of parts sector employment in Canada plunging by more than 20,000 jobs to 81,676 workers last month from a peak reached in 2001, industry analyst Dennis DesRosiers said in a report yesterday.

The parts sector will not disappear, said Mr. DesRosiers, president of DesRosiers Automotive Consultants Inc.

“The remaining parts sector should be able to recover as the cyclical downturn in the industry recovers,” Mr. DesRosiers said.

The Ford announcement capped a brutal week for the Detroit Three that included forecasts by several Wall Street analysts and the chairman of Chrysler LLC that sales in the U.S. market will plunge to their lowest level this month in more than a decade.

Underlining the growing danger to Detroit was Ford’s new statement that its perennially profitable credit arm will report a pretax loss this year and will not pay a dividend to its parent company.

Regulator filings show Ford Motor Credit Co. has posted a profit annually since 1989, which is as far back as Securities and Exchange Commission documents go.

Two influential U.S. ratings agencies added to the pressure, with Standard & Poor’s Corp. placing ratings for all three companies on credit watch with negative implications and Moody’s Investors Service Inc. cutting Ford’s outlook to negative from stable.

Both rating agencies are worried about the cash drain the severe slump in truck and SUV sales is causing.

“We have renewed concerns about all three auto makers’ future cash outflows in light of the prospects for U.S. sales for the rest of 2008 and into 2009,” said Standard & Poor’s credit analyst Robert Schulz.

Deteriorating fundamentals could reduce liquidity to undesirable levels by the second half of next year, Standard & Poor’s added.

Led Zeppelin’s back together. Stagflation and high gas prices have made a comeback as well. And late next year, you’ll be able to complete a 1970s revival with a two-door car that’s all business up front and party out back.

Answering the wishes of fervent fans — and the fears of some critics — General Motors Corp. was to unveil today its plans for a revival of the Chevy El Camino car-truck as a 2010 model Pontiac hot rod. The “sport truck” doesn’t have a name yet; GM will run a contest over the next month asking for submissions at a Pontiac Web site www.pontiac.com/namethiscar, and announce the winner April 15.

Here’s one: “Australiaino.”

Based on the same underpinnings as the G8 sedan and upcoming Chevrolet Camaro, the un-Camino will be built in Australia, where GM has centered engineering efforts for rear-wheel drive cars. It’s a risky strategy for GM, as Australian-built models have never sold well in the United States, and a weaker U.S. dollar threatens the business case for any imports.

But without its Australian arm, GM would not likely have enough resources to give Pontiac new models.

In addition to the mini-truck, GM also was to unveil today a version of the G8 sedan with the Corvette’s 402-horsepower engine that is to come to showrooms in the next year.

Australia has the longest history with so-called utes, since they were invented there by a Ford engineer in 1934 who got the idea from a farmer seeking one vehicle for church on Sundays and the pig market on Mondays. Ford brought the idea to the United States in the late 1950s, and GM followed, with the Chevrolet El Camino growing to define the segment.

GM’s U.S. production peaked in 1973 at nearly 72,000 El Caminos and GMC Caballeros. By the early 1980s, tighter fuel rules for cars had made small pickups more competitive, and GM ended production in 1988.

And by then, the El Camino and its ilk had become a punch line. President Bill Clinton told workers at GM’s Louisiana truck plant in 1994 that he owned an El Camino in the ’70s: “It was a real sort of Southern deal. I had Astroturf in the back. You don’t want to know why, but I did.”

Abandoned in the United States — save for some unsuccessful stabs at a comeback such as the Subaru Baja — the utility market flourished in Australia, where Ford and GM’s Holden have continued to build several models.

The G8-based vehicle will come only with the 361-horsepower V8 offered in the G8 GT paired with a six-speed automatic transmission. It will haul more than 1,000 pounds and tow 3,500 pounds — as much as some small pickups.

General Motors of Canada Ltd. is idling its Truck assembly plant in Oshawa for two weeks at the start of the new year, in another ominous sign for the country’s auto sector.

The automaker confirmed yesterday that it will halt output of the Chevrolet Silverado and GMC Sierra pickup models because of falling demand in the key U.S. market.

The stoppage follows GM’s decision in August to eliminate a third shift and about 1,200 jobs at the same plant at the end of this month.

“It just keeps getting worse,” said Chris Buckley, president of Canadian Auto Workers Local 222.

GM’s latest move will mean the temporary layoff of about 2,700 workers on two shifts who will receive about 65 per cent of their gross pay through federal Employment Insurance and company supplementary employment benefits.

The Oshawa plant, a big profit producer for GM, assembles about 440 trucks a shift and has generally run flat out in recent years. The two-week halt would reduce output by about 8,800 trucks and also curb parts production by suppliers in the region.

GM is also cutting production at two other plants in Pontiac, Mich., and Fort Wayne, Ind., during the same period.

The Silverado, GM’s biggest seller, and the Sierra account for 22 per cent of the company’s product volume.

The company is cutting output in North America by more than 10 per cent, or 113,000 vehicles, in the first quarter of next year.

Ford Motor Co. is also reducing North American production in the fourth quarter but it has not revealed which plants would temporarily halt output.

The company has Canadian assembly plants in Oakville and St.Thomas.