Consolidating in Thailand
Ford is shifting its production of the Fiesta from the Cuautitlán Assembly Plant in Mexico and the Chennai Assembly Plant in India. The company already makes the Fiesta in Thailand at its Rayong plant.
The shift is expected to happen in 2016, when Ford builds the next generation of this car on a new, more global platform. Currently, the Fiesta is going through an overhaul for the 2014 model.
The efficacy of this plan is that the Mexico plant has the capability to build multiple cars per assembly line, but so far it has produced only the Fiesta. But now, with its capacity freed, the plant can be used for making one or more vehicles that are in demand in North America.
GM and Chrysler will also minimize downtime
The way current trends are moving, researchers like LMC Automotive and TrueCar are all expecting May auto SAAR to exceed 15 million units in the U.S. And, not just Ford alone, the other Detroit car makers (GM and Chrysler) are also capitalizing on the strong demand. All three companies have gained market share through the first four months of the year, and do not want supply constraints to get in their way.
Chrysler will not allow any downtime in three of its assembly plants. These include the Jefferson North plant, which builds the Jeep Grand Cherokee and Dodge Durango, the Conner Avenue plant, which makes the Viper, and the Toledo North plant, which will produce the new 2014 Jeep Cherokee.
In four other assembly plants, there will be a week-long break, while the other assembly plants will get their usual two weeks off. The company will also keep all but one of its engine and transmission plants open throughout summer.
Chrysler is seeing strong demand for many of its vehicles. In May, some dealers are reporting that sales are up by almost 20% y-o-y. Selling hot are Dodge Wrangler and Jeep Grand Cherokee.
General Motors Company (NYSE:GM) has not announced its exact plans like Ford and Chrysler, but, according to industry sources, it appears that the company will plan out its shutdowns to ensure all plants are not idled simultaneously.
General Motors Company (NYSE:GM) is witnessing fantastic demand for its Buick and Cadillac models, while the market is eagerly awaiting the launch of the Silverado and Sierra pickups.The company is in the middle of the biggest product overhaul in its history. In this year alone, it is launching as many as 23 vehicles.
Last word to investors
Ford Motor Company (NYSE:F) is following a balanced demand-supply strategy in each of its markets. It is making difficult decisions where it has to, like in Australia. Meanwhile, it is boosting capacity in markets like North America, where the demand is burgeoning. The way Ford is playing this game leaves no doubt in one’s mind that the Blue Oval is poised for more growth in the future, and investors have only to gain.
The article Ford Is Doing The Balancing Act originally appeared on Fool.com and is written by Eshna De.
Eshna De has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Eshna is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
