Layoffs are mounting and more shutdowns are looming at vehicle assembly plants in Canada as auto makers adjust to a slowdown in the U.S. market.
Ford Motor Co. of Canada Ltd. has issued indefinite layoff notices to 150 people at an engine plant in Windsor, Ont., and scheduled week-long shutdowns at two of its three vehicle assembly plants in Canada next month and in May, union officials said.
General Motors of Canada Ltd. has tentatively scheduled a one-week shutdown for May or early June at a transmission plant in Windsor and will reduce production at a parts plant in St. Catharines, Ont., meaning some workers on layoff may not be recalled, according to other union officials.
GM Canada spokesman Stew Low said the auto maker is still assessing its plans for second-quarter production at the Windsor plant.
Ford Canada spokesman John Arnone confirmed the shutdowns at the assembly plants and that layoff notices had been issued to workers at its Essex engine plant, but would not confirm the number of layoffs.
The cutbacks at the two auto giants come even before they assess the impact the U.S.-led war on Iraq will have on sales, which have been kept at high levels in part because of heavy incentives, including cash rebates, interest-free loans and free air conditioning.
The temporary Ford shutdowns affect more than 5,000 workers at its assembly plants in the Ontario cities of Oakville and St. Thomas. GM Canada employs about 1,600 people at its Windsor transmission plant.
Ford has on hand 70 days worth of Windstar minivans, which are assembled in Oakville. Inventories of Ford Crown Victoria and Mercury Grand Marquis full-size sedans — assembled in St. Thomas — are at 91 and 74 days respectively, according to Ward's AutoInfoBank, an industry publication.
U.S. sales are expected to fall 5 per cent in March from year-earlier levels to 15.4 million vehicles on a seasonally adjusted annual rate (SAAR) basis, John Casesa, who follows the industry for Merrill Lynch & Co. Inc., said in a note to clients yesterday.
Whatever happens in the U.S. market is critical for Canadian assembly plants because about 80 per cent of Canada's vehicle production is exported to the United States.
"March demand looks sloppy, but higher than dire mid-month expectations," Mr. Casesa wrote. "Nonetheless, if our March estimate is accurate, the SAAR [in the first quarter] will average 15.7 million units, making company estimates for 2003 in the 16.2- to 16.5-million-unit rate look optimistic."
Last week, Mr. Casesa lowered his estimate for full-year U.S. sales to 15.9 million vehicles.
Ford Canada is trying to fight soft sales with a new incentive program that offers existing owners credits of $500, $750 or $1,000 — depending on the vehicle — for a new car, truck, sport utility vehicle or minivan purchased by June 14.
It's on top of existing Ford Canada rebate programs, which include interest-free loans or cash rebates.
"That [new program] tells you that there's softness in the marketplace," said a Ford dealer in Alberta. "That's double-dipping and you don't often see that."
The dealer said sales at the beginning of March picked up after a "terrible" February, but have slowed since the war began last week.
"In the last week or so it's been mediocre," he said.
Norman Hébert, who runs a string of dealerships selling offshore-based brands in the Montreal area, said sales have been brisk all month.
"I'm seeing a market that is as good or better than last year," Mr. Hébert said yesterday. "I'm trying to see negative things out there and I don't see a lot except the war."
An Ontario dealer who owns GM dealerships and import outlets said business is good outside Toronto, but less than brisk at his Toronto store.
"That first week in March was pretty deadly," he said.
Angelo Longo, a Chrysler dealer in Cambridge, Ont., said customers appeared to be holding back earlier in the month, but once the war began, showroom traffic began to pick up.
"The uncertainty seems to have been dispelled a little bit," Mr. Longo said. "March is quite a bit better than February."
