Tuesday, September 16, 2008

Auto Column

Chris Vander Doelen, The Windsor Star

Published: Monday, September 15, 2008

Jim Press, vice-chairman and co-president of Chrysler LLC, says North American economic conditions remain so volatile he has no clue how sales will do for the last quarter of the year.

July was a disaster for the North American auto industry - the worst month in 16 years, at an seasonally adjusted annual rate of 12.5 million vehicles.

August improved a bit, to an annual rate of 13.7 million units. But that's still a far cry from the boom days of selling 16 million to 17 million cars and trucks per year.

As a rough rule of thumb, each 250,000 in sales represents one automotive assembly plant and several thousand direct jobs. So North American sales are down the equivalent of eight to 12 assembly plants and tens of thousands of jobs.

In an address to the Automotive Press Association in Detroit a few days ago, Press said he wouldn't hazard a guess as to how he thinks September and the rest of the year will go.

The future is so hazy, the former head of Toyota North America said, he can't tell which way it's going. "We can't tell if the market is going back to 13 or 14 million or down to 11 or 12 (million).... But we haven't fallen off the table yet."

Clearing out the 2008 models and surviving the next three months is key for Chrysler. "We're still within spitting distance" of sales projections, Press said.

The good news: "We don't plan to close any more plants."

Slowdown forces Toyota to keep workforce busy

Toyota, where Press used to work, is famous for never closing assembly plants or laying off employees, among other claims to fame.

But it's become quite a struggle for the company to keep all of its team members busy. Sales have slumped so badly, even the world's most successful carmaker doesn't have enough work to keep everyone on the payroll building cars.

Thousands of Toyota's North American associates aren't building cars and trucks these days because of the economic slowdown -- but they are still getting paycheques.

In a recent interview, Ray Tanguay, president of Toyota Motor Manufacturing Canada Inc. and a member of the company's worldwide board of management, said the company has reassigned 4,500 of its U.S. assemblers and other employees to training and other duties while the company rides out the downturn.

"We're trying to be very transparent with our team members and our suppliers," Tanguay said. "We're going to invest in them" while the company rides out the rough economic waves.

The 4,500 people had been building pickup trucks and SUVs at Toyota's three truck plants in Indiana, Texas and Alabama.

Toyota announced a few weeks ago it was postponing the hiring of a second shift at its new RAV4 assembly plant in Woodstock, Ont. But keeping all those people on payroll in the U.S. was "the toughest decision," said Tanguay.

The Canadian operations, by comparison, "are very fortunate we have high demand vehicles." The Lexus RX 350 and the fuel efficient Toyota Corolla and Matrix are built at Toyota's Cambridge assembly plant, "and they are in very short supply right now."

Sales of the RAV4, which will start coming out of the new Woodstock plant in a few weeks, are up 30 per cent in North America this year, so that plant's future appears assured despite the postponement of the second shift.

Tanguay, a graduate of St. Clair College, said nobody in the industry forecast how bad sales would become in North America this year. And like Press, he says there is no clarity to where the industry is going.

"There are a lot of factors. Nobody can give an answer."

The factors hurting the auto industry sales include the sub-prime mortgage meltdown in the U.S., declining housing values, higher oil prices and the devalued U.S. dollar - "all these factors have a huge impact on the market."

"But we had a pretty good ride since 1989," said Tanguay, putting some perspective on the current conditions. "The market has just been going up. Things don't always go up."

The current downturn, he said, "is a little bit of a setback."

Companies interested in Viper

You read it here first two weeks ago that American automotive engineering firms Roush and Saleen were looking at buying the Viper name from Chrysler.

Autoblog.com, says Chrysler vice-chairman Jim Press has confirmed those two companies are at the top of the list to buy the supercar brand.

Phoenix engines more efficient

Chrysler's Windsor Assembly Plant has begun running prototypes of minivans with the company's new Phoenix engines and even Bluetec diesels, sources say.

The Phoenix family of engines are fuel efficient V-6s with technologies such as turbocharging, overhead cams, direct injection, and variable valve timing.

Ford and General Motors have already moved into such engines in search of greater fuel efficiency for their volume models. Chrysler's versions will come in four different displacements.

Chrysler co-president Tom LaSorda has said the first Phoenix engines will be available a year from now in the 2010 Jeep Grand Cherokee, along with other undisclosed vehicles to be built on the same platform at Jefferson North in Detroit.

No word yet on which displacement they are using in the minivan prototypes.

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