(J.B. Forbes/file photo/P-D)
ST. LOUIS POST-DISPATCH
About 1,100 workers left at Chrysler's pickup plant in Fenton are walking what amounts to a manufacturing tightrope.
The situation will not get better: Chrysler has said it has no plans to bring back the second shift, or about 900 workers, that the automaker cut this month.
And it can get worse. Plummeting sales of the Dodge Ram pickup could push off-balance what the automaker makes versus what it sells, and thus endanger the Fenton plant. Tumbling sales already spurred Chrysler to close the adjacent minivan plant at the end of next month.
The stakes — and the challenges — are high this year for the 2009 Dodge Ram. Gasoline prices that topped $4 a gallon nationally in the summer left consumers wary of driving gas-guzzling sport utility vehicles and pickups. The weak economy tightened consumer spending. Plus, the housing slump has battered construction companies, which are among the chief buyers of these big pickups.
These are factors that Chrysler and the other automakers acknowledge, but despite those troubles, Chrysler is confident in the 2009 Ram.
What's driving that enthusiasm is the redesign of the Ram 1500 pickup — the first major redesign since the 2002 model. Chrysler said the redesigned full-size pickup should officially roll off the Fenton plant's assembly line today and trickle into St. Louis dealerships and others across the nation later this month.
"This isn't just a warmed-over refresh," said Mike Accavitti, director of Dodge marketing.
The redesigned 1500 model — built in Fenton and Warren, Mich. — uses a different rear suspension than other full-size pickups, giving it more of a car-like smooth drive. And a new version, a crew cab model with two full-size rear doors, joins the standard and quad cab versions already being made.
"We are introducing a truck that we don't have in the marketplace," Accavitti said. "Crew cabs have grown since 2002 from nothing to 50 percent of (overall pickup sales) … There's where we will increase our market share initially and where we will increase our market share in the long haul."
The larger Ram pickups, such as the 2500, are not part of the redesign. These larger pickups are built in Fenton and Saltillo, Mexico.
Ford Motor Co. said in June that it would delay the launching of its redesigned F-150 by about two months because of slow truck sales and the need to sell down 2008 inventory. But Accavitti said Chrysler has gone ahead with its launching because it cleared out much of its 2008 inventory using incentives. The automaker has less than three months worth of last year's Rams, or fewer than 30,000 pickups, he said.
"We're in a better inventory position than the other guys," Accavitti said.
Still, hefty incentives on the 2008 Ram 1500 could cannibalize the 2009 model, said Jessica Caldwell, an industry analyst for auto information website Edmunds.com. She added that the automaker might be forced to offer incentives on the 2009 Ram. Chrysler would only say it is evaluating its incentive strategy for the new model.
Competition is fierce in the full-size pickup segment, which includes competitors such as the Chevrolet Silverado, the Toyota Tundra and the Nissan Titan.
Tracy Handler, a market analyst for research firm Global Insight, said the 2009 Ram 1500 will get some extra market share when it launches. Those sales, she said, could come at the expense of Chevy sales because the last redesign for the Silverado was in the 2007 model year.
Chrysler's decision to go ahead with the launching when Ford delayed its own also could help the Ram's sales compared with that of the F-150, she said.
Ford spokeswoman Afaf Farah said Ford does not have excessive 2008 inventory now and is confident in its new model.
Once the F-150 arrives in late fall, the Ram might lose some market share back to the Ford pickup, said Art Spinella, president of consumer research firm CNW Research.
Pickup buyers tend to have a strong loyalty to one of the automakers and rarely cross over to another maker. Ford has consistently targeted contractors and recreational vehicle owners who tow those vehicles, Spinella said, while the Dodge Ram saw its biggest sales just a few years ago when consumers known as "appearance buyers" perceived pickups as status vehicles.
"It's not likely that many of these appearance buyers will come back to market," he said. "The people who use pickups for work-related (purposes) are coming back to market, and they're very pro-Ford and pro-Chevy."
With analysts predicting lower sales this year, pickup makers will be fighting for a smaller pie.
Handler said peak pickup sales were about 2.5 million three years ago, with about 25 percent of buyers being the "appearance" consumers. She said her firm expects pickup sales to be about 1.5 million for the next few years.
According to Global Insight, Chrysler is expected to sell about 260,000 Dodge Rams in the United States in 2008 and about the same in 2009 — down 27 percent from 2007's actual sales.
Capturing sales, then, depends on how well the automaker markets the Ram to those who need trucks for work, Spinella said.
That's what Chrysler plans to do, Accavitti said. Although it will still reach out to what it calls the "casual" buyers, most of the marketing will target the ranchers and contractors, owners of recreational vehicles, and people who use their vehicle for both work and personal driving.
A steady decline in sales meant Chrysler didn't need to make as many pickups at its three Ram plants. The excess capacity led the automaker to eliminate one shift in Fenton.
Right now, Chrysler doesn't see the need for a second shift.
"It's important that the elimination of the second shift at the (Fenton) North plant be considered permanent," spokesman Ed Saenz said.
Although stronger than expected Ram sales won't mean the return of a second shift for Fenton, the local plant may be in peril if sales go further south.
If there is a sharp decline in pickup sales this year, there could be enough extra capacity in the Warren, Mich., plant to cut the remaining Fenton shift and consolidate production of the Ram 1500 to the Detroit-area location, said Greg Gardner, an analyst for Oliver Wyman, publisher of the Harbour Report that tracks auto plant productivity.
Saenz said he wouldn't speculate on whether a drop would warrant cutting the remaining St. Louis shift.
Although running a plant with one shift is considered inefficient, Saenz said Chrysler has other plants in Sterling Heights, Mich., and Detroit that operate on one shift. He said people should not speculate that those plants, and the operations in Fenton, will be closed just because of their one-shift schedules.