Special Coverage

Management Briefing Seminars

Ongoing restructuring efforts by Detroit’s Big Three auto makers is expected to result in about a dozen North American plant closings over the next five years, in addition to the multitude of manufacturing facilities that already have been shuttered.

Yet, despite the high number of closings, the U.S. will not see a volume loss as General Motors Corp., Ford Motor Co. and Chrysler Group shift output to their remaining factories, and foreign transplants open three new plants in Georgia, Mississippi and Indiana.

The U.S. is expected to account for 70.2% of North American output this year. But that will shrink to 68.0% by 2012, while Mexico and Canada see gains.

Three U.S. states will be exiting the automotive industry entirely. They include Wisconsin, as GM closes its Janesville plant; Virginia, following the shutdown of Ford’s Norfolk factory; and Minnesota, after Ford shutters the Twin Cities facility.

Other states that will continue to build vehicles but likely see factory closures include Michigan, Ohio, Kentucky and Delaware.

Georgia is the only state that will see a plant closing and another opening, as it says goodbye to GM’s Doraville facility and welcomes Kia Motor Corp.’s upcoming West Point manufacturing operation.

U.S. Plant Closings, Openings
and Output Forecast
Output Forecast
Year Closing Year Opening 2007 2012
Chrysler, Newark DE 2009 93,000
GM, Doraville GA 2008 92,000
Ford, Louisville KY 2009* 230,000
Ford, Wixom MI 2007 20,000
GM, Hamtramck MI 2010* 142,000
Ford, Twin Cities MN 2008 85,000
GM, Moraine OH 2009* 195,000
Ford, Norfolk VA 2007 50,000
GM, Janesville WI 2010 3,000
Kia, West Pointe GA 2001 180,000
Honda, Greensburg IN 2008 165,000
Toyota, Tupelo MS 2010 155,000
Total 910,000 500,000

Total U.S. Production Forecast

10,700,000

10,775,000
* Closing forecast by Ward’s. Source: Ward’s AutoForecasts.

Although earlier plans were for Kia to open its Georgia facility in 2009, Ward’s forecasts a production delay until 2011.

The U.S. plants slated for closure make up 8.5%, or just over 910,000 units, of the forecasted production in 2007. The new plants Toyota Motor Corp., Honda Motor Co. Ltd. and Kia plan to open are expected to account for a combined output that slightly exceeds 500,000 units, or about 4.7% of U.S. vehicle volume in 2012.

A differential of about 410,000 units will be realized with increased production from other U.S. plants.

Recent profits reported by GM and Ford give credence to their cost cutting efforts, but the fact that U.S. volume will not diminish as plants are shuttered also is a testament to the manufacturing efficiencies they have gained, or expect to gain.

Going forward, Detroit OEMs will maintain the same output using fewer facilities.

Although Ward’s recent North American production forecast reflects relatively flat output in the U.S. over the next five years, Mexico’s build will increase 16.5% by 2012.

The added production will give Mexico 14.3% share of North American builds, up from the 12.7% initially forecast for 2007. Output gains come from two new plants, with anticipated high-volume that outweighs the possible closure of two low-volume facilities.

Canada is forecast to see a 7.0% production increase by 2012 that will nudge its portion of North American output to 17.6% from 17.1%.

delnick@wardsauto.com