Pyrrhic Victory for Michigan

In the seesaw battle for vehicle production leadership, Michigan should edge out the Canadian province of Ontario for the No.1 spot for 2008, leading it by some 450,000 units.

But that success may be short-lived. Ward's forecasts Ontario to win back the crown in 2009, only to lose it to Michigan again in 2012.

Unfortunately the victories for both are largely pyrrhic. The pitched battle between Michigan and Canada's auto-intensive province next door is not about which one is building the most cars and trucks, but which is least victimized by Detroit Three plant closings and shift cuts.

These problems were underscored when Chrysler LLC and Ford Motor Co. announced extended holiday shutdowns.

The only real winners in the automotive capacity outlook for the next three or four years are southern U.S. states such as Tennessee, Mississippi, Georgia and South Carolina, plus Indiana and several states in Mexico.

But the outlook is darkening for even this group, as foreign auto makers such as Toyota Motor Corp. delay investment plans while the global economic crisis worsens.

On the positive side of the ledger, Michigan did see shifts added at two auto plants.

Ford operated a third shift at its Dearborn Truck plant for eight months in 2008 and General Motors Corp. launched a new shift at its Lake Orion facility in the fall, increasing Michigan's capacity by a combined 86,000 units.

But these small gains could not compensate for the negatives, which include the first full year of lost production at Ford's now-closed plant in Wixom, MI, accounting for 80,000 lost vehicle assemblies compared with the previous year. GM increased the shortfall by 56,000 units, eliminating a third shift at its Delta Township, MI, plant near Lansing.

Even so, Michigan's loss of 50,000 units of production capacity pales when compared with Ontario's 573,000-unit deficit for 2008.

Ontario welcomed the opening of Toyota's new Woodstock plant, where the auto maker is building the RAV4 cross/utility vehicle, but it produced only about 25,000 units because production did not begin until the year's last quarter.

What's more, this positive news was countered by a flurry of big cuts at GM and Chrysler.

Two Ontario plants lost a third shift when Chrysler reduced output at its Brampton facility and GM dropped from three shifts to one at its Oshawa Truck plant. These actions shrunk capacity nearly 210,000 units for the province.

GM further cut capacity a whopping 388,000 vehicles by shutting down one of two Oshawa car lines and shifting all production to the other as it retools for launch of the new '10 Camaro.

But Ontario could move back into first place soon as it benefits from full-year production at Toyota's Woodstock plant and the possible addition of a third shift at Ford's Oakville plant to help build the new Lincoln MKT luxury CUV.

This combined capacity increase will more than balance the loss from GM closing the Oshawa truck plant.

Michigan, on the other hand, could see the closing of two plants that would reduce the state's capacity by more than 550,000 units over the next two years.

Ward's predicts GM next year will close its Pontiac East plant, where it builds fullsize pickup trucks, and Ford could shutter its Wayne plant when its Michigan Truck facility switches to building cars by mid-2010.

However, Michigan may get its No.1 ranking back in 2012, when Ford is expected to close its St. Thomas facility in Ontario, a move that once again would give Michigan a slight edge in production volume.