Show Stopper

The terrorist acts against the United States Sept. 11 took their toll on the auto industry an ocean away, as much of the official business of the biennial international auto show in Frankfurt came to an abrupt halt.

On opening day of the exhibition for the media, the same day of the attack on New York and Washington, stunned visitors at Europe's largest auto show crowded around media trucks parked outside and at some exhibitor booths to watch the chilling footage of the World Trade Center collapse and the chaos at the Pentagon, and they flocked to computer terminals to tap into the latest news on the Internet. Phone lines were jammed as frantic calls were made home to check on family members and friends.

The following day — the second scheduled press day at Frankfurt — the German car manufacturers association cancelled opening ceremonies. Security was heightened, with uniformed police in groups of two or more a much more noticeable presence both in and outside the exhibition halls. DaimlerChrysler AG put a moratorium on talking business at a small press dinner that night, but went on with the event in a show of “solidarity” with reporters from the U.S.

The show grounds were desolate early that Wednesday as nearly all automaker and supplier press conferences were scrubbed. Activity did pick up later that day and into the next, with some halls packed with show attendees.

It wasn't only American-based companies that called off their events but many others, including Japan's Denso Corp. and Germany's ZF Friedrichshafen AG and Siemens VDO Automotive. DaimlerChrysler was supposed to reveal more details about its plans to produce the Chrysler Crossfire, a stylish sports coupe first shown at this year's North American International Auto Show in Detroit, but the automaker scrapped its event as well.

A bomb threat at Hall 3, occupied mostly by Ford Motor Co. and its associated brands, forced an evacuation early in the morning and sent some executives home for good. The hall was reopened by midday.

Delphi Automotive Systems Corp., which had one of the first press conferences scheduled for Day Two of the show, managed to conduct an abbreviated briefing about its products on display — but only after Chairman, Chief Executive and President J.T. Battenberg III paid homage to the victims of the violence.

“This was an act of unbelievable proportions on our many decent people and on our society,” Mr. Battenberg told journalists. “The auto industry is a society, and one which believes that despite such acts we must stay together. … I would encourage everyone to try to find a way to contribute to the efforts to help the many victims and or their families over the next several days as we react to this crisis in our various homes and communities.”

Hours after the news hit here, automakers were mulling ways they might contribute to relief efforts. DaimlerChrysler officials immediately began re-evaluating their promotional or marketing spending plans, days later announcing the automaker would donate $10 million to aid the children of victims of the terrorist attacks. Others followed suit, with Ford Motor Co. and the United Auto Workers union and dealers joining up to provide some $2.5 million to various causes and lining up blood drives and arranging other support activities. Volkswagen AG set up a $2 million fund to assist victims of the attacks. General Motors Corp. donated $1 million to the American Red Cross and promised to match dollar for dollar any contributions by employees. It also made vehicles available to assist in recovery operations.

Several suppliers also set up relief funds including ZF Group North American Operations, which donated $250,000 to the American Red Cross Disaster Relief Fund. Denso donated another $200,000 to the relief effort and Goodyear Tire and Rubber Co. kicked in $1 million.

“The auto industry also has many great strengths and determination,” Mr. Battenberg told the media the day after the strike. “And while we will continue to grieve, we must not allow this act of violence to stop us from conducting our lives and our businesses in the economies of the world. That was the message that President Bush just delivered to the American people, and it is in that spirit that we will move on. Accordingly we will set aside much of our anger and much of our feelings as we try to conduct business in an orderly manner.”

The industry was anything but orderly the day the terrorists hit, as vehicle assembly and supplier plants were evacuated, and the Canadian and Mexican borders were closed, disrupting the flow of parts for vehicle production. Production of an estimated 52,000-plus cars and trucks were lost to the disaster that first week, and plants still were being hampered by the flow of goods — in part due to long delays for trucks crossing the Windsor-Detroit border — the following week. Ford quickly announced it was lowering its third quarter earnings forecast, saying it will net less than the 10 cents a share predicted earlier. U.S. auto stocks took a double-digit plunge when the market reopened Sept. 17, as did some shares of major suppliers. And even Toyota Motor Corp., Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. stocks slipped as much as 12% in trading in Tokyo.

Several automakers also began to curtail executive travel in mid-September. Media programs were scrapped by Toyota and others. GM, which with Delphi had chartered a flight from Frankfurt to get executives and journalists home from the show, said it would relocate a “small number” of employees and their families from the Middle East as a precautionary measure.

The impact of the terrorist attacks on the Frankfurt show was a blow to German automakers, which were counting on the exhibition to spark new car interest and spur sales in their struggling home market. But German Chancellor Gerhard Schroeder was vowing to fight any negative economic impact. “We hope to send a signal from Frankfurt to show that together we can steer economic development in the next few months in such a way that no one need fear for their jobs or prosperity,” he told reporters.