Wednesday, December 24, 2008

Foreign automakers in the U.S. cut back.


By Clifford Krauss / New York Times

SAN ANTONIO — Sales are off and production is down, so workers at the Toyota Tundra truck factory here are taking classes: how to handle tools safely, how to get along better with colleagues of varying backgrounds. Some have even cleaned local parks and fed the hungry while collecting Toyota paychecks.

"We'd rather be building trucks," said Mike Goss, a Toyota spokesman. "I'm trying to imagine how many trucks we would be selling, with gas prices where they are now, if people were spending money."

But people are not spending money these days, and sales of the Tundra and other Toyota vehicles have hit a wall. The sales slowdown, and some of the accompanying business problems, that have engulfed the Detroit automobile makers are rapidly spreading to the world's strongest auto companies. To cope, Toyota, Honda, Nissan and Hyundai are all slowing American production, and many foreign auto companies are putting off plant expansions.

For the most part, the so-called auto transplants — foreign-owned car companies with major operations in the United States — have deep pockets and ample credit, and they are not facing potential bankruptcy like General Motors and Chrysler.

But none of the foreign companies have proved any better than the Detroit Three at predicting how gasoline prices would gyrate or the extent to which demand for cars and trucks would collapse in a deepening recession.

"The transplants are facing many of the same constraints that the domestics are facing: excess capacity, especially for light trucks like S.U.V.'s and pickup trucks," said Rebecca Lindland, an auto analyst at IHS Global Insight, a forecasting company. "The difference is that this is the first time they have faced these kinds of issues. It's sort of a whole new world for them."

The big question is how long the transplants can, or will, keep factories like the one in San Antonio operating at a snail's pace without laying off full-time workers. So far the companies have fired only temporary workers, but the future is clouded by the potential depth of the recession.

"The worst-case scenario is the current sales rate stays in place or gets worse for many years," said David Whiston, an auto analyst at Morningstar. "But that's stuff that is too scary to think about."

The tale of the Tundra and the San Antonio plant is part of a larger story of unprecedented juggling for Toyota, the biggest foreign car producer in the United States by far and a company long known for its skill in planning and execution. Until recently, the company had been struggling to keep up with demand in North America.

1 comment:

airJackie said...

Foreign Auto Makers are waiting to see what Ford does. GM/Chrsyler are making deals and maybe selling their companies. In the end this could be very good for car buyers. What will be done with all those extra cars when the companies do start back to work? Now I wouldn't mind if they gave me a BMW just to ride back and forth to the store. I hate to drive now, but if it's free I'll take it.