Ford to Honda Move to Boost Capacity as U.S. Sales Rise

Automakers, enjoying the best U.S. sales since 2007, this week disclosed plans to spend $434 million to boost their capacity to make vehicles and engines in North America.

Ford Motor Co. (F) said it’s looking to squeeze more vehicles out of every factory on the continent. Honda Motor Co. (7267) said yesterday it will invest $215 million in Ohio, including about $180 million at an engine plant, the Tokyo-based automaker said in a statement. Chrysler Group LLC yesterday said it will add capacity and almost 300 jobs at a Michigan engine plant.

The carmakers are responding to increased sales, including a 14 percent July jump in U.S. car and light-truck deliveries to 1.32 million, according to Autodata Corp. The annualized industry sales rate, adjusted for seasonal trends, was 15.8 million, accelerating from 14.2 million a year earlier. The July results keep the U.S. on track for its best year since 16.1 million vehicles were sold in 2007.

“We’re still looking at how we get more out of every plant, and that’ll be a focus for as long as the demand is as strong as it is,” Jim Tetreault, Ford’s vice president of North American manufacturing, told reporters yesterday near Traverse City, Michigan. He spoke later during the Center for Automotive Research’s annual Management Briefing Seminars.

Photographer: Jeff Kowalsky/Bloomberg

Employees work on the assembly line at the Ford Motor Co. Dearborn Truck Plant in Dearborn, Michigan. Close

Employees work on the assembly line at the Ford Motor Co. Dearborn Truck Plant in Dearborn, Michigan.

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Photographer: Jeff Kowalsky/Bloomberg

Employees work on the assembly line at the Ford Motor Co. Dearborn Truck Plant in Dearborn, Michigan.

Ford, already facing low inventories of its Fusion sedan, may add more capacity for “some products,” he said.

Asked if the Dearborn, Michigan-based company needed additional capacity for the Fusion sedan and Escape sport-utility-vehicle, Tetreault said, “We’re working on it.”

Plant Investments

The popularity of Ford’s new Fusion sedan has left inventory low and the automaker is adding a second shift of 1,200 workers at its assembly plant in Flat Rock, Michigan, to start building Fusions there this quarter.

A third shift could be added there, Tetreault said yesterday.

“If sales and marketing says we need more, we’ll give them more.”

Separately, Chrysler said it intends to spend $52 million at its engine factories in Trenton and Dundee, Michigan, to boost capacity of the Tigershark engine. The Auburn Hills, Michigan-based automaker will add 298 jobs at the Trenton plant, according to a statement. Chrysler is majority owned by Turin, Italy-based Fiat SpA. (F)

General Motors Co. (GM) said Aug. 6 that it’s increasing a planned Spring Hill, Tennessee, plant investment by $167 million. The Detroit-based automaker is adding $40 million to a previously announced mid-size vehicle program and will spend $127 million on a second mid-size vehicle program.

The moves will retain or create 1,800 jobs and bring total spending at the Tennessee plant to $350 million, according to a statement.

Brazil, Too

Automakers are also investing in South America. Honda said it plans to double its capacity in Brazil, where it will spend 1 billion reais ($435 million) to build a second factory, which will open in 2015.

GM fell 1.3 percent to $35.48 at the close in New York. Ford declined 1.5 percent to $16.77. GM has increased 23 percent this year, while Ford has gained 29 percent, both exceeding the 19 percent climb for the Standard & Poor’s 500 Index.

To contact the reporter on this story: Tim Higgins in Acme, Michigan, at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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