Photographer: Luke Sharrett/Bloomberg

Ford to Idle Four Factories as Slowing Sales Bloat Inventory

Updated on
  • Plants building F-150 pickup, Escape SUV to close temporarily
  • Automaker says this year’s earnings guidance will not change

Ford Motor Co. is temporarily halting one of two plants that builds the top-selling F-150 pickup as it idles four factories this month amid slowing U.S. auto sales.

This week, Ford is shutting its Louisville, Kentucky, factory building the Escape and Lincoln MKC sport utility vehicles, as well as two plants in Mexico that make the Fusion sedan and Fiesta subcompact, according to an e-mailed statement. Next week, the second-largest U.S. automaker said, it will close the F-150 factory near Kansas City for seven days. And starting Oct. 31, the Louisville plant will be idled for another week, Ford said.

The plant closings follow last week’s idling of Ford’s Mustang factory in Michigan after sales of the sports car plunged 32 percent in September. U.S. auto sales are slowing as many analysts predict the industry won’t match last year’s record of 17.5 million cars and light trucks. The temporary shutdowns do not change Ford’s guidance to investors that it expects pretax profits of about $10.2 billion this year, Bob Shanks, chief financial officer, said in an interview. 

"What we’re doing here with these plants and these product lines is adjusting to demand," Shanks said. "We’re just at the more mature part of the cycle and while we still see strong demand, we do think we’ll start to see some softening."

F-series sales fell 2.6 percent last month as a pickup price war heated up. Escape sales dropped 12 percent in September as Ford faced competitive pressure from the Toyota RAV4 and Honda CR-V. Fusion sales plunged 18 percent and Fiesta was off 40 percent as car sales continue to languish with low fuel prices pushing buyers into trucks and SUVs.

Felker said Ford is trying to match production with demand. Inventories have been swelling on the models the automaker is idling. The company had 93 days supply of F-series pickups, which includes the F-150, at the end of September, up from 83 days a year earlier, according to researcher Autodata Corp.

Escape inventory grew to 64 days, from 50 a year earlier, while Lincoln MKC climbed to 96 days from 91 last year, according to Autodata. A 60-day supply is considered optimal.

Ford had 72 days supply of Fusion sedans at the end of last month, up from 51 a year earlier, and it had enough inventory of the Fiesta to last 77 days, up from 56 in September of 2015, according to Autodata.

(Updates with CFO Quote in the fourth paragraph.)
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