Ford to shut Taurus plant for week after India strike image

Ford Motor Co. is scheduling a one-week shutdown of the Chicago factory building its new Taurus, a model that more than doubled in sales last month, caused by a strike at a parts-supplier in India that ended yesterday.

The closing of the Taurus plant next week will furlough 1,300 workers, Todd Nissen, a Ford spokesman, said in an interview. Nissen, who wouldn’t specify the amount of lost Taurus production, said the shutdown isn’t expected to disrupt sales of one of its fastest-growing models.

Rico Auto Industries Ltd. will resume full shipments to Ford and General Motors Co. after workers agreed to end the strike late yesterday, Surendra Singh Chaudhary, senior vice president in charge of human resources, said by phone today. About 2,200 workers struck the company’s Gurgaon plant near New Delhi, demanding reinstatement of 16 suspended workers. GM will resume production at a Michigan plant next week.

“It’s never a good thing to have a plant shut down, it’s bleeding money when you’re in that situation,” said John Wolkonowicz, an analyst at IHS Global Insight in Lexington, Massachusetts. “It’s truly a disaster when a plant closes down. Car companies make money when they build them and ship them to dealers.”

Sales of the redesigned Taurus sedan that debuted this year rose 60 percent in September and 141 percent in October from the previous version, which often had been consigned to the rental- car lot. It was redesigned at the behest of Ford Chief Executive Officer Alan Mulally, who adopted reviving the Taurus as a pet project shortly after he arrived from Boeing Co. in 2006.

Ford, based in Dearborn, Michigan, rose 30 cents to $7.75 at 4 p.m. in New York Stock Exchange composite trading. The stock has more than tripled this year.

GM Plant Restarts

GM is resuming production next week at its sport-utility vehicle factory in Delta Township, Michigan, that had been shut this week as a result of the Rico strike, said Chris Lee, a spokesman for the Detroit-based automaker. The Michigan factory, which builds the Buick Enclave and GMC Acadia, is scheduled to operate on one shift instead of the standard two shifts, he said.

“As we monitor the situation we hope to be in a position to bring back the second shift, but that remains to be seen,” Lee said. “We’re monitoring the parts shortage situation and we’re flexible.”

Ford is monitoring the Rico resolution to see when it can resume production in Chicago, Nissen said. Rico supplies Taurus transmission parts, he said.

“Dealers have a 40-day supply of the Taurus and we think we can work through the situation without it affecting sales,” Nissen said. “We’re pleased to see the labor situation in India is on its way to being resolved and we continue to work with Rico to improve parts flow.”

Rico agreed to take back eight suspended workers immediately, and another eight will be kept under suspension pending an inquiry, Chaudhary said. Prem Kumar, president of the Rico Auto Employees Union, also said workers agreed to end the strike following the settlement.

Source: Bloomberg