Overview
A lot has happened since our last update on Detroit, home of the U.S. automotive industry. So the TPR is once again reporting on this important metalworking region to see how the changes occurring in Detroit are affecting automotive supplier companies. As Roland Jones, Business Editor for MSNBC online, stated in a January article in which he reviews the automotive industry in 2005 and previews 2006, “From sinking sales to job cuts by the thousands, it’s safe to say that 2005 was a dreadful year for the American automotive business. Will 2006 be any better? Detroit certainly hopes so. But some industry observers say that despite new vehicles and far-reaching restructuring plans, serious challenges remain for America’s big automakers.” Jones goes on to say, “And those challenges look much like the ones that dogged Detroit in 2005 — stiff competition from Asia, tough union negotiations over crippling healthcare and pension costs, and a continued erosion of U.S. market share, as consumers continue to gravitate to foreign automakers such as Toyota and Honda, which have been at the vanguard of new consumer demand for cars with more fuel-efficient gas-electric hybrid engines.” Six months into 2006 and we have the luxury of hindsight showing Jones and others hitting the mark with their predictions. U.S. automakers are taking drastic measures to salvage what’s left of their rankings as the world’s leaders in the industry, and those measures include plant closings and sourcing off-shore. As we reported in our September 2004 Regional Spotlight, the Motor City is a one awash with activity in all sectors of tooling: die cast, injection mold, blow mold and stamp die tooling. Detroit is home to the world headquarters of both Ford Motor Company and General Motors Corporation. It is also the base for the North American headquarters of Daimler-Chrysler and Volkswagen. This week’s headlines in Crain’s Detroit Business, mostly supplier related, are a mixed bag of good and bad news:
ThyssenKrupp Budd closing Detroit plant;
about 350 workers affected
Big Three
date with president pushed to June 2
TRW
Automotive reports first-quarter net income of $47 million
Visteon reports first-quarter net income of
$3 million
American
Axle’s net income falls 35 percent in 1Q
BorgWarner posts revenue increase, improved operating income
Lear
posts improved net income on revenue increase
Delphi
Vice Chairman Wohleen to retire Combined with ever increasing energy costs and pressures from foreign competition, it’s clear that auto suppliers, including toolmakers and processors, have their work cut out for them if they are to remain viable in this volatile market. The TPR brings you news from the leading automakers themselves: Chrysler Group Reports April 2006 U.S. Sales Decline 4 Percent
Auburn Hills, Mich., 05/02/2006 - Against an exceptionally robust prior year comparison and in-line with overall industry performance, Chrysler Group reported U.S. sales for April 2006 of 190,095 units, a decrease of 4 percent (8 percent decrease unadjusted) over April 2005 sales of 206,546 units. All sales are being reported on a day-rate adjusted basis unless otherwise indicated. "The Dodge Caliber helped to increase the company's car business 37 percent in April, continuing the legacy established by the Chrysler PT Cruiser and the Chrysler 300 of head-turning vehicle styling. The Dodge Caliber confirms that the Chrysler Group is a serious contender in the car market," said Gary Dilts, Chrysler Group Senior Vice President - Sales. The strong global appeal of the all-new Dodge Caliber pushed monthly sales for the Dodge brand up 5 percent to 106,231 units, compared to April 2005 sales of 104,667. Sales of the all-new Dodge Caliber surged 78 percent over March 2006 sales to 11,236 units, marking the first month that the Dodge Caliber surpassed 11,000 unit sales. The popularity of the Dodge Caliber was reinforced in April as demonstrated by the average of 12 days supply of the vehicle on dealer lots. The Dodge Charger posted sales of 9,662 units, an increase of 11 percent over March 2006 sales and the third best month of sales since its introduction in May 2005. The Dodge Sprinter continues to make headway with commercial customers. The Dodge Sprinter posted sales of 1,646 units, an increase of 8 percent over April 2005 sales of 1,585 units. The flagship vehicle for the Chrysler brand, the Chrysler 300, posted sales of 12,804 units in April 2006, an increase of 4 percent over April 2005 sales of 12,837 units. In April, U.S. sales of the Chrysler 300 surpassed 300,000 units. Since its April 2004 introduction, the Chrysler 300 reached that milestone faster than any other Chrysler brand vehicle. The Jeep® brand is aggressively expanding its vehicle lineup in 2006 with vehicles that offer exceptional fuel economy, numerous safety features and significant value. Beginning with the Jeep Commander last fall and continuing with the all-new Jeep Compass, the unique Jeep combines trademark Jeep features and performance with the high fuel efficiency demanded by consumers. Followed by the Jeep Patriot and anchored by the Fall arrival of the all-new Jeep Wrangler and four-door Jeep Wrangler Unlimited, the Jeep vehicle lineup will more than double from three to seven models. For May, Chrysler Group announces the "0% is Back" incentive program on most Chrysler, Jeep and Dodge vehicles. Customers can choose from a variety of cash-back options ranging from $750 to $5,000 on selected models, or qualified customers can select 0% financing for 60 months on selected models through Chrysler Financial. The program runs through July 5. "Gas prices and interest rates are challenging consumers' spending habits and affecting everything from groceries and household goods to some sectors of automotive sales," said Dilts. "By bringing successful, highly fuel efficient vehicles like the Dodge Caliber to market that address customer concerns, Chrysler Group can expand our leadership beyond those segments where we are strongest: minivans, trucks and SUVs. We have five vehicles on the way that are long on style and easy on gas that will be in the marketplace by the end of 2006." Chrysler Group finished the month with 586,263 units of inventory, or an 80-day supply. Ford Motor Company: Monthly U.S. Sales Announcements Fuel Economy Rules in Ford's April Sales Results
DEARBORN, Mich., May 2 /PRNewswire-FirstCall/ -- Stronger demand for vehicles offering higher fuel economy helped Ford Motor Company offset lower demand for trucks and SUVs. Ford's April sales totaled 262,722, down 7 percent, but car sales were up 8 percent and truck sales were down 15 percent. Within trucks, crossover utilities (CUVs) posted higher sales and the Escape and Mariner hybrid utility models had record sales. Higher car sales were paced by the company's new mid-size sedans -- Ford Fusion, Mercury Milan and Lincoln Zephyr. Combined sales totaled 19,548 in April as each of the sedans posted record monthly sales. "The Fusion, Milan and Zephyr continue to surprise us on the upside," said Al Giombetti, president, Ford and Lincoln Mercury marketing and sales. "These new, fuel-efficient cars are helping our dealers to retain owners and capture new ones. We never have been in a better position to compete for customers in an environment of rising gasoline prices." Combined sales for Ford's CUVs (Ford Escape and Freestyle and Mercury Mariner) registered a sales increase of 8 percent in April and the Escape and Mariner hybrid models achieved record monthly sales. Sales of the Escape hybrid were 3,039 and sales of the Mariner hybrid were 381. Ford will expand its CUV portfolio later this year with two all-new CUVs, the Ford Edge and Lincoln MKX. Lincoln and Mercury posted higher retail sales for the second month in a row as sales of the Milan and Zephyr sedans and Lincoln Mark LT full-size pickup offset lower sales of discontinued products (Mercury Sable and Lincoln LS). Land Rover dealers reported record sales for April and year-to-date. Sales totaled 3,736 for the month (up 19 percent) and 15,035 year-to-date (up 30 percent). April was the seventh consecutive month of record sales for Land Rover. Ford Motor Company: Sixty 2005 World Excellence Awards Go to Ford's Global Suppliers
DEARBORN, Mich., May 3 /PRNewswire-FirstCall/ -- Ford Motor Company (NYSE: F) tonight awarded its highest supplier honor -- the World Excellence Award -- to its global suppliers for their exemplary performance in 2005. More than 150 of Ford's largest production and non-production suppliers from 17 countries attended the eighth annual event in Dearborn. The World Excellence Awards recognize suppliers who not only achieve the highest levels of cost, quality and delivery but who also embrace the vision to build on Ford's legacy and drive innovation to new heights. "Our World Excellence Award-winning suppliers are integral in our ability to address the needs of our customers today and tomorrow," said Tony (Thomas K.) Brown, senior vice president, Global Purchasing. "We are grateful for their ceaseless concentration on delivering value." The keynote speaker was Ford group vice president and chief technology officer Richard Parry-Jones, who said Ford and its suppliers share a vision and strive for many of the same goals. "You come from all over the world, speak many different languages and represent many different cultures. But you share this in common -- you are all a most valued part of the extended Ford family," Parry-Jones said. There are three types of World Excellence Awards -- Gold, Silver and Recognition of Achievement. The Gold and Silver Awards are given to suppliers that excel in quality, cost and delivery; 13 Gold Awards and 32 Silver Awards were presented. The Recognition of Achievement Award is given to suppliers who impact customer satisfaction by providing significant contributions in key areas: Environmental Leadership, Consumer-Focused Technology and Consumer-Driven 6-Sigma. Nine suppliers received Recognition of Achievement Awards and six other suppliers received Special Recognition Awards for an undisclosed project. Winners of the Gold Award (Quality, Cost & Delivery) are: * AK Steel Corporation; Middletown, Ohio - Steel * Arvin Exhaust, S.A.; Valencia, Spain - Exhaust Systems * BASF Canada; Windsor, Ontario - Automotive Coatings * BASF Coatings S.A.; Guadalajara, Spain - Automotive Coatings * BASF Coatings AG; Munster, Germany - Automotive Coatings * Beru AG; Ludwigsburg, Germany - Glow Plugs * Burgess-Norton Manufacturing Company; Geneva, Illinois - Piston Components * FTE Automotive Move GmbH; Muhlhausen, Germany - Clutch Actuation * Hankook Tire Co., Ltd.; Taejon, Korea - Tires * Harada Industry Co., Ltd.; Tokyo, Japan - Audio & Navigation Systems * Right Way Industrial Co., Ltd.; Tainan, Taiwan - Connecting Rods * Ronal Iberica S.A.; Teruel, Spain - Wheels * Sanden Manufacturing Europe, S.A.; Tinteniac, France - A/C Compressors
Winners of the Silver Award (Quality, Cost & Delivery) are: * Acumuladores Moura S/A; Sao Paulo, Brasil - Batteries * Akkardan; Kocaeli, Turkey - Propeller Shafts * Allevard Springs Ltd.; Rhondda Cynon Taff, United Kingdom - Suspension Coil Springs * Autoliv, Shanghai Vehicle Safety Systems Co., Ltd.; Shanghai, China - Air Bags * Bosch Systemes De Freinage SAS; Yzeure, France - Brakes * Cosma Body & Chassis Systems; Belle Plaine, Iowa - Stampings * Cosma Body & Chassis Systems; Montezuma, Iowa - Stampings * Cosma Body & Chassis Systems; Piedmont, South Carolina - Stampings * Cosma Body & Chassis Systems; Williamsburg, Iowa - Stampings * Delphi Automotive Systems; Juarez, Mexico - Sensors * Erbsloh AG; Velbert, Germany - Rolled Section * EWIE Canada Company; Windsor, Ontario - Special Tools * Hella Electronics Corporation; Flora, Illinois - Vacuum Motor Assemblies * Honsel GmbH & Co.; Meschede, Germany - Aluminum Castings * Intier Automotive Seating of America, Inc.; Excelsior Springs, Missouri - Seats * Johnson Controls, Inc.; Hudson, Wisconsin - Seats * Johnson Controls, Inc.; Shelbyville, Kentucky - Seats * Johnson Matthey (Pty) Ltd. CSD; Gauteng, South Africa - Catalytic Converter Internals * KS Pistoes Ltda.; Nova Odessa, Brasil - Engine Pistons * Metzeler Automotive Profile Systems SA de CV; Gomez Palacio, Mexico -Weatherstrips * Miniature Precision Components, Inc.; Richland Center, Wisconsin -Engineered Plastics * MTU Friedrichshafen GmbH; Friedrichshafen, Germany - Drive Shafts * Nishikawa Standard Company; Bremen, Indiana - Weatherstrips * Nishikawa Standard Company; New Haven, Indiana - Weatherstrips * PBR Australia (Pty) Ltd.; East Bentleigh, Australia - Brake Components * Quadrad Manufacturing; Guelph, Ontario - Transmission Shafts * Stabilus GmbH; Koblenz, Denmark - Gas Struts
* ThyssenKrupp Automotive Tallent Chassis Limited; Durham, United
Kingdom - Frames * TRW Canada Limited; St. Catharines, Ontario - Suspension Components * Valeo Engine Cooling, Inc.; Jamestown, New York - Engine Cooling * Wheels India Limited; Chennai, India - Wheels * Yumex Corporation; Hiroshima, Japan - Exhaust Systems
Winners of the Recognition of Achievement Awards are: * Freudenberg NOK - Consumer-Driven 6-Sigma * Visteon Corporation - Consumer-Driven 6-Sigma * Wallenius Wilhelmsen Logistics - Corporate Responsibility * Wexford Sand Co. - Corporate Responsibility * Johnson Controls, Inc. - Diversity and Community Service * Warn Industries, Inc. - High Mileage Improvement * GP Daikyo Corporation - New Consumer-Focused Technology * Sonora Forming Technologies - New Consumer-Focused Technology * Mituyoyo America Corporation - New Consumer-Focused Technology
Winners of the Special Recognition Award are: * Continental Teves, Inc., Auburn Hills, Michigan - Special Recognition Award * Delphi Automotive Systems, Troy, Michigan - Special Recognition Award * Lear Corporation, Southfield, Michigan - Special Recognition Award * Motorola, Shaumburg, Illinois - Special Recognition Award * Visteon Corporation, Van Buren Township, Michigan - Special Recognition Award * Yazaki Corporation, Canton, Michigan - Special Recognition Award
General Motors: GM Finalizes First-Quarter Financial Results
DETROIT – General Motors Corp. (NYSE: GM) announced that it had finalized its first-quarter 2006 financial results to reflect final determination of the first-quarter accounting treatment for the recently approved retiree health-care settlement agreement and other adjustments. As a result, GM earned $445 million, or $0.78 per diluted share of common stock, in the first quarter. These results compare with a preliminary loss for the period of $323 million, or $0.57 a share. GM reported a loss of $1.3 billion, or $2.22 per share in the first quarter of 2005. The difference between the preliminary and final results primarily reflects a change in the way GM will account for the health-care settlement agreement between GM and the United Auto Workers union. As part of the agreement, GM will make contributions to a new independent Voluntary Employees’ Beneficiary Association trust (VEBA) of $1 billion in each of 2006, 2007, and 2011. GM will also make supplemental contributions to this VEBA related to events like profit-sharing payments, wage deferrals from active employees, and increases in the value of GM stock. After discussions with the U.S. Securities and Exchange Commission on the proper accounting treatment for the settlement agreement, GM has determined that it will recognize the impact of the contributions over approximately 7 years, beginning in the third quarter of 2006 when the health-care changes are scheduled to take effect. Excluding special items, GM reported adjusted net income of $184 million, or $0.32 per diluted share in the first quarter of 2006, compared with a preliminary adjusted loss for the period of $529 million, or $0.94 per share. In the year-ago quarter, GM reported an adjusted loss before special items of $988 million, or $1.75 per share. The reported results for the first quarter of 2006 include special items totaling a favorable $261 million after tax, or $0.46 per diluted share. These results include a gain of $372 million from the sale of most of GM’s stake in Suzuki. This gain was increased by $55 million to reflect finalization of the foreign exchange treatment for the transaction. The gain was partially offset by restructuring charges totaling $111 million, or $0.19 per share, at GM North America, GM Europe and GM Latin America/Africa/Middle East. GM is also revising its first-quarter financial results for General Motors Acceptance Corporation (GMAC) to reflect finalization of the tax effect of the sale of GMAC Commercial Mortgage, which closed late in March. As a result, GMAC earned $637 million in the first quarter of 2006, compared to the previously reported preliminary first-quarter net income of $605 million. GMAC earned $728 million in the year-ago period. GM remains committed to reducing structural costs in North America by $7 billion on a running rate basis by the end of 2006. Running rate basis refers to the average annualized cost savings into the foreseeable future anticipated to result from cost savings actions when fully implemented. Due to the change in the accounting treatment of the UAW health-care settlement, GM now expects approximately $4.5 billion of structural cost reductions to be realized during calendar year 2006, compared with $4 billion previously estimated for calendar year 2006. GM plans to file a complete set of revised financial results when it files its 10-Q report with the Securities and Exchange Commission later this week.
Above chart taken from Employment Change by Community, Southeast Michigan, 1999-2002, a report by the Southeast Michigan Council of Governments. Employment Statistics & Export Figures The following tables are taken from the 2002 U.S. Economic Census (the latest available) for the Detroit Metropolitan area. Since 1997, the Census Bureau has broken down the Detroit Metropolitan area into three regions, so we have to give you the stats in that format. This is a complete representation of automotive manufacturing employment statistics and value of shipments (exports) associated with these companies’ production using the NAICS codes. The bolded first line shows figures for all transportation equipment produced in each Detroit region.
Chart 1:
Detroit-Warren-Livonia, MI Metropolitan Statistical Area
Chart
2: Detroit-Livonia-Dearborn, MI Metropolitan Division
Chart 3 :
Detroit-Warren-Livonia, MI Metropolitan Statistical Area
Trade Representation
SPE Automotive Division – D31 Automotive Division Hotline - (248) 244-8993
Original Equipment
Suppliers Association (OESA) Notable automotive related companies that are based or have plants here 3M Automotive
Tooling related events here
SPE Automotive TPO Global Conference 2006 Travel & tourism resources If you are planning on taking a business trip to Detroit, you might want to check out these online resources: www.detroit.worldweb.com and http://www.visitdetroit.com/ for accommodations, city guides, weather reports, travel resources and more. See also www.michigan.org.
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