Ford Motor Co.'s Automotive Components Holdings LLC and Johnson Controls Inc. have ended talks on JCI's proposed purchase of Ford's massive auto interiors plant in Saline, Mich., which darkens the future for the plant and its 1,700 employees.
Ford's ACH subsidiary said in an Aug. 8 news release that it is ``considering all options'' for the 1.6 million-square-foot plant with plastics processing and assembly. ACH noted that no decisions have been made about the site's future except that ``ongoing operations will continue beyond 2008.''
While that may seem like a short time line, ACH spokeswoman Della DiPietro said that gives the Saline plant a life beyond an original 2008 deadline that Ford had set to sell or close 17 ACH plants.
But industry watcher Jim Gillette said he sees a bleak future for the Saline site. Unless a new buyer steps in quickly, he expects Ford to close the plant and close it soon.
``The handwriting is on the wall,'' said Gillette, director of supplier analysis for CSM Worldwide, a Northville, Mich.-based consulting group. ``They probably should close it. They need to remove [production capacity] from the mix, and that would actually benefit other suppliers.''
The Saline plant was one of 17 former Visteon Corp. plants that Dearborn, Mich.-based Ford took back in 2005 with the intention of selling or closing them. While the facility has produced award-winning interiors including a two-shot molded instrument panel for Ford's Mustang it is also unwieldy, covering more than a million square feet of manufacturing space and sitting on 189 acres. Gillette referred to it as a ``monster.''
In 2002, it turned out 3.1 million instrument panels and another 1.2 million center consoles. It includes injection molding, vacuum forming, powder-formed PVC skins and reaction injection urethane foam molding.
It was always going to be difficult to sell, but in November, JCI's Plymouth, Mich.-based auto unit and Ford announced that they had signed a memorandum of understanding for the sale.
The two companies have been in talks since then, Ford stated in its news release, but added that, ``business conditions have deteriorated dramatically over the past several months.''
Slowing auto production, higher gasoline prices and a weakness in the housing industry have battered the industry. In addition, JCI bought 70 percent of the interior operations of bankrupt supplier Plastech Engineered Products Inc. last month, which brought it another 29 plants it is running as JCIM LLC.
``It's a different world, obviously,'' Gillette said.
Saline's best hope could be if an international auto supplier from an emerging region such as China or India sees the plant as a good opportunity to break into the North American market, Gillette said. ``I feel badly for the people that will probably lose their jobs, but there is capacity that you've got to take out of production,'' he said.
The Saline announcement comes less than two months after Ford terminated a memorandum of understanding to sell the ACH lighting plant in Sandusky, Ohio, to Meridian Automotive Systems Inc. of Allen Park, Mich. The Sandusky plant, like Saline, also has confirmed business beyond the original 2008 deadline, DiPietro said.
Negotiations are continuing with Flex-N-Gate Corp. of Urbana, Ill., to buy ACH's plant in Milan, Mich., according to DiPietro. The Milan site has blow molding and injection molding and manufactures bumper fascia and fuel tanks. ACH has completed the sale of five plants and one business unit out of the original group of 17 sites.