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Honda Adds Overtime at Two Plants After Uptick in Sales

August 17, 2009
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Honda Motor Co. is adding overtime Saturdays starting in September at two U.S. plants in response to dwindling inventories spurred by rising sales.

Honda’s factory in Lincoln, Alabama, will add three Saturdays in September and October, said spokesman Ed Miller. Its plant in East Liberty, Ohio, will add multiple Saturday workdays from September to the end of the year. Miller declined to say how many overtime Saturdays that plant will have.

“In the last couple of months, we’ve noticed these upticks in sales of certain models, so we felt we had to adjust upward,” he said.

Although dealers could legally complete Cash for Clunkers transactions any time in July, Honda has not assessed the impact of the federal voucher program on its inventory levels, Miller said.

“Not in the Honda way of having real, nailed-down data, which we always like to have,” he said.

Honda’s Alabama and East Liberty plants will operate with their usual two shifts during their weekend production. Honda is also gradually ramping up production at its plant in Greensburg, Indiana, as the company had planned to do when it phased out Civic production from East Liberty earlier this year, Miller said.

Cash for Clunkers has been so successful that Congress tripled its initial $1 billion in funding. The National Highway Traffic Safety Administration, which administers the incentive, said dealers had submitted 358,851 clunkers transactions as of August 14. Those are worth $1.5 billion in voucher reimbursements.

The federal program’s success lifted U.S. light-vehicle sales to an 11.1-million-unit sales rate last month. That was the first month demand had risen above 9.9 million units this year. For comparison, sales totaled 16.2 million in 2007.

Some analysts are predicting August will be even stronger than July.

General Motors, Ford, Toyota and Mazda are among automakers joining Honda in boosting North American production as supplies of some models shrink.

General Motors Co.’s third-quarter production schedule is set, and the automaker can make only slight adjustments, said Mark LaNeve, GM’s vice president of U.S. sales.

“We’re kind of running all out,” LaNeve said. “We are lean on inventory right now. We are looking at adding production to the current schedule in the fourth quarter and the first quarter.”

So far, GM has ample stocks of fuel-efficient vehicles that are popular in the Cash for Clunkers program.

Ford Motor Co. is adding 10,000 units in the third quarter. That brings planned North American production for the period to 495,000 vehicles, up 18 percent from year-earlier levels. Ford plans to produce 570,000 vehicles in the fourth quarter, up 33 percent from a year earlier.

Ford added 15,000 vehicles to the fourth-quarter production plan from an earlier internal forecast to replenish inventories depleted by clunker sales.

Toyota says it is increasing production by 65,000 units of its most popular vehicles.

Mazda has pulled forward some Japanese production. Mazda also is ramping up production at its plant in Flat Rock, Michigan.

Mazda spokesman Jeremy Barnes expressed concern that automakers might overcompensate with their production runs, leaving dealers stuck with oversupplies of 2009 models if the Cash for Clunkers fund runs out quickly.

“It’s a challenge to re-spool up and get suppliers back online,” Barnes said. “You can’t just switch it on and off overnight. So it’s a juggling act. We hoped the program was going to be brilliant, but no one knew how well the program was going to go.”


Filed by Chrissie Thompson and Amy Wilson of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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