TCC's Daily Edition: 10/02/01

October 1, 2001


The U.S. auto industry held its breath Monday waiting for September sales figures that are scheduled to be released today. Auto showrooms were nearly vacant in the two weeks following the attack on the World Trade Center and the Pentagon, although they did pick up somewhat in the last week of the month. The question seems to be not whether they are down, but by how much. A steep decline in domestic auto sales could be another signal that U.S. economy is headed into recession and another round of cutbacks is pending at automakers and suppliers.


While the American industry waited for its September sales figures, the Japan Automobile Association released its sales figures for last month, and they were not good. Sales of new cars, trucks and buses dropped 4.1 percent last month in Japan, their biggest decline in nearly two years. Sales of passenger cars dipped 1.4 percent to 271,455 vehicles, but trucks took a 10.8 percent tumble with only 98,463 units being sold. No surprise, the association pointed to a downturn in consumer confidence after the Sept. 11 attacks. Sales at Toyota fell 8.7 percent, while Nissan's sales dropped 4.8 percent. The only bright spot was at Honda, where sales increased for the 22nd straight month. Honda's sales increased 28.6 percent largely on strong sales of its minivan models and the Fit subcompact.


Facing potentially devastating liabilities from asbestos litigation, Southfield, Mich., supplier Federal-Mogul Corp. and its U.S. subsidiaries voluntarily filed for financial restructuring under Chapter 11 of the U.S. Bankruptcy Code. "We have determined that the Chapter 11 and administration processes are the only way we can effectively structure payments for claimants without financially crippling the operations of Federal-Mogul," said company CEO Frank Macher. "The operations of Federal-Mogul are fundamentally sound." The company said bankruptcy protection will allow it to develop a plan to resolve its asbestos liabilities, and that business will continue without job losses or facility closures. Meanwhile, the New York Stock Exchange is considering dropping Federal Mogul from its listings. The company's stock price had fallen below the NYSE minimum of $1 a share over a 30-day period. Last Friday, the stock closed at 65 cents.


The United Auto Workers’ efforts to organize workers at Nissan’s plant in Smyrna, Tenn., got a boost from the U.S. National Labor Relations Board when it rejected Nissan’s request to add 300 workers at another Tennessee plant to those voting to approve union representation. The UAW opposed adding those workers because it feared that they would dilute the number of workers who would be in favor or organizing. The results of the vote could be known late Wednesday. If the UAW is successful, it will be the first time in its 66-year-history that it has organized a plant wholly owned by a foreign automaker.


Declining vehicle sales in North American has forced Ford to cut European production of engines and transmissions. In December, Ford will idle the Blanquefort, France, factory, which makes transmissions for Ranger pickup trucks. It will also idle the Cologne, Germany, engine factory later this month. More than 2,500 employees work at Blanquefort, while Cologne employs 1,800 workers. It makes engines for Rangers and Explorer sport-utility vehicles.

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