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Industry job cuts may top 1 million worldwide

November 23, 2010
Automakers and their suppliers may cut more than 1 million jobs, as much as one-tenth of the total workforce, as the global economic slowdown forces plant closures, an auto industry research group said.
The forecast comes after Ford Motor Co. said Jan. 11 it will cut 23,000 jobs and close five factories, after shedding 12,000 workers last year. The second-largest automaker posted its first annual loss in nine years as it lost market share to Japanese rivals such as Toyota Motor Corporation and Honda Motor Co. Other carmakers, with the exception of Japanese companies that have benefited from a weak yen, are expected to follow with similar cuts.
Overcapacity has led to low returns, aid Scotland-based Autopolis. Suppliers will follow with their own cuts, bringing the total auto industry staff cuts to 8 percent to 10 percent. The reorganization may last more than 18 months, said Graeme Maxton of Autopolis.
"Ford is the first of all others, all of whom have similar problems, apart from Toyota," Maxton said in an interview.
"Most of the cuts will be in the United States and Europe, where the drop in sales, in volume terms, will be the biggest and where the industry has the biggest overcapacity problem."
DaimlerChrysler AG, the No. 5 carmaker, intends to shut six plants through 2003 and has axed more than 26,000 workers to save money at unprofitable Chrysler. Isuzu Motors Ltd., a Tokyo-based truckmaker part-owned by General Motors Corporation, is shedding one-third of its 37,000 workers by March 2004.
The auto industry may have 20-30 percent overcapacity in its factories, Maxton estimates. In the United States, Ford made 3.6 million vehicles last year, though its factories could have produced 5.7 million units, or 37 percent more, he said.
All three U.S. automakers expect 2002 sales to be lower than last year's 17.2 million cars and light trucks.
While 2001 sales rose with interest-free loans after the Sept. 11 attacks, automakers either lost money or had thinner margins, Maxton said. 
Maxton expects U.S. vehicle sales to fall at least 10 percent this year, whereas automakers are likely to sell 8 percent fewer vehicles in Europe.
Asian sales probably will be in line with last year, with rising sales in China compensating for declines in Southeast Asia and Taiwan, he said. Sales in Japan and India will be little changed, Maxton said.