Ford Motor Co. is officially getting out of the traditional minivan business.
Production of the Mercury Monterey ended this week, Ford spokeswoman Sara Tatchio confirmed Thursday. She would only say that its sister vehicle, the Ford Freestar, would continue through the 2007 model year. But another source said production of the Freestar will halt next spring.
The end of Ford's minivans will have an impact on local factory workers. Ford's Van Dyke Transmission Plant in Sterling Heights will cease production of the transmission used in the Monterey and Freestar in November.
The loss of the transmission, which also is used in the soon-to-be-discontinued Ford Taurus, would have cost the plant about 500 jobs, but a new agreement between Ford and the United Auto Workers will save 300 of those positions. Ford is likely to offer buyouts to workers at the plant to minimize layoffs.
No other Ford factory makes transmissions for the minivans and the company has no new minivans in its pipeline. The move means Ford will be the first major automaker to stop selling traditional minivans, once one of the hottest segments in the U.S. market.
In its place, Ford is developing a new generation family-hauler based on the stylish Ford Fairlane concept unveiled at the 2005 Detroit auto show.
It's not hard to see why Ford is changing direction. Ford's minivan sales have tanked in the face of competition from rivals such as DaimlerChrysler AG's Chrysler Group — inventor of the minivan and long the segment leader — and Japan's Toyota Motor Corp. and Honda Motor Co.
Ford's minivan sales have dropped from more than 250,000 units in 2000 to fewer than 86,000 units last year, when the Monterey and Freestar accounted for 7.8 percent of the segment. Things have only gotten worse this year.
Ford sold 3,374 Freestars in July — half as many as during the same period in 2005 — and year-to-date sales were down more than 27 percent. Sales of the Monterey fell even faster, dropping nearly 53 percent in July and almost 43 percent for the first seven months of 2006.
As The Detroit News first reported in June, Ford has given the green light to a new vehicle based on the Fairlane concept. Unlike a traditional minivan, the slab-sided Fairlane has no sliding doors. Ford calls it a “people mover” and says it could create a new market niche.
Some analysts see the Fairlane as a full-size crossover that combines the best of cars and SUVs.
“They are rethinking the minivan,” said Erich Merkle, a brand analyst with IRN Inc. in Grand Rapids. “It makes sense. The minivan segment has become far too competitive. Putting those resources into a full-size crossover is a more prudent choice for Ford.”
Mazda Motor Corp., which is controlled by Ford, still sells the MPV minivan in the United States.
Workers have had to make hard choices as Ford slashes factory output and realigns its plants to match product changes.
On Monday, workers at Van Dyke Transmission were briefed on the details of a new competitive operating agreement between the company and the United Auto Workers.
Under the deal, the company will be able to outsource a number of jobs at the plant, including building maintenance, groundskeeping, construction and janitorial positions. Employees will also be reorganized into teams made up of production workers and skilled-trades people.
As a result of these concessions, the Van Dyke plant will get a new transmission, set to start production in January 2008, which will be used on a future vehicle.
The Van Dyke plant already is at work on Ford's new six-speed transmission, which was co-developed with General Motors Corp., for new Ford Edge and Lincoln MKX crossovers, due on the market late this fall.
The Van Dyke plant, which opened in 1968 and employs just under 1,200 UAW workers, is the latest Ford factory where a competitive operating agreement was approved to secure future work.
“We're working hard with all of our plants to make them the most competitive in the world,” said Ford spokeswoman Anne Marie Gattari. “They are one of the plants that have made some good progress in improving competitiveness and attacking waste.”
A similar agreement was reached with workers at Van Dyke's sister plant in Sharonville, Ohio, which makes parts for the new six-speed transmission.
UAW Local 2280, which represents workers at Van Dyke, did not respond to requests for comment.
