Slowing economy puts brakes on Alabama's auto industry

by Eileen Jones - bio | email

VANCE, AL (WSFA) - The slowing economy is putting the brakes on part of down Alabama's booming automobile industry. Honda and Mercedes plants in Alabama are reducing production because of slumping sales. So, will Montgomery's Hyundai plant join them?

First, you can add Mercedes Benz to the list of companies now feeling the pinch from the downturn in the economy.  Mercedes will cancel its night shifts later this year and will lengthen employees' Thanksgiving and Christmas holidays.

Secobndly, Honda is also going through changes. It builds minivans and sport utility vehicles here and plans to halt production for two days next month and eliminate its second shift every Friday for the next three months.

Hyundai Manufacturing's Robert Burns explains why. "Manufacturers that have  trucks or larger SUV's are certainly seeing an impact."

For the past two years, Hyundai sales were up 85% for their SUV - the Santa Fe, but down 33% for the Sonata sedans. Now that money is tight, its sales are the other way around.

"In the month of June about 60% of our Sonatas were sold with four cylinders engines and our volume was really very strong. We had an increase of about 13% over a year on the Sonata sales. Now, contrary the Santa Fe had a slight reduction and that's because of that demand shift," says Burns.

Unlike other manufacturers, Hyundai can shift its production. That means, they will go with the demand and make more fuel efficient Sonatas and fewer SUV's. In other words, Hyundai is planning no changes, no cut backs and also no promises.

"Our vice president of production meets with team members every month - the very first week of the month and discusses sales and discusses the production plan for that month, and that's when I find out. So, from month to month we make a determination," Burns added.

Honda and Mercedes say there will be no layoffs or cut backs - just a reduction in the employees work schedule. Those companies also say their employees may use their vacation or personal leave time during the shutdowns.