It's Not Just the Big Three

[legion]

Nissan to Cut Work Force at Its Tennessee Plants
SMYRNA, Tenn. (The Wall Street Journal)--Nissan North America Inc. said it expects to cut its hourly work force in Tennessee by about 5% through voluntary buyouts and early retirements, with productivity improvements and slower demand for pickup trucks and sport-utility vehicles prompting the decision.

The unit of Japan's Nissan Motor Co. said it is offering packages to 6,200 workers at its two plants located in the state, including its massive vehicle-assembly facility in Smyrna, which builds midsize cars, trucks and SUVs. The company expects 300 people to accept the offer but isn't setting an exact target on the amount of people who will leave, according to spokeswoman Vicki Smith.

The downsizing effort at Nissan is the latest indication of the toll that declining sales of large vehicles -- as consumers shift toward cars that offer better fuel-efficiency -- is having on auto makers in the U.S. General Motors Corp., Ford Motor Co. and DaimlerChrysler AG unit Chrysler Group have all been forced to scale back production of trucks and SUVs, which have long been the biggest source of profits.

Ms. Smith said Nissan has made critical strides in productivity at its Tennessee plants, reducing its need for manpower. At the same time, the production mix in Smyrna is shifting toward midsize cars and away from trucks and SUVs. Nissan is in the midst of launching new midsize cars under the Altima nameplate, including a hybrid-electric version.

Nissan is giving workers until March 13 to accept packages that promise a lump-sum payment of $45,000, plus $500 for each year of service. Workers at the company's Decherd, Tenn., transmission plant are included in the offer.

Nissan's North American production, not including Mexico, fell 11% in 2006, according to industry trade publication Ward's Automotive Reports. The company's sales fell 5% last year in the U.S., while its market share fell slightly to 6.2%, according to Autodata Corp.

Nissan's 2006 slide stood in contrast to the market-share gains that its Japanese rivals, Toyota Motor Corp. and Honda Motor Co., have registered.

For Nissan, North America represents a critical market that has provided sizable profits and notable growth opportunities. While many of the company's vehicles sold in the U.S. are built in North America, a sizable chunk continue to come from Japan, where a weaker currency contributes to generous profit margins.

The company employs 16,000 people in North America, with more than 9,000 working in U.S. production jobs. Unlike the Detroit auto makers, Nissan's work force is relatively young. Of the 6,200 blue-collar workers in Tennessee, only 450 are eligible to retire, meaning they are 55 years old with at least 10 years of service. The company supports relatively few retirees in the region.

The Smyrna plant was built in 1983 and was Nissan's first in North America.

[Jim Richards]

I wonder if the love affair with SUV's is nearing an end, or if this is just a bump in the road.

[legion]

Remember the 25' boats of the late 60's/early 70's? I think these things go in cycles.

I also think the baby-boom generation has enough cash that they don't really care a whole lot about gas mileage (even though they will complain about it loudly). Put another way: I don't think they'll choose gas mileage over big, safe (at least for them), cushy vehicles.