Residual impact from slumping automobile sales – especially recent demand drop-off of SUVs and pickup trucks – is having a local trickle down effect, resulting in at least temporary lay-off of approximately 30 individuals at the Spartan Light Metal Products Plant in Mexico.

"A week or so ago, one of our larger customers that is serviced from that plant – Ford – called down the orders on one of the parts that we make for their F-150 pickup trucks," said Philip Zampogna, vice president of human resources for the firm. "It was kind of a substantial call-down (i.e., scale back)." Stating "they (customer) give you a projected volume," he added: "I think it's probably about 30 percent of the remaining orders for the remainder of the year" of the particular F-150 product. The specific product line was not identified.

Regarding the impacted personnel – employed on the second shift – Zampogna said: "How we handle it, is we have affected folks out on layoff, and for the first 30 days, we pay for their insurance benefits, and things of that nature. And in case it's temporary, we bring them back. But it is very difficult in this environment, as you might imagine, to understand whether it's more permanent or its more temporary." He added that the firm retains recall rights for 90 days of employees considered to be under temporary layoff status.

The layoffs are likely a reflection of broader macroeconomic concerns. Weakened credit status, deflating asset values, stagnant wages, and across-the-board commodity inflation – especially fuel prices – are having sea-change effect on national and international industries and economies, with automotive manufacturers among the hardest hit.

On Monday, Chrysler Motors announced it will indefinitely close one production plant in St. Louis, while scaling back production at another facility in the city. Likewise, General Motors stock shares recently slumped to a 53-year low. Even venerable foreign car companies such as Toyota and Honda have struggled against economic headwinds.

More specifically, regarding Ford, the company announced on June 20 that it would delay introduction of its new F-150 model until late fall rather than its initial target of late summer. F-150s have traditionally been among the company's biggest sellers and most profitable vehicles. But with per-gallon gas prices pushing or exceeding $4, consumers are shifting away from large size SUVs and trucks.

In its announcement last month, Ford stated it is "revising its product plan to add more small cars, crossovers and fuel-efficient powertrains," with preliminary plans to step up its North American production of the Ford Focus and Ford Fiesta compact cars, effective in 2010.

Still, while no business enterprise is guaranteed on-going success, especially during turbulent financial periods (witness recent collapse of the Bear Stearns investing firm and the demise of several airline companies), Zampogna said Spartan's overall current business outlook remains solid, if not exceptional.

"We consider ourselves still profitable as an organization, which a lot of automotive suppliers can't say," he said of the privately-held firm. "Certainly we're affected by the current economy, so our profitability may not be quite as high as it typically has been, or what we'd like it to be. But we still have a solid business plan, and we are still profitable at this point."

That business plan includes five new product launches from the Mexico facility scheduled in upcoming months, according to Zampogna, who confirmed that many of the new products planned for production are car-related, rather than truck or SUV.
"We have those five new product launches for existing customers coming to that facility in the next four to six months. So we're doing all the pre-launch work right now, and we should start to see normal production volume from that in the last quarter of the year and the first quarter of next year. So although I don't want to be misleading and say that I think this is a temporary lull, because it is tough to know for certain, I would say that the facility is still strong, and that we are rolling out five other new product launches, which means new business with existing customers. And again, who knows whether that will simply add to our sales volume, or maybe replace some of the volume that you would lose based on the Ford business. But we are still very committed to the community and the facility, and certainly believe that we still have a strong customer demand, even outside of the Ford group."

Other customers whose products are manufactured at the Mexico plant include Toyota and Honda.

Meantime, phone calls made to the Mexico facility indicate it is closed all week, with a recording stating it is scheduled to resume normal hours of operation next Monday. But Zampogna said the shut-down is not unusual. "That is a standard shut-down we have across our entire system, across all three plants. And it is typical in all manufacturing, and especially what we do. You shut down because, number one, a lot of your customers have shut-downs. But number two, it gives us an opportunity to do a lot of p.m. (preventative maintenance) on machines and a variety of other things. So it's not unusual. We go through shut-downs every year. Generally, it occurs every year, unless your volume is so high, customer demand is so high that you can't afford to shut down. I have been with the company for five years, and we have gone through varying degrees of shut-down every year that I have been here."

Noting hourly employees can use collected personal or vacation time this week, but otherwise are not paid, the human resources executive added: "Mexico was fortunate I think last year because customer demand was so high, I don't think they could afford to shut down."

The recent second shift layoff follows at-least temporary layoff earlier this spring of approximately 25 workers at the facility. Zampogna noted that a few of those personnel have since been called back for work. Exact current number of employees at the plant could not be determined at press time, but records indicate the company – considered a leader in aluminum and magnesium die castings – employed approximately 250 at the beginning of the year.