Visteon goes it alone: Visteon may invest, but Ford will sell restructured parts plants.

Visteon might invest and expand production in the six Mexican production complexes it now controls after its restructuring deal with Ford. But analysts say the fate of the four complexes that Ford took over, and has slated for sale, is far less certain.

Automaker Ford formed Visteon by spinning off its spare parts plants in 2000. The move proved disastrous, losing Ford more than US$3 billion in a little over four years. In late May, Ford agreed to a final bailout; spending another US$1.25 billion to restructure Visteon and take back 24 production facilities in North America.

"We are going to focus and invest in people and technology," said Jean Claude Pinet, spokesman for Visteon in Mexico. "We want a lean, svelte operation, but we have no plans to sack anyone."

Ford has reduced Visteon's Mexico staff by 2,000 to around 8,000 by taking on the Autovidrio and El Jarudo plants in Ciudad Juarez, the Lamosa complex in Nuevo Laredo and the Vitroflex plant in Monterrey, which is a joint venture with Mexico's Vitro.

Visteon said in May the deal would cut its labor costs in half across the Nafta zone, to US$17 per hour from US$38.

Pinet said the "new" Visteon now had no plants with more than 1,500 staff. Before it had six of the behemoths in North America.

Visteon as a whole will focus on lighting, climate and interiors, said Pinet.

And Visteon might even consider opening new factories, providing it had a large contract with a new client to justify doing so.

The 24 Ford-managed North American plants will be controlled by a new temporary business unit, where they will be restructured and prepared for sale to other parts manufacturers.

"So far only a memorandum of understanding has been signed that protects the company's supply of critical parts and components, and creates opportunities for production material cost savings," said Ford de Mexico's director of public relations Herman Morfin Ortiz.

Ford said it will cut 5,000 jobs in the United States alone, where former Visteon employees number more than 17,000. It has not commented on its plans for the Mexican plants.

However, Martin King, auto industry analyst at influential ratings agency Standard and Poor's, said the Mexican plants might experience a less painful restructuring than their U.S. counterparts.

"The U.S. plants have been a real burden for some time," he said. "Visteon's Mexico operations are not a burden. They are on a better competitive footing."

S & P cut Ford's rating to "junk" or non-investment grade at the start of May, citing losses at Visteon as an important factor.

"The few plants that are closely tied to the U.S. plants are going to Ford," said King. "They make parts that are transformed into another part in the States."

And the fate of those plants will depend on what happens to the down-stream plants in the United States, he added.

"The U.S. plants going to Ford are clearly very unprofitable. With the Mexican plants it is hard to be sure because they are so closely tied to the U.S. plants," King said. "Those facilities are not really selling to outside parties, so it all depends on the price the Mexican Visteon plant chooses to charge the U.S. plant."

Ford will want to restructure the recently acquired plants within six months to a year, said Harley Shaiken, a researcher on labor relations and professor at University of California at Berkeley.

He said it was likely Ford had taken on the least profitable operations from Visteon, hoping the remaining operations would thrive and stop costing money. But he warned that the new Visteon should not expect an easy ride from now on.

Alexander Manda is a freelance journalist who lives and works in Mexico City. He can be reached at [e-mail]