Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from the line of John Murphy, representing Merrill Lynch.
John Murphy - Merrill Lynch
One thing that seems to be getting lost in the shuffle here I think is that your capacity utilization rate in North America was incredibly low in the first half of this year. By my rough calculations, it is just a little bit better than 50%. I was just wondering if that jives with your calculations, and how we should think about operating leverage as that capacity utilization improves, because that is a horrifically low level, and the losses are pretty good performance in the face of that.
Alan Mulally
We are looking at that now. Are you thinking of manned?
John Murphy - Merrill Lynch
I'm thinking two shifts, straight time, basically assuming the capacity in North America is about 2.9 million.
Lewis Booth
By our analysis, first quarter was about 75% and second quarter was about 80%. So, the way we calculate the utilization, and that's manned utilization, John. So, perhaps offline we can take you through the numbers and try and understand the difference.
John Murphy - Merrill Lynch
Okay. But even with that, as we look at production ramping up in the third quarter and theoretically going forward, how should we think of that operating leverage as capacity utilization improves?
Alan Mulally
John, the way to think of it is we'll continue to improve the asset utilization. Remember, I know you know this well, but we have been making economic decisions at each point along the way, not just to consolidate the operations and get the utilization up, but make the best economic decisions through this downturn.
Clearly, the plan that we're operating on will be to build in more flexibility in each of the plants, just like we're doing with the new conversion of the truck plant to the car plant for the Focus, and get to a place where we have substantially more flexibility and ongoing higher utilization. That's the plan.
Lewis Booth
John, I think you recognize we have still got some plant closures ahead of us already announced. So, as the volumes go up, our utilization will continue to improve.
John Murphy - Merrill Lynch
Okay. Then secondly, Lewis, when we look at the payoff schedule for these notes owed to the UAW, it looks like next year in June, you could actually prepay this liability at $7.9 billion, given what you've gotten with the UAW. That is the number that we should be thinking about that could be funded with stock at current market prices? Is that the way to think about it, because I think there is a lot of confusion in the market that you might do an open market transaction; but it seems like this might be a more efficient way to go?
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