GM cutbacks
06-03-2008, 10:34 AM
#1
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GM cutbacks
(AP) — General Motors is closing four truck and SUV plants in the U.S., Canada and Mexico as surging fuel prices hasten a dramatic shift to smaller vehicles.
CEO Rick Wagoner said Tuesday before the automaker's annual meeting in Delaware the plants to be idled are in Oshawa, Ontario; Moraine, Ohio; Janesville, Wis.; and Toluca, Mexico. He also said the iconic Hummer brand will be reviewed and potentially sold or revamped.
The announcement is an economic blow to Janesville, which long has been entwined with automaking. The sprawling GM plant has survived the Depression, a world war and GM's major layoffs in the 1980s, but it will not escape the latest round of corporate belt-tightening.
"There were some tears and a lot of people were kind of ticked off, but it's part of the business," said Scott Lambert, 39, who has worked at the plant for 13 years.
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The plant, GM's oldest, opened in 1919 and long was the largest employer in Janesville, a city of 60,000 about 100 miles northwest of Chicago. But cutbacks have shrunk the work force to about 2,600, so it's no longer the city's biggest employer.
Wagoner announced the moves in response to slumping sales of pickups and SUVs brought on by high oil prices. He said a market shift to smaller vehicles is permanent.
The moves will save the company $1 billion per year starting in 2010. Combined with previous efforts, GM by 2011 will have cut costs by $15 billion a year compared with 2005, Wagoner said.
GM shares rose 39 cents, or 2.2 percent, to $17.83 in morning trading.
The cuts will affect about 2,500 workers at each of the four facilities, although Wagoner did not know exact numbers. Many will be able to take openings created when 19,000 more U.S. hourly workers leave later this year through early retirement and buyout offers.
He said the company has no plans to allocate products to the four plants in the future.
"We really would not foresee the likely prospect of new products in the plants that we're announcing today that we'll cease production in," he told a Moraine, Ohio, city official who asked a question in a telephone conference call.
Henderson said the plant closure measures would reduce the company's capacity to produce pickups and large SUVs by 700,000 per year, about 35 percent.
He also said GM is planning for gasoline prices to stay around $4 per gallon for the foreseeable future, "with a bias upwards."
Pete Hastings, senior analyst with Memphis, Tenn.-based Morgan Keegan & Co., said GM's moves are painful yet prudent.
"It's a permanent shift, and they're right to recognize it," he said. "But is it enough? It's a bit early to tell. ... That's the hard part of gauging where we are in the economy — and how deep or strong the shift in demand is for more fuel-efficient vehicles."
Analyst Kevin Tynan of New York-based Argus Research Corp. said the Detroit Three automakers have been "caught with the market running away from them." While he recognizes GM's plight and efforts to overcome it, he still questions the aggressive push to market with the Volt, which is demanding heavy investment at a time when money is tight.
"It's very bad timing, very late in the game to be making big bets," he said. "At the same time, you don't have a choice."
GM also has just emerged from a spate of labor problems, with two local union strikes at key factories and a nearly three-month strike at key parts maker American Axle and Manufacturing Holdings Inc.
GM said in a recent regulatory filing the strikes will cost it a total of $2 billion before taxes in the second quarter.
CEO Rick Wagoner said Tuesday before the automaker's annual meeting in Delaware the plants to be idled are in Oshawa, Ontario; Moraine, Ohio; Janesville, Wis.; and Toluca, Mexico. He also said the iconic Hummer brand will be reviewed and potentially sold or revamped.
The announcement is an economic blow to Janesville, which long has been entwined with automaking. The sprawling GM plant has survived the Depression, a world war and GM's major layoffs in the 1980s, but it will not escape the latest round of corporate belt-tightening.
"There were some tears and a lot of people were kind of ticked off, but it's part of the business," said Scott Lambert, 39, who has worked at the plant for 13 years.
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Belvidere plant spared in Chrysler cutsLocal Ford plant hit with more production cutsOutlook 'bleak' for FordSuggested Searches
chicago - plant - production cuts - chrysler group - torrence avenueSponsored by He said he was headed to buy an atlas to figure where other GM plants were that might be hiring.
The plant, GM's oldest, opened in 1919 and long was the largest employer in Janesville, a city of 60,000 about 100 miles northwest of Chicago. But cutbacks have shrunk the work force to about 2,600, so it's no longer the city's biggest employer.
Wagoner announced the moves in response to slumping sales of pickups and SUVs brought on by high oil prices. He said a market shift to smaller vehicles is permanent.
The moves will save the company $1 billion per year starting in 2010. Combined with previous efforts, GM by 2011 will have cut costs by $15 billion a year compared with 2005, Wagoner said.
GM shares rose 39 cents, or 2.2 percent, to $17.83 in morning trading.
The cuts will affect about 2,500 workers at each of the four facilities, although Wagoner did not know exact numbers. Many will be able to take openings created when 19,000 more U.S. hourly workers leave later this year through early retirement and buyout offers.
He said the company has no plans to allocate products to the four plants in the future.
"We really would not foresee the likely prospect of new products in the plants that we're announcing today that we'll cease production in," he told a Moraine, Ohio, city official who asked a question in a telephone conference call.
Henderson said the plant closure measures would reduce the company's capacity to produce pickups and large SUVs by 700,000 per year, about 35 percent.
He also said GM is planning for gasoline prices to stay around $4 per gallon for the foreseeable future, "with a bias upwards."
Pete Hastings, senior analyst with Memphis, Tenn.-based Morgan Keegan & Co., said GM's moves are painful yet prudent.
"It's a permanent shift, and they're right to recognize it," he said. "But is it enough? It's a bit early to tell. ... That's the hard part of gauging where we are in the economy — and how deep or strong the shift in demand is for more fuel-efficient vehicles."
Analyst Kevin Tynan of New York-based Argus Research Corp. said the Detroit Three automakers have been "caught with the market running away from them." While he recognizes GM's plight and efforts to overcome it, he still questions the aggressive push to market with the Volt, which is demanding heavy investment at a time when money is tight.
"It's very bad timing, very late in the game to be making big bets," he said. "At the same time, you don't have a choice."
GM also has just emerged from a spate of labor problems, with two local union strikes at key factories and a nearly three-month strike at key parts maker American Axle and Manufacturing Holdings Inc.
GM said in a recent regulatory filing the strikes will cost it a total of $2 billion before taxes in the second quarter.
Last edited by HillsdaleHHR; 06-27-2008 at 03:30 PM.
06-03-2008, 11:09 AM
#2
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I would think they would move the HHR to another plant to continue making it, seeing as how it is getting touted as 30mpg. It would be a shame to get rid of it after only four years. Especially if they can get anymore mileage out of the ecotec.
06-03-2008, 01:38 PM
#6
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Join Date: 04-04-2008
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Yeah the article makes no mention of the HHR. Besides I belive its made on the same platform as the Cobalt. Now there is a rumor going around that the Cobalt might be history. Possibly a new named car coming next year.
06-03-2008, 05:12 PM
#8
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Location: Seaforth
Posts: 449
GM Oshawa has held the reputation as the most productive, highest quality and lowest cost plant that GM has in North America. It figures those botards in the corporate offices would shut down their best. This after signing a contract with the union 2 weeks ago and getting 175 million from the gov't to keep jobs. What a bunch of sleezes. I might look at a Honda or Toyota next time.
06-04-2008, 04:35 PM
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