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« Anxiety Over Auto Bailout Spreads Beyond Manufacturers to Suppliers | Main | Holiday Gifts To Keep Your Pets Happy While Driving »

December 12, 2008

General Motors Idles Plants, Cuts Production 30 Percent

081212-01-General_Motors_Shreveport_assembly_plant04 General Motors issued a press release today announcing a significant reduction of planned production for the first quarter of 2009 due to the ongoing and severe drop in industry sales, which were down 36 percent in November overall and 41 percent for GM (2007 vs. 2008). The impact of these and recently announced actions to adjust production with market demand will result in the temporary idling of approximately 30 percent of GM's North American assembly plant volume during the first quarter of 2009 and will remove approximately 250,000 units from production.

I'm sure it's only a matter of time before we see similar announcements from other manufacturers. Honestly, with the pileup of imported vehicles from Honda, Mercedes-Benz, Toyota and Volkswagen, sitting in the Port of Long Beach and Port of San Diego,  I'm surprised we haven't seen such announcements from other import manufacturers. Auto sales are at a standstill, and it's not just the domestics who are suffering.

According to General Motors, this is a direct response to the rapidly deteriorating market conditions. The speed and severity of the U.S. auto market's decline has been unprecedented in recent weeks as consumers reel from the collapse of the financial markets and the resulting lack of credit for vehicle financing.

081212-02-General_Motors_Shreveport_assembly_plant05 The announcement falls on the heels of the Congressional denial  of billions of dollars in funds that would help the manufacturer weather this winter storm and reorganize. Idle plants don't need employees, which means that all the workers at these plants will be relying on their Union dues to keep bread on their tables. Unfortunately, this may be the incentive the UAW needs to agree to lower wage and benefit rates across the board, as it is unclear what the operating status of General Motors will be by the time the second quarter arrives.

In the hours after congress denied the bailout, many lay the blame on the U.A.W for the defeat of legislation that would have provided temporary financing until the automakers restructured.  An article at the New York Times  points its own finger at the U.A.W. by demonstrating the outcome of recent UAW contract negotiations "In 2007, the U.A.W. agreed to sharply lower starting wages and benefits for newly hired autoworkers at the Detroit companies, as well as for workers in jobs away from the assembly line, like janitors and maintenance personnel. But the cuts did not affect most long-time union members, whose hourly pay and compensation is about $55 an hour. The figure ranges above $70 an hour when the automakers' costs for health care for retired workers and retirement benefits is factored in. By contrast, workers in plants run by foreign companies in the United States earn about $45 an hour, and the nonunion companies do not have the hefty burdens for future "legacy costs" that are faced by the Detroit companies."

The following U.S., Canada and Mexico operations impacted by this announcement include:

United States:

  •     Ft. Wayne (Ind.) - Chevy Silverado, GMC Sierra Light Duty Regular and Extended Cab
  •     Flint Assembly (Mich.) - Chevy Silverado, GMC Sierra Heavy Duty Regular and Crew Cab & Medium Duty
  •     Wentzville (Mo.) - Chevy Express, GMC Savanna
  •     Lansing Delta Township (Mich.) - Buick Enclave, GMC Acadia, Saturn Outlook
  •     Pontiac Assembly (Mich.) - Chevy Silverado, GMC Sierra Heavy Duty Extended Cab
  •     Spring Hill (Tenn.) - Chevy Traverse
  •     Fairfax Assembly (Kan.) - Chevrolet Malibu/Hybrid, Saturn Aura/Hybrid
  •     Arlington Assembly (Texas) - Full Size SUVs: Chevy Suburban, Tahoe & Tahoe Hybrid, GMC Yukon, Yukon XL & Yukon Hybrid, Cadillac Escalade/Escalade ESV & Escalade Hybrid
  •     Lansing Grand River (Mich.) - Cadillac STS & CTS
  •     Orion (Mich.) - Chevy Malibu, Pontiac G6
  •     Detroit-Hamtramck (Mich.) - Buick Lucerne, Cadillac DTS
  •     Shreveport (La.) - Chevy Colorado, GMC Canyon, Hummer H3 & H3T
  •     Bowling Green (Ky.) - Chevy Corvette, Cadillac XLR
  •     Wilmington (Del.) - Pontiac Solstice, Saturn Sky, Opel GT

Canada:

  •     Oshawa Consolidated - Chevy Impala
  •     Oshawa Truck - Chevy Silverado, GMC Sierra Light Duty Extended and Crew Cab
  •     CAMI - Chevy Equinox, Pontiac Torrent

Mexico:

  •     Silao - Chevy Silverado, GMC Sierra Light Duty Crew Cab, Chevy Avalanche, Cadillac Escalade EXT
  •     Ramos 2 - Chevy HHR, Saturn VUE, Chevy Captiva
  •     San Luis Potosi - Chevy Aveo, Pontiac G3

As a result of these assembly plant actions, GM will also continue to assess its powertrain and stamping capacity needs and make adjustments as appropriate.

Usually, I remove the standard boiler plate information found at the bottom of every press release that agencies send out. But today, in wake of the news and out of respect for this great company, I will leave it on, and ask readers to read it carefully. As the automotive climate changes in the days to come, we all need to acknowledge how important this company is. When I read it, I feel as if I am reading an obituary.

General Motors Corporation is the world's largest automaker and has been the annual global industry sales leader for 77 years. Founded in 1908, GM today employs about 252,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 34 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com and at www.gmfactsandfiction.com

By Brandy Schaffels
AskPatty Editor


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