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GM to Idle 30% of North American Production in 1Q 2009

General Motors announced 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% in November overall and 41% for GM (2007 vs. 2008). The impact of these and other actions to adjust production with market demand will result in the temporary idling of approximately 30% of GM’s North American assembly plant volume during the first quarter of 2009 and will remove approximately 250,000 units from production.

US, Canada and Mexico operations affected by the announcement include:

  • 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
  • Oshawa Consolidated (Canada) - Chevy Impala
  • Oshawa Truck (Canada) - Chevy Silverado, GMC Sierra Light Duty Extended and Crew Cab
  • CAMI (Canada) - Chevy Equinox, Pontiac Torrent
  • Silao (Mexico) - Chevy Silverado, GMC Sierra Light Duty Crew Cab, Chevy Avalanche, Cadillac Escalade EXT
  • Ramos 2 (Mexico) - Chevy HHR, Saturn VUE, Chevy Captiva
  • San Luis Potosi (Mexico) - Chevy Aveo, Pontiac G3

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

Automakers other than the Detroit 3 in the US, including Toyota and Honda, have cut their production in the face of the tanking sales market. Honda, for example, just increased its planned production cuts to 119,000 units through March 31.

Comments

Non-UAW

UAW members will still have their income while the plants idle, unlike the non-UAW workers in Honda and Toyota.
UAW do not accept the Republican proposal to reduce their wage even when the bailout stalled.
I am willing to accept a lower pay job and my cash at hand will run out this weekend, where can I get bail out????

HarveyD

GM (+ Ford and Chrysler) have progressively given up most of their management rights in the last 20-30 years.

They have lost the right to vary production levels, by cutting work shifts, work days or with temporary plant closures, to match sales.

The only way they can reduce labour cost is with complete plant closures. That is difficult to do with very large integrated plants. This could be done when the same vehicle is produced in many different plants and/or with flexible Toyota style multi-model plants.

When you have to pay all the emplyees regardless of hours worked, short term lay offs are not very profitable. That is the perfect recipe to bankruptcy.

JamesEE

Among the plant closings: Fairfax Assembly (Kan.) - Chevrolet Malibu/Hybrid, Saturn Aura/Hybrid

Why are they closing the hybrid production lines? Are they not selling, or did they have to close the whole plant and the hybrid models didn't amount to much anyway?

JMartin

Management has negotiated away their ability to manage and UAW comes away looking greedy, but I have to ask one question.

Why is it that in a recession, some politicians insist:
It is bad to cut income of the rich by raising taxes, but
It is good to cut the income of workers by cutting wages?
How about at least a little philosophical consistency rather than obvious class bias.

HarveyD

JMartin:

Most would agree that minimum wages is not what is proposed or wanted for auto factory workers.

However, $73/hr to $79/hr is comparatively way too much. An across the board 30% to 50% cut should be applied before or shortly after bail outs.

Asking government bail outs while being paid $5 M to $30 M a year to outrageouly mismanage a car industry, bank, or a financial organisation is indecent and should not remain uncorrected. Those white collar brigands should be punished. They should refund some of the over-payments (for poor services and bad decisions) and their salaries should be cut to $1/year for the next 3 to 5 years.

Bails outs without very strict corrective actions and effective on-going over-sight will not (rightfully) be very popular with most tax payers.

joooooookes

Harvey, those massive costs are only true counting payments to retirees, those are averaged per active worker, but their salaries are not THAT high. UAW concessions start to take effect with the VEBA in 2010, but the UAW might have to take concessions sooner than that, though maybe they won't considering the $14 billion bailout failed over the time table for pay parity with import automakers' factories.

And what are chances for on-going effective government oversight, given the situation the US finds itself in now? Congress mostly embarassed themselves with their lack of knowledge of the current Detroit auto industry, and the rumoured pick for 'Car Czar' is a bean counter. A quality 'perception gap' exists, as you are evidence of, and restrictive government oversight by financial types linked to the current economic predicament are going to fix that, or actual long term quality? I highly doubt it.

Looks more and more like they're screwed either way, and truthfully if GM has the funding for Chapter 11 they should do it before they run out and have Chapter 7 bankruptcy as their only option. Notice how suppliers demanded cash payment from Chrysler not GM? GM going might take them down, whereas Chrysler has recently been suing a would-be supplier, Getrag, and dropping models left and right.

I wonder if we'll end up with the strongest global automakers owning much of the US supply base after a wave of supplier bankruptcies should GM go under, since many of those suppliers also supply parts to as many as 50% of import automakers.

microbatmant

UAW workers will get paid while plant lies idle?

What????

Is this true.

UAW workers get paid to stay home????

I do not belive this please show me some sources that prove this true.

Andrey Levin

Micro:

Google “UAW job bank”

ToppaTom

"UAW workers will get paid to stay homewhile plant lies idle? What????

I do not belive this please show me some sources that prove this true."

http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentID=15177946

http://www.highbeam.com/doc/1G1-127839379.html

ToppaTom

"UAW workers will get paid to stay homewhile plant lies idle? What????

I do not belive this please show me some sources that prove this true."

http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentID=15177946

http://www.highbeam.com/doc/1G1-127839379.html

Dan A

If GM goes into bankruptcy, let's face it, Chrysler is definitely going down, and ford isn't too far away. For any of the automakers, bankruptcy means liquidation, because their sales will plummet from the sigma and fear of warranty loss. All the imports are going to have major issues with parts suppliers, many of whom are going down, if you noticed when word came out that the bailout package had failed Honda and Toyota shares plummeted.

I still think that the GM-Chrysler merger could be beneficial in the long term. Seeing as Chrysler has by far the weakest lineup in the big-3 and future prospects are bleak, such a merger could be beneficial to cutting capacity in the industry (which is so desperately needed). GM could eliminate Hummer and replace it with Jeep in that 'segment', eliminate Pontiac and GMC and replace it with Dodge (shed all the Dodge cars and replace them with the Holden cars like Pontiac has been doing, would allow them to get rid of the Sierra with an actually different pickup, and keep the minivans), incorporate the Chrysler brand vehicles into Buick, and get rid of Chrysler (or the other way around, I suppose). In one fell swoop you eliminate 4 brands, can keep existing successful cars but put them into better brands and eliminate less successful brands.

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