GM to Idle Detroit Car Factory Amid Slow Demand
October 12 2017 - 8:47AM
Dow Jones News
By Mike Colias
General Motors Co. plans to close a Detroit factory through the
end of the year and deepen production cuts to slow-selling cars the
plant manufactures, idling some workers and letting go others
around the holiday season in response to weak sales.
GM will temporarily close its Detroit-Hamtramck assembly plant
for about six weeks starting in mid-November, said people familiar
with the plan. The move will lay off roughly 1,500 workers who help
build four low-demand models at the plant.
The nation's largest auto maker also plans to scale back the
factory's assembly line to produce roughly 20% fewer vehicles once
the plant resumes operations, costing about 200 workers their jobs,
the people said.
A GM spokesman declined to comment.
The expected move comes after GM already laid off several
hundred employees at the Detroit-Hamtramck factory earlier this
year by eliminating the evening work shift. GM, like other auto
makers, is revising production plans amid cooling U.S. vehicles
sales, punctuated by a sharp contraction in the market for
passenger cars. Consumers are opting for larger and more versatile
sport-utility vehicles that are proving attractive amid low prices
at the fuel pump.
The upshot is dealer lots are packed with compact and midsize
sedans that were staples of the U.S. auto market a few years back.
GM, saddled with more factories that make only passenger cars than
competitors, has moved aggressively to realign production amid the
shift in consumer tastes.
The Detroit-Hamtramck plant, which straddles the border of the
Motor City and its smaller neighbor, is GM's least productive
assembly factory in North America, according WardsAuto.com. Even
with cuts earlier in the year, further sales slumps for the models
built there precipitated the expected idling and production
cut.
Over the past year, GM has slashed passenger-car output,
resulting in nearly 3,000 laid-off workers overall. Some have been
transferred to busier plants making SUVs or components.
The 32-year-old Detroit-Hamtramck factory has been hit
especially hard. Workers there build four nameplates, including the
small Chevrolet Volt plug-in hybrid and the Cadillac CT6, a large
sedan introduced last year as the luxury brand's flagship car.
Sales of each have generally fallen sharply in recent months,
leading to inventory piling up at dealerships.
Dealers are sitting on a roughly 10-month supply of the Buick
LaCrosse, for instance, another car built at the plant, according
to WardsAuto.com. A two-month supply is considered healthy.
The cars are struggling to attract buyers despite GM recently
redesigning most of them. Fresh sheet metal typically translates
into stronger sales. Critics lauded the CT6 as on a par with German
luxury cars, but sales are nonetheless falling short of GM's
goals.
GM executives repeatedly have said they would cut output to
align with demand, even though the reduced production hurts
revenue. Car companies book revenue when they ship vehicles to
dealerships, and GM had long been criticized for cranking out too
many cars that required steep discounts to sell.
GM finance chief Chuck Stevens told analysts in July that the
company is "committed to take action on passenger cars, which we
have done and will continue to do as required to align supply and
demand."
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
October 12, 2017 08:32 ET (12:32 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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