Monday, November 21, 2005

GM to close several plants

It looks like GM is finally doing some things to get its North American over-capacity under control. This plan is expected to save GM $7 billion by the end of 2006. The plan includes closing several final assembly plants as well as several parts manufacturing plants.

Say what you will, but a significant portion of GM's (as well as Chrysler's and Ford's) production (and subsequent incentives) is driven, not by demand in the market, but by a financial need to keep the UAW workers working rather than paying a large portion of their salaries even if a plant is idle. It is cheaper to put thousands in incentives on the product than to idle the workers and get no revenue for their pay.

Closing some plants permanently is going to be quite painful both to the workers, salaried and union, but with current moves to make plants more flexible (able to build more than one model or platform, and make it much easier to keep plants at 100% of their capacity) - this should ultimately be a good thing for GM and definitely for the future of the remaining plants, workers, and the company.

The plants that are closing, what they currently build, and when they are scheduled to shut their doors per this plan are:

  • Oklahoma City. 7-seat versions of Buick Rainier, Chevy Trailblazer, GMC Envoy, and Isuzu Ascender. It will close in early 2006. Production will likely shift to Moraine, Ohio - which currently builds the 5-seat variants.
  • Lansing Craft Centre in Lansing, Mich. Chevy SSR. It will close in mid-2006. This may spell the end for the hot-rod, retro, convertible pickup.
  • The Doraville, Ga. Buick Terraza, Chevy Uplander, Pontiac Montana SV6, and Saturn Relay. It will close in 2008. Production is expected to shift to a plant currently under construction in Delta Township, outside Lansing, MI.
  • The Oshawa, Ontario, car plant No. 2 will close in 2008. It builds the Buick LaCrosse and Pontiac Grand Prix. Replacements for these cars will likely be build in Oshawa plant #1 or another GM plant.

GM will close these stamping and powertrain plants:

  • The Lansing, Mich., stamping plant will be closed in 2006.
  • The Pittsburgh stamping plant will be closed in 2007.
  • The St. Catharines, Ontario, Street West powertrain parts plant will be closed in 2008.
  • The Flint North plant in Flint, Mich., which builds the 3.8-liter V-6 engine, will close in 2008.

GM also will reduce production at these facilities:

  • Line No. 1 of the Saturn plant in Spring Hill, Tenn., will be shut down at the end of next year. This line builds the Saturn ION, its replacement will be build alongside the Chevy Cobalt at the Lordstown, Ohio plant.
  • The third shift at the Oshawa, Ontario, car plant No. 1 will be dropped in the middle of next year. This plant builds the Chevy Impala and Monte Carlo.
  • The third shift at the Moraine, Ohio, truck plant will be cut in 2006. Moraine builds the Buick Rainier, Chevy Trailblazer, GMC Envoy, Isuzu Ascender (once production ends in Oklahoma City, and the Saab 9-7.

Good luck GM. Let's hope your upcoming product makes this the last time you need to scale back like this.

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