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GM Slashes Truck Production, Announces Plant Closures

June 3, 2008
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General Motors said Tuesday, June 3, that it is ending truck production at four plants that build full-sized pickups and SUVs and is considering “all options” with its Hummer brand, including a possible sale.

The moves are the result of high gas prices, which GM now views as permanent, CEO Rick Wagoner said. GM is reacting to $4-a-gallon gasoline prices by making major cuts in its full-sized pickup and SUV production.

The automaker said it will cease production at its Oshawa, Ontario, truck assembly operations in Canada, which builds the Chevrolet Silverado and GMC Sierra, likely in 2009.

GM said its plant in Moraine, Ohio, which builds the Chevrolet TrailBlazer, GMC Envoy and Saab 9-7x, will end production at the end of the 2010 model run or sooner, if demand dictates.

The plant in Janesville, Wisconsin, will cease production of medium-duty trucks by the end of 2009 and of the Chevrolet Tahoe, Chevrolet Suburban and GMC Yukon in 2010 or sooner.

Production of the Chevrolet Kodiak medium-duty truck will end in Toluca, Mexico, by the end of this year.

Wagoner said each plant employs about 2,500, but it's unclear whether employees will be transferred or laid off.

These cuts, along with the recent moves to remove shifts at U.S. truck plants in Pontiac and Flint, Michigan, will result in annual cost savings of more than $1 billion by 2010, Wagoner says.

“Employees of these facilities were notified this morning,” Wagoner said. “These are difficult decisions and we’ll work with our union partners.”

The shutdowns will reduce GM’s pickup and SUV capacity by more than 700,000 units.

On the plus side, GM said it will add a third shift to the Orion, Michigan, plant starting in September.

GM builds the Chevrolet Malibu and Pontiac G6 sedans at Orion. Also in September, the company plans to add a third shift at Lordstown Car Assembly in Ohio, which builds the Chevrolet Cobalt and Pontiac G5. That plant will also build the new compact car coming to Chevrolet in 2010.

GM will begin a strategic review of its Hummer brand to determine its fit within the GM portfolio, Wagoner says.

Presently, GM's truck-to-car mix is about 50-50. Wagoner says that within three years, once all the changes take effect, the mix will be 60 percent cars and 40 percent trucks.

“Once the U.S. market settles down, GM will benefit from the cost it’s taken out and the new products it’s introducing,” Wagoner says.

Filed by Jamie Lareau of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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