GM to slash truck and SUV production

Sharon Terlep / The Detroit News

WILMINGTON, Del . — General Motors Corp. today announced plans to shutter four truck and SUV plants while adding capacity at some smaller-car factories.

A Metro Detroit assembly plant is among the winners in the automaker’s restructuring plan announced today, with an additional shift announced at the automaker’s Lake Orion plant.

"Our greatest concern is the unprecedented rise in oil prices," said GM Chairman and CEO Rick Wagoner, speaking before the automaker’s annual meeting in Delaware. "We believe it is, by and large, permanent.

"We view the near term environment … with considerable caution."

Underscoring sinking sales of SUVs and trucks compared with growing consumer demand for sedans such as the redesigned Malibu and crossovers such as the Buick Enclave, Wagoner announced:

• GM will phase out production at four SUV and truck assembly plants: Oshawa, Ontario, in 2009; Moraine, Ohio, in 2010 or sooner; Janesville, Wis., by the end of 2009 and Toluca, Mexico, by the end of this year.

• The addition of a third shift at the Lake Orion plant where the Pontiac G6 and Malibu sedans are built

• The addition of a third shift at the Lordstown, Ohio, plant that produces the Chevy Cobalt and Pontiac G5

The timing of all of the moves is subject to changes in market demand, Wagoner said. Employees at the affected factories were notified this morning.

When the cuts and buyouts are complete, GM will save $1 billion a year, Wagoner said. That’s in addition to $5 billion annual saving expected from the automaker’s new contract with the United Auto Workers.

Wagoner said GM has no plans to reduce the automaker’s salaried work force. However, he said, GM is exploring other options, including the possible sale of its Hummer brand.

GM also made the following product announcements:

• An all-new next generation Chevrolet compact car program. It will be better-equipped, fuel efficient and produced at GM’s Lordstown plant in starting in 2010.

• A replacement for the subcompact Chevy Aveo also will go on sale in the second half of 2010.

• A new engine module to be produced in Flint

Wagoner also said GM’s board has approved production funding for the Chevy Volt electric plug-in, with the car expected in showrooms by the end of 2010. The company has asked for tax breaks to build the car at GM’s Hamtramck assembly plant.

The production cuts outlined today are GM’s answer to the disappearing U.S. truck market and broader economic woes imperiling its North American turnaround.

The actions outlined today come in addition to truck production cuts GM announced earlier this spring and a round of buyouts and retirement incentives that will usher out 19,000 hourly workers this summer, nearly one-quarter of GM’s U.S. blue-collar work force.

Even a GM dramatically smaller than the auto giant of a decade ago hasn’t proven lean enough to succeed in an increasingly competitive auto market.

GM hasn’t reported a full-year profit since 1994, and began this year with a $3.3 billion loss in the first quarter, and a 12.2 percent drop in sales through April. It is expected to show a further decline in sales when May results are announced later today.

The automaker, still heavily reliant on big pickup trucks and SUVs, is scrambling to get its vehicle lineup more in line with a fundamental shift in consumer tastes toward more fuel-efficient cars and smaller SUVs.

Company executives have said their recovery plan didn’t account for $4-a-gallon gasoline in addition to a slew of other factors dragging down the company’s bottom line.

Massive mortgage losses at GMAC LLC, GM’s former finance arm, costly labor disputes and cash demands from bankrupt parts supplier Delphi Corp., a GM spinoff, have cost the automaker billions this year alone.

The problems couldn’t come at a worse time for the automaker. The U.S. auto market is headed for its biggest sales slump in 10 years as a stagnant national economy has consumers holding off on big-ticket purchases, including new vehicles.

With the new cuts, GM follows the lead of Ford Motor Co., which last month said it would cut truck output, ramp up car production and eliminate more white-collar jobs, perhaps as much as 12 percent of its salaried work force.

Ford’s announcement came as the automaker pulled back from its long-stated goal of returning to profitability in 2009. The company said the actions are necessary because of the structural shift in the industry away from truck sales to cars, driven by soaring fuel prices, as well as the weak economy.