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Spring Hill will benefit from GM’s boost in production

August 19, 2009

Spring Hill will benefit from GM’s boost in production

Clunkers program has fueled demand

By Tom Krisher

Shoppers are snapping up cars and trucks so quickly that">General Motors Co. is boosting production for the rest of the year to keep up with">Cash for Clunkers demand.

It’s another sign that automakers believe consumers are returning to showrooms after a yearlong slump.">Ford Motor Co. last week moved to increase its output, and other automakers took similar action earlier in the month. Confidence among manufacturers is up, even though most analysts predict that demand from Cash for Clunkers is waning.

GM said Tuesday it would add 60,000 vehicles to its production schedule in the third and fourth quarters and bring back about 1,350 laid-off workers. The company now plans to make 535,000 cars and trucks during July-September.

Spring Hill, Tenn., is among factories that will get a short-term boost. Remaining workers at Spring Hill will see more third-quarter overtime as they continue to make the Chevrolet Traverse large crossover vehicle.

"It’s a very positive development," said Mike Herron, chairman of">United Auto Workers Local 1853, which represents hourly workers at Spring Hill. "That will give us four extra production days in the third quarter."

But the overtime authorized for the Traverse assembly line doesn’t affect GM’s plans to cease production of the vehicle at Spring Hill in late November and move it to a plant in Lansing, Mich., Herron said. That will leave Spring Hill searching for a new product.

"The end game is not going to change," Herron said.

The exact date for the end of Traverse production at the Tennessee plant "will be dependent on market demand" for the vehicle, whose sales have been boosted by the clunkers program, Herron said.

"Our dealers are clamoring for more vehicles in almost every segment," said Mark LaNeve, GM vice president of U.S. sales. "We’re getting extremely short on a number of our products."

Since the clunkers program began in late July, dealers have reported shortages of some vehicles, mainly more fuel-efficient models.

GM’s August sales could beat company projections by 50,000, LaNeve said. He sees sales rising through 2009.

"If we don’t add the production in, we would certainly be running short in November or December," even if the program takes away sales from later months, he said.

Dealer inventory drops

GM’s dealer inventory is running at a very low 360,000 units, down from 1.3 million three or four years ago. Some models, like the Equinox, have only a 10-12 day supply, far from the ideal 60 days that analysts say is necessary to provide adequate selection.

GM will add shifts to factories in Ingersoll, Ontario, and Lordstown, Ohio. The Ontario plant makes the brand-new Chevrolet Equinox and GMC Terrain crossover vehicles, both of which get 32 mpg on the highway. Lords town makes the Chevrolet Cobalt small car.

Production also will be boosted at other North American factories, including those that make the Chevrolet HHR small wagon, the Chevrolet Colorado and GMC Canyon midsize pickups, the Chevrolet Camaro muscle car, the Buick LaCrosse sedan, and the Cadillac SRX and CTS Wagon.

The automaker also will add two months to the life of a midsize-car factory in Orion Township, Mich., and 10,000 workers will get overtime to increase production at other assembly and parts plants.

More increases are possible in the fourth quarter, the company said.

Customer urgency ebbs

Interest in Cash for Clunkers may be waning, though, according to the"> automotive Web site, because many customers waiting to buy have made their moves. Also, inventories have dropped and prices are up.

Car and truck inquiries on the Web site fell 15 percent last week from this year’s peak in July, when the clunkers program began.

The program initially was swamped and in danger of running out of money until Congress added $2 billion to the initial $1 billion that was allocated.


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