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21st of October 2017

Automotive



GM to idle Detroit-Hamtramck car plant for 6 weeks, cut output

UPDATED: 10/12/17 2:07 pm ET - adds details

DETROIT -- General Motors plans to scale back production and temporarily shutter an assembly plant in Detroit through the end of the year amid a slump in car demand across the industry.

The automaker will idle its Detroit-Hamtramck assembly plant for six weeks beginning in mid-November, according to a source familiar with the plans. The downtime will begin the week of Nov. 13, which had been previously scheduled. It will be followed by five additional weeks that will idle the plant through the holiday shutdown at the end of December.

The move, first reported by The Wall Street Journal, will mean layoffs for roughly 1,500 workers who build the Buick LaCrosse, Cadillac CT6, Chevrolet Impala and Chevrolet Volt -- all sedans with relatively high inventories.

GM, in an emailed statement, confirmed it “will be making schedule adjustments to keep supply and demand in balance,” including the plant operating under a reduced production schedule effective Oct. 20.

"This action will help maintain more stable production," the company said.

Those plans, a source confirmed, include reducing plant output by about 20 percent and reducing the plant’s 1,800 hourly workforce by less than 200 people.

While U.S. sales of the Cadillac CT6 are up 51 percent to 8,128 this year through September, the flagship luxury sedan is a low-volume seller. U.S. sales of the Buick LaCrosse are off 21 percent this year while demand is down 32 percent for the Impala and 6 percent for the Volt.

Across the industry, U.S. car demand has dropped 11 percent through September and is on track to decline for the fourth consecutive year.

In the first nine months of this year, the Detroit-Hamtramck plant produced 75,361 vehicles, a 43 percent decrease from the 132,086 it built in the same period in 2016, according to the Automotive News Data Center.

A local union representative was not immediately available to comment on the plans.

GM eliminated a second shift at the plant earlier this year as consumer preferences shift away from sedans and coupes to pickups, crossovers and SUVs.

As of Oct. 1, according to the Automotive News Data Center, inventories of the cars produced at Detroit-Hamtramck were collectively well above the 70-day supply that the industry considers healthy:

• Buick LaCrosse: 284 days, down from 286 on Sept. 1

• Cadillac CT6: 106 days, down from 145 on Sept. 1

• Chevrolet Impala: 67 days, up from 49 on Sept. 1

• Chevrolet Volt: 107 days, up from 97 on Sept. 1

Both GM and rival Ford Motor Co. have worked for most of this year to rein in high inventories of passenger cars as consumers have shifted to buying pickups, crossovers and SUVs. Overall, GM had a 76-day supply of vehicles as of Oct. 1 (down from 87 on Sept. 1) and Ford had a 72-day supply (down from 81 on Sept. 1).

Production cuts slice into revenue, but could also help automakers avoid deeper price cuts on vehicles they can sell.

"This is consistent with our view that domestic (manufacturers) continue to face steep competition in the passenger car segment and production must be aligned with waning sales in order to reduce the elevated amounts of inventory," Buckingham Research Group analyst Joseph Amaturo wrote in a client note about the Hamtramck news.

Earlier this year, GM eliminated the plant's second shift, saying it was laying off around 1,200 workers.

GM has reduced the number of shifts at five of its plants and several other facilities. The automaker announced last month that it would cut the third shift at its plant in Spring Hill, Tennessee, as of late November.

A GM spokesman said there are no plans to reinstate any of those shifts at this time.

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