this is where the supposed profits come from
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GM to lay off 3,500 at 4 pickup truck and SUV factories
Monday April 28, 6:57 pm ET
By Tom Krisher, AP Auto Writer
GM to lay off 3,500 by axing 1 shift each at 4 pickup, large SUV
factories due to weak sales
DETROIT (AP) -- Sagging pickup truck and sport utility vehicle sales
have forced General Motors Corp. to shut down one shift each at four
North American factories and lay off about 3,500 workers.
The world's largest automaker by sales said Monday that the cuts, to
take effect starting this summer, were brought on by weak demand due
to high gasoline prices and an economic downturn.
The cuts will affect pickup factories in Pontiac and Flint, Mich., and
Oshawa, Ontario, as well as the full-size SUV plant in Janesville,
Wis. The layoffs represent just over 4 percent of GM's hourly
manufacturing work force of about 80,000 in North America.
The company said the cuts mean it will make about 88,000 fewer pickups
and 50,000 fewer large SUVs this calendar year.
GM said the exact number of layoffs will be worked out with its
unions. Workers will get unemployment benefits and supplemental pay
that total 80 percent of their normal 40-hour gross pay, said GM
spokesman Dan Flores.
"With rising fuel prices, a softening economy and a downward trend on
current and future market demand for full-size trucks, a significant
adjustment was needed to align our production with market realities,"
GM North America President Troy Clarke said in a statement.
For about the past three years, the U.S. auto market has been shifting
away from pickup trucks and SUVs to cars and crossover vehicles, but
the trend accelerated in recent months due to gas prices that have
topped $3.50 per gallon across the nation.
The company expects the layoffs to take place starting July 14 at the
Flint, Janesville and Pontiac plants, and Sept. 8 at Oshawa. Most of
the factories had already seen layoffs and production cuts due to a
parts shortage from a two-month strike at American Axle and
Manufacturing Holdings Inc.
GM spokesman Tony Sapienza said the company will eliminate shifts with
750 workers each at Flint and Janesville, 1,150 workers in Pontiac and
900 workers in Oshawa.
"Those are the people that we believe will be impacted based on what
the shifts are," he said. "We'll be working with our partners to
determine how that's brought to fruition."
Greg Gardner, an analyst with the Oliver Wyman Group, said the cuts
look like "a realistic assessment."
"The full-size pickup and SUV market is not going to rebound anytime
soon," he said. "It looks like that they don't plan on making up very
much of the production loss due to the American Axle strike."
Gardner said GM's announcement reflects the industry's overall
production forecast this year, down to about 15 million light vehicles
from an earlier forecast of 15.5 million.
"Obviously, the larger, heavier vehicles are taking the biggest hit,"
he said.
The Flint, Pontiac and Oshawa plants make the Chevrolet Silverado and
GMC Sierra pickups, while Janesville manufactures the Chevrolet Tahoe
and Suburban and GMC Yukon big SUVs.
GM said pickup sales overall are down 15 percent through March, while
sales of large SUVs are off 26 percent. Dealers in much of the country
say the bigger vehicles aren't selling because of the economy and
gasoline prices.
George Tasker, the top salesman at Martin Chevrolet in Torrance,
Calif., said buyers are sitting on the sidelines for most vehicles
mainly due to economic uncertainty and declining home values.
"Everybody's going to drive a little bit longer until we can figure
out where this thing is going," he said.
Los Angeles-area dealers still can get just about any truck or SUV a
customer wants by trading with each other, despite curtailed
production from the American Axle strike, he said.
Jesse Toprak, chief industry analyst for the auto information site
Edmunds.com, said GM has a 92-day average supply of large trucks. A 60-
day supply is considered optimal in the business.
He said the automaker will lose about $4.4 billion in gross sales
because of the production cuts, but it's nearly impossible to
determine the impact on GM's net profits.
The production cuts should help GM keep its inventory under control,
said Catherine Madden, an analyst with the consulting firm Global
Insight.
"They're not going to put themselves in a position where they're going
to overbuild and sell at any costs," she said.
"They take the hit now instead of being forced with their back up
against the wall in September."
GM said it did not forecast how many of those vehicles it expected to
make this year, but it sold about 1.1 million of them in the U.S. last
year, according to Autodata Corp.
The announcement was made after the close of regular trading. GM
shares gained 56 cents, or 2.6 percent, to close at $21.94, and were
unchanged in after-hours trading.
The cuts come as 74,000 U.S. workers represented by the United Auto
Workers face a May 22 deadline to decide on GM's latest round of
buyout and early retirement offers.
GM won't say how many workers it hopes to shed, but under its new
contract with the UAW, it will be able to replace up to 16,000 workers
doing nonassembly jobs with new employees who will be paid half the
old wage of $28 per hour.
AP Business Writer Jeff Karoub contributed to this report.
On Apr 24, 1:48=A0pm, Stray Dog <straydog2...@[EMAIL PROTECTED]
> wrote:
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