GM to axe plants in shift to small cars

General Motors is closing four truck and SUV plants in the United States, Canada and Mexico as surging fuel prices hasten a dramatic shift to smaller vehicles.

CEO Rick Wagoner said before the automaker's annual meeting in Delaware the plants to be closed are in Oshawa, Ontario, in Canada; Moraine, Ohio; Janesville, Wisconsin; and Toluca, Mexico.

He also said the iconic Hummer brand may be discontinued.

Wagoner said that the GM board has approved production of a new small Chevrolet car at a plant in Lordstown, Ohio, in mid-2010 and the Chevy Volt electric vehicle in Detroit.

Slumping sales

Wagoner announced the moves in response to slumping sales of pickups and SUVs brought on by high oil prices. He says a market shift to smaller vehicles is permanent.

The cuts will affect about 2,500 workers at each of the four facilities, although Wagoner did not know exact numbers.

Many of the workers will be able to take openings created when 19,000 more US hourly workers leave later this year through early retirement and buyout offers.

He said that the company has no plans to allocate products to the four plants in the future.

GM plans to cease production at the four factories and has no plans to allocate future products to them, Wagoner said.

"We really would not foresee the likely prospect of new products in the plants that we're announcing today that we'll cease production in," the GM chief told a Moraine, Ohio, city official who asked a question in a telephone conference call.

The moves will save the company $1 billion per year starting in 2010. Combined with previous efforts, GM will have cut costs by $15 billion a year, Wagoner said.

Wagoner said GM's board approved the production schedule of the Chevrolet Volt, and the company plans to bring the plug-in electric car to showrooms by the end of 2010.

The Volt runs on an electric motor and has a small engine to recharge its batteries.

He said the change in the US market to smaller vehicles likely is permanent.

"We at GM don't think this is a spike or a temporary shift," Wagoner said.

The Detroit-based automaker also has just emerged from a spate of labor problems, with two strikes at key factories and a nearly three-month strike at key parts maker American Axle and Manufacturing Holdings Inc.

GM said in a recent regulatory filing the strikes will cost it a total of $2 billion before taxes in the second quarter.

"It is significant, but this is a late reaction to changing market dynamics," said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan.

"The plans really should have been in place a number of years ago."

GM rose 36 cents to $17.80 at 8:29 am before regular New York Stock Exchange composite trading.

Agencies

(China Daily 06/04/2008 page17)