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GM to scale back production at Detroit sedan plant

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10/12/2017 | 08:09pm CET
FILE PHOTO: General view of the front entrance at the General Motors Assembly Plant in Arlington Texas

General Motors Co said on Thursday it plans to scale back production at an assembly plant in Detroit starting later this month as it tries to deal with declining U.S. sedan sales

GM said in a statement that effective Oct. 20 its Detroit-Hamtramck plant "will operate under a reduced production schedule."

"This action will help maintain more stable production," the No. 1 U.S. carmaker said.

The statement followed reports that GM plans to shut the plant for about six weeks from mid-November and lay off about 1,500 workers then cut production roughly 20 percent once operations resume, according to a source familiar with the plans.

That output cut would lead to around 200 lost jobs. The move was originally reported by the Wall Street Journal.

General Motors declined to comment on those reports.

The Hamtramck plant makes four poorly performing sedan models, including the Buick LaCrosse, sales of which are down 21.5 percent year to date, and the Chevrolet Impala, which is down 31.8 percent.

Both GM and rival Ford Motor Co have struggled to rein in high inventories of passenger cars as consumers have shifted to buying pickup trucks and sport utility vehicles. Consultants have blamed a large portion of the U.S. auto industry's excessive inventories of unsold vehicles on GM.

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 plants. 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.

Although the eliminated shifts employed 6,000 hourly and salaried workers, GM's actual layoffs have been smaller. A spokesman said GM has let go 2,300 temporary workers and 800 hourly, union-represented workers have been laid off, for a total of 3,100 job cuts so far.

GM has found alternative work for 2,900 affected hourly workers.

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

General Motors shares were down 0.9 percent at $45.04 in early afternoon trading.

(Reporting by Nick Carey in Detroit and Rachit Vats in Bengaluru; Editing by Savio D'Souza, Bill Trott and Jonathan Oatis)

By Nick Carey and David Shepardson

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