GM to shut down four truck plants

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GM on Tuesday, June 3, announced a range of strategic initiatives to aggressively respond to growing demand for fuel-efficient vehicles and to economic and market challenges in North America. Rick Wagoner, GM chairman and chief executive officer, made the announcements as part of the GM annual meeting of stockholders in Wilmington, Del.

Major initiatives announced by Wagoner include:

  • Cessation of production at four plants that build pickups, SUVs and medium-duty trucks;
  • A strategic review of the Hummer brand;
  • Funding for production of the Chevy Volt extended-range electric vehicle;
  • A new global compact car program for Chevrolet, a next generation for the Chevy Aveo, and a high-efficiency engine module for the U.S. market; and
  • Addition of third shifts to Lordstown and Orion, which build Chevy and Pontiac cars.
  • “From the start of our North American turnaround plan in 2005, I’ve said that our goal is not just to return GM to profitability, but to structure GM globally for sustained profitability and growth,” Wagoner says. “Since the first of this year, however, U.S. economic and market conditions have become significantly more difficult. Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix.”

    Oshawa Truck Assembly in Canada, which builds the Chevy Silverado and GMC Sierra, will likely cease production in 2009; while Moraine, Ohio, which builds the Chevy TrailBlazer, GMC Envoy and Saab 9-7x, will end production at the end of the 2010 model run, or sooner, if demand dictates. Janesville, Wis., will cease production of medium-duty trucks by the end of 2009, and of the Tahoe, Suburban and Yukon in 2010, or sooner, if market demand dictates. Chevrolet Kodiak medium-duty truck production also will end in Toluca, Mexico, by the end of this year.

    GM expects that these actions, along with the recent announcement to remove shifts at two other U.S. truck plants (Pontiac and Flint, Mich.), will result in an additional GM North America structural cost savings of more than $1 billion, on a running rate basis, by 2010. This is on top of the approximately $5 billion running rate reduction by 2011 that the company announced earlier this year, and also in addition to the $9 billion reduction accomplished over the 2006-07 period in North America.

    GM says it will work closely with its union partners to mitigate the impact of these actions, which it says are made necessary by long-term changes in consumer demand for trucks and SUVs.

    GM also is undertaking a strategic review of the Hummer brand to determine its fit within the the company’s portfolio; the company says it is considering all options, from a complete revamp of the product lineup to a partial or complete sale of the brand.

    Meanwhile, the Chevy Volt won formal approval by the board for funding production of the extended-range electric vehicle. This approval, which includes development and tooling, indicates that GM leadership believes that the technology for the Volt, including its lithium-ion batteries, will be ready for volume production on schedule.

    “The Chevy Volt is a go,” Wagoner says. “We believe this is the biggest step yet in our industry’s move away from our historic, virtually complete reliance on petroleum to power vehicles. We intend to show a production version of the Chevy Volt publicly in the very near future, and we remain focused on our target of getting the Volt into Chevrolet showrooms by the end of 2010.”

    Preliminary plans are to produce the Volt at GM’s Detroit-Hamtramck Assembly Center, subject to successful discussions with state and local governments.