More GM Factory Closures Likely

Light & Medium Truck, Sep 2008 by Krisher, Tom

At a General Motors Corp. factory just west of Detroit, about 1,000 workers are still cranking out mighty but thirsty V-8 engines that go into pickup trucks and sport utility vehicles.

The automaker's plans to cut 300,000 pickups and SUVs out of the production schedule by the end of next year should be a concern at Romulus Powertrain, because industry analysts said any factory that makes mostly truck components could be in danger of closure.

GM officials said half of the production cuts will come from accelerating previously announced closures at four assembly plants, including one in western Ohio. They hinted the other half could come from canceling shifts at other factories.

Analysts, however, said it's possible another assembly plant could be shuttered, and that some factories that make truck parts almost certainly will be closed. Besides the Romulus plant, engine and transmission factories that make mostly truck parts are in Willow Run and Ypsilanti and in Parma in northeast Ohio and Defiance in northwest Ohio.

"Virtually no factory is off the table," said Michael Robinet, vice president of global forecast services for CSM Worldwide, an auto industry consulting company based in Northville, Mich.

GM announced in June that it would idle pickup and SUV factories in Janesville, Wis.; Oshawa, Ontario; Moraine, Ohio; and Toluca, Mexico, as it tries to deal with a rapid shift to smaller vehicles brought on by $4-per-gallon gasoline. In July, the company said it will speed up the closures, although it didn't give specifics.

GM will be left with four pickup plants, one SUV factory and one full-size van plant in the United States. It also has truck factories in Mexico.

GM Chief Operating Officer Fritz Henderson said that thousands of jobs likely would be cut, but he would not give a specific number. About 19,000 hourly workers recently left the company through buyout and early retirement offers, which could help buffer the losses.

The company also is adding workers at its Orion Township, Mich., and Lordstown, Ohio, factories, both of which make fuel-efficient cars that are selling well despite the declining U.S. auto market.

Of the U.S. pickup plants, analysts said one in Pontiac, Mich., is most vulnerable because it's operating on only one shift, although it might not be closed for several years.

A pickup plant in nearby Flint is still running on two shifts, and it's presumably safe because it's the only one that builds the one-ton crew-cab body style of the heavy-duty pickups, said Haig Stoddard, an auto analyst with the consulting company Global Insight.

The Fort Wayne, Ind., pickup plant probably won't be considered for closure because it's GM's productivity star with a highly flexible workforce, said Greg Gardner, an analyst with the Oliver Wyman Group, which authors an annual study on auto plant productivity.

A Shreveport, La., factory that makes midsize pickups also should be safe, and the Arlington, Texas, SUV factory likely will remain for the time being, although production could be shifted at some point to Mexico, analysts said.

Several parts plants that mainly feed truck factories could get the axe because GM won't need as many engines, transmissions and other parts once the four assembly plants are closed, analysts said.

"I'm sure there are going to be cuts in powertrain because they have so many plants that are building engines for the full-size trucks," Stoddard said. "There probably will be some plant closures."

GM has more than two dozen parts plants, most of which make components for both trucks and cars. Analysts said those that make predominantly truck components are particularly vulnerable, but the decision on which plant to close is complex.

GM said it's unfair to workers to speculate about the factories.

"Many factors come into play in making production plan decisions that are not encompassed in this kind of speculation," the company said in a statement.

Tom Krisher, AP Auto Writer