GM Chief’s Speech : Oil Price Drop May Keep Car Plant Going
General Motors Chairman Roger Smith said Thursday that declining world oil prices may help prolong the life of the auto giant’s Van Nuys assembly plant, which builds the sporty Pontiac Firebird and Chevrolet Camaro.
“With oil prices coming down, people will shift their thoughts to higher-performance automobiles,” Smith told reporters before a speech to the Los Angeles World Affairs Council. “We’ve got them.”
Smith said GM has long-term plans for the plant but he declined to reveal them.
Speculation that GM intends to shut the plant persists, mainly because manufacturing at the Van Nuys plant, 2,000 miles from its Midwestern suppliers, adds heavy shipping fees to production costs. About 75% of the cars made there are shipped east of the Rockies.
Industry analysts maintain that the 39-year-old facility cannot stay afloat as long as American cars sell so slowly in Western states. Foreign competition forced GM to shut its South Gate and Fremont plants in 1982, although the Fremont plant recently reopened as a GM-Toyota joint venture.
Smith said he suspects that the fears that the plant will close are based on GM’s experiences in South Gate and Fremont. “Seeing two of your soldiers knocked off their horses, you wonder how you’re doing,” he said.
United Auto Workers member Eric Mann, who coordinates a workers’ group called the Campaign to Keep GM-Van Nuys Open, said in an interview that Smith’s assurances are not enough. He said he wants a commitment from GM that the plant will be in operation for at least 10 years.
“The Van Nuys plant can be the center of a new GM initiative in the West, complete with local suppliers and a local stamping plant,” Mann said. “We don’t think it’s time to give up yet out here.”
Team-Worker Concept
UAW Local 645 in Van Nuys this week adopted a resolution approving the team-worker concept that GM employs on its Japanese-design cars at the Fremont plant. The Van Nuys plant manager, Ernest D. Schaefer, predicted that the team approach would lead to better-quality cars.
Christopher Cedergren, senior analyst for J. D. Power & Associates, an auto marketing firm based in Westlake Village, said he expects the plant to be viable for several years. But, he said, a major revamping of GM models expected in late 1989 could mark the plant’s demise.
Recent speculation in the industry is that GM plans to replace the Camaro and Firebird with front-wheel-drive, plastic-skinned models, like the Pontiac Fiero. Most U.S. cars now have front-wheel drive, which has handling and space-saving advantages.
Retooling the plant to make a front-wheel-drive car could cost $200 million to $300 million, a GM spokesman said.
