GM May Close 3 Plants Soon, Key Officials Say
General Motors, struggling to control costs and reduce its excess production capacity in the face of a rapid erosion in its market share, may announce a series of major assembly plant closings within the next few months, eliminating thousands of jobs, according to top GM executives.
GM officials refuse to identify which plants will be permanently shuttered, but many of the facilities that appear vulnerable--including GM’s Van Nuys complex--produce aging, rear-wheel-drive products gradually being phased out in favor of newer, front-wheel-drive models.
In fact, several old GM assembly plants and related operations, most of which are in Michigan, had originally been scheduled to be shut down years ago, when new replacement plants opened up. But they have so far been saved by the collapse in fuel prices, which has generated unexpectedly strong consumer demand for large, rear-drive cars.
But officials at the world’s largest auto maker apparently believe that many of those products are reaching the end of their life cycles and can’t be granted further reprieves. At the same time, GM officials have watched as the company’s market share has been eaten away by imports--and by the growing production volume pouring out of U.S. plants of the Japanese auto makers--and have apparently realized that GM no longer has the sales volume to justify retaining all of its plants.
‘Some Excess Capacity’
“There is going to be some excess capacity,” Lloyd E. Reuss, GM’s executive vice president in charge of North American automotive operations, said in an interview Tuesday. “We have built new plants to replace older plants, but then the older plants haven’t closed. We have a lot of facilities,” Reuss said.
“I think we will have three assembly plant closings--at least three; there may well be more than that. We will be making some announcements in the next couple of months.”
Reuss added that unless there is an increase in the demand for the Chevrolet Camaro and Pontiac Firebird models produced at the Van Nuys assembly plant and a similar facility in Norwood, Ohio, one of the two plants may be among those shut down.
“If we could sell two plants’ worth of Camaros and Firebirds, we would have no problem,” Reuss said. “But we’re not doing that right now.”
Sluggish demand for the Camaro-Firebird models forced GM to eliminate the second shift at Van Nuys in July, reducing employment there to just 2,500 workers.
Reuss indicated that production of the existing Camaro-Firebird lines--which could be phased out entirely by 1989--may eventually be consolidated in either Van Nuys or Norwood. He added that GM now has no plans to produce any other cars or trucks in the plant that doesn’t retain the Camaro-Firebird work, indicating that the losing plant will probably be shut down.
Reuss’ comments came just one day after GM President F. James McDonald said in Detroit that GM might announce some permanent plant closings in the “next couple of months.” They also came one day before GM’s scheduled release of its third-quarter financial results, which are expected to show an operating loss.
