GM to Lay Off Another 4,500 Workers at 3 Plants : Sales at No. 1 Auto Firm Continue to Slide; Ford, Chrysler, Some Imports Post Gains
General Motors announced more bad news Wednesday when it said it plans to permanently lay off another 4,500 workers early next year at three Midwestern assembly plants that produce the giant auto maker’s slow-selling luxury cars.
The new layoffs, which will affect workers at two plants in Michigan and one in Missouri, were announced the same day that GM posted a 9.4% drop in November car sales, continuing the company’s downward sales trend that began when its incentive programs expired in early October.
By contrast, industrywide car sales were up 6.8% for the month, and imports set a new record for November; GM was the only major domestic auto maker to report a decline.
The new round of job cuts are part of a broader cost-reduction campaign at the world’s largest auto maker and come less than one month after GM said it would close 11 plants over the next three years, eliminating 29,000 jobs.
In addition, the layoffs and sales report cast more gloom over GM at a time when the company is already reeling from the controversial ouster on Monday of its chief in-house critic, Texas billionaire H. Ross Perot, whose stake in GM was bought out by the company for about $700 million.
The United Auto Workers had a pointed response to Wednesday’s news contrasting the layoffs with the Perot flap. “As we approach the holiday season, we would hope that the company’s top management will devote as much attention and concern to these 4,500 employees and their families as they did to their recent highly publicized management problem,” UAW Vice President Donald Ephlin said.
Analysts said GM may be suffering from an image problem that is spilling over into consumer confidence. “The whole string of announcements that GM has made lately tends to convey weakness,” said John Hammond, automotive analyst with Data Resources, an economic forecasting firm. “That tends to leave the thought in the minds of consumers that maybe GM’s not a trend setter.”
But with sales of its redesigned, front-wheel-drive luxury cars plunging, GM appeared to have little choice but to cut back.
Late Wednesday, GM said that effective Feb. 2, it will eliminate the second shift at its Poletown assembly plant in Detroit, laying off 2,500 workers who have been building Oldsmobile Toronado, Buick Riviera and Cadillac Eldorado and Seville models.
On Jan. 5, it will slow down its assembly lines by eight cars per hour at both its Orion Township, Mich., and Wentzville, Mo., assembly plants, eliminating 1,000 jobs at each facility. The Orion plant, which is near Pontiac, Mich., builds Cadillac DeVille, Fleetwood Sedan and Oldsmobile 98 Regency models, while the Wentzville plant outside St. Louis produces Buick Electra and Park Avenue models and Oldsmobile 98 and Delta 88 models.
Many of those nameplates have suffered enormous sales losses since GM switched its luxury car lineup to down-sized, front-wheel-drive models. Sales of the Eldorado, for instance, have plunged 59.8% so far this year, while the Buick version of the same car, the Riviera, has been hit by a 54.3% sales drop.
Ironically, Cadillac’s most successful car this year is its old Fleetwood Brougham, a large, rear-wheel-drive model that GM revived when it became clear that luxury car buyers were turned off by GM’s newer offerings. Cadillac said Wednesday that Fleetwood sales are up 75.7% so far this year.
While GM was struggling Wednesday, both Ford and Chrysler posted impressive sales gains for November. Ford, buoyed by its hit Ford Taurus and Mercury Sable models, said its sales were up 23.8% for the month, while Chrysler reported a gain of 9.3%.
Imports Hit High for Month
“Ford has its Taurus and Sable products, and Chrysler is doing well” with its low-priced Dodge Omni and Plymouth Horizon America series, Hammond said. “They have products helping them. . . . GM does not.”
And despite rising prices for Japanese cars, import sales hit a new November high of 261,500, up 10.2% from the same period in 1985. Honda and Toyota both set new sales records during the month, and analysts believe the two companies are now poised to battle for import sales supremacy.
But Nissan, Mazda and Subaru all reported lower sales as buyer resistance to escalating prices appeared to set in. Auto Sales Percentage changes in auto sales for the month of November are based on daily rates rather than total sales volume. There were 24 selling days in the current period and 25 in the year-ago period.
% November 1986 1985 change GM 255,516 293,884 -9.4 Ford 145,425 122,341 +23.8 Chrysler 71,830 68,459 +9.3 Honda U.S. 30,308 11,240 +180.7 AMC 3,860 7,747 -48.1 VW U.S.* 4,906 6,120 -16.7 Nissan U.S. 6,954 6,011 +20.8 Toyota U.S. 2,275 -- -- DOMESTIC 521,074 515,802 +5.2 Toyota 60,387 49,187 +27.9 Nissan 32,186 43,690 -23.5 Honda 44,599 37,565 +18.7 Mazda 18,134 22,802 -17.1 Subaru 12,120 15,526 -18.7 VW Imports 8,707 10,509 -13.6 Volvo 7,771 7,670 +5.5 Hyundai 15,925 -- -- Others* 61,671 60,319 +6.5 IMPORTS 261,500 247,268 +10.2 TOTAL U.S. 782,574 763,070 +6.8
*Estimate
