GM Postpones the Pain for Van Nuys Workers : Autos: The plant is spared closure for now. But Camaro and Firebird production will be shifted to Canada, and no substitute vehicle is planned.
General Motors Corp.’s decision to permanently close four U.S. assembly plants, which led to the auto maker’s $2-billion third-quarter loss, spared the company’s aging Van Nuys plant--for the time being, at least.
Some observers say the Van Nuys operation is still doomed.
“This does not mean a reprieve for Van Nuys,” asserted Chris Cedergren, a senior analyst at J. D. Power & Associates, an auto research firm in Agoura Hills. “We are assuming GM will close Van Nuys” by 1993, he said.
The Van Nuys plant, which employs about 3,500 hourly workers and covers 100 acres, currently builds GM’s Chevrolet Camaro and Pontiac Firebird sports cars and is the last remaining auto assembly plant in Southern California and one of only two in the state. Indeed, with the exception of GM’s joint-venture plant with Toyota Motor Co. in Fremont, Calif., GM has no other assembly plants west of Arlington, Tex.
Van Nuys is in trouble because GM already has announced that it plans to shift production of the Camaro and Firebird to a plant in Quebec, Canada, when the next generation of the cars are unveiled in the 1993 model year. Yet GM has not announced what vehicle, if any, it will assign to Van Nuys after the Camaro and Firebird are transferred.
The nation’s biggest auto maker is moving Camaro/Firebird production because it contends that Van Nuys’ location, more than 1,000 miles from many of its suppliers, adds several hundred dollars to each car’s production cost. Also, about 75% of the sports cars are sold east of the Rocky Mountains.
In the meantime, sales of the Camaro and Firebird are sagging along with the car industry generally, which is why GM announced Monday that it will temporarily idle Van Nuys and 10 other U.S. plants for up to 4 weeks next month. The Van Nuys facility will be closed for two weeks beginning Monday.
Moreover, GM will “probably” indefinitely lay off 200 to 250 Van Nuys workers even after the plant restarts production because of the slump in sales, asserted Bruce Lee, western regional director of the United Auto Workers union.
But GM spokeswoman Kathy Tanner said “we haven’t determined what impact there will be in terms of layoffs” at the plant, which was built in 1947.
Lee and other UAW executives are trying to persuade GM to convert Van Nuys into a “flex” plant that would be capable of building more than one vehicle on short notice, to respond quickly to changes in demand. GM is entertaining the idea, but has yet to make a decision.
“I think we have convinced them to really seriously make a flex plant,” Lee said. “GM knows they need one in the West; it’s the biggest market in the country.” Now that GM and the UAW have reached agreement on a new labor contract, GM is expected to resume evaluation of the flex-plant idea next week, he said.
J.D. Power’s Cedergren said GM likely will veto the flex-plant proposal, simply because its excess production capacity leaves no room for Van Nuys at all. But there is one way that the plant might be salvaged, he said.
He noted that the state Air Resources Board recently mandated that as early as 1998, 2% of all new cars sold in California must be electric powered to help reduce smog. Early this year, GM unveiled a prototype for an electric car, called the “Impact,” that the company later said it hopes to mass-market.
“We could see GM deciding to produce the Impact at the Van Nuys plant,” Cedergren said. “Also, the plant could be used to equip certain commercial vehicles with electric motors. The one thing that could save Van Nuys would be the California Air Resources Board.”
GM EARNINGS
General Motors’ $2-billion loss for the third quarter reflects a $2.1-billion charge for closing four assembly plants in Kansas City, Mo.; Framingham, Mass.; Pontiac, Mich.; and Atlanta. Eleven other plants, including Van Nuys, will be idled for up to four weeks.
