US: GM to close four North American plants; considering Hummer's future

By: Glenn Brooks, Tuesday, June 03, 2008,

Tags: Future Models, General Motors, Manufacturing, OEM Strategy.

AutomotiveWorld.com

Speaking at the OEM's annual shareholders' meeting in Delaware, Rick Wagoner, the chairman and chief executive of General Motors, has announced plans to close four vehicle production plants in North America, while also stating that the company is seeking options for Hummer, one of which is closing the division.

As well as the plant closures and restructuring or sale of GM's specialist SUV brand, Wagoner also listed details of future vehicle programmes. Among these, he stated that the board has now approved "an all-new next-generation Chevrolet compact-car". This model, believed to be part of the same programme that will see replacements for the Corporation's Delta and T3300 platforms merged onto a new global 'Delta 2' architecture, will be built at the Lordstown plant in Ohio from mid-2010.

Following recent media reports that the Cobalt will live on after the arrival of this new 'compact' model, it is noteworthy that Wagoner did not name the future vehicle or reference the current Cobalt by name. He did, however, state that it would be powered by the 1.4-litre gasoline turbo engine recently unveiled by Opel.

The other Chevrolet model announced by the GM chief executive is likely to be an import, to judge by his choice of words: "The next-generation Aveo... which will also be based on a global architecture... will have segment-leading fuel economy when it becomes available for sale in the US beginning in the second half of 2010."

In related powertrain news, Wagoner states that the GM Board has "also approved an investment to produce a highly efficient, small-displacement engine module in the US. This 1.0- to 1.4-litre engine achieves a superb balance between fuel efficiency and power, and will be the mainstream engine for the next-generation Chevy compact car I just talked about". This engine is tentatively planned to be produced in Flint, Michigan, subject to satisfactory negotiations with local and state authorities.

As for news on the forthcoming Chevy Volt gasoline-electric hybrid, Wagoner is sticking to the OEM's previously stated launch date.

"We intend to show the production version of the Chevy Volt publicly in the near future, and we remain focused on our target of getting the Volt into Chevrolet showrooms by the end of 2010. We are preliminarily planning to produce the Volt at our Detroit/Hamtramck plant, subject to successful discussions with state and local governments," Wagoner said.

GM has also announced plans to expand production of some car lines. From 2 September, a third shift of production at the Orion assembly plant in Michigan will commence. This facility builds the Chevy Malibu and Pontiac G6 models. Also in September, a third shift will be added at Lordstown, Ohio, where the smaller Chevy Cobalt and Pontiac G5 are made.

By contrast, in announcing plans for assembly plant closures, Wagoner acknowledged that this is in response to a shift away from trucks and SUVs in North America.

Four truck plants have now been earmarked for closure, the first of which will be the Toluca facility, where the Chevrolet Kodiak medium duty trucks are built. This Mexican plant will shut the end of this year.

The largest of the four sites, Oshawa Truck in Ontario, is likely to close in 2009. As well as the GMC Sierra, this facility builds its twin, the Chevrolet Silverado pick-up, GM's best selling vehicle in the US.

The Moraine plant in Ohio will also be shuttered. This makes the aging Chevy TrailBlazer, GMC Envoy, and Saab 9-7 SUVs. The timing is stated by GM as being "at the end of the current model run in 2010, or sooner if market demand dictates".

Janesville, where the Chevy Tahoe and Suburban, GMC Yukon, and Chevy, GMC, and Isuzu medium duty trucks are built is the third plant of the four due to close. GM says the medium duty truck line built at this facility in Wisconsin "will cease operations by the end of 2009, and the SUV lines will discontinue production in 2010, or sooner if market demand remains weak".

Wagoner also states that the timing of all these actions is subject to model lifecycles and market demand. "If volumes continue to wane, the timing could be pulled ahead," he said.

"In addition to these assembly plant moves, we will consolidate the related stamping and powertrain capacity, consistent with the lower market demand for trucks and SUVs. We will communicate the affected plants as these plans are finalised," Wagoner added.

With today's announcements, GM will have cut its truck annual assembly capacity by over 700,000 units, and the total GM North America capacity to 3.7 million units by 2010.

The last part of General Motors' strategic review is the future of Hummer. Wagoner says the Corporation is "considering all options for the Hummer brand... everything from a complete revamp of the product lineup to partial or complete sale of the brand. We are communicating this information to our Hummer dealer network today, and will seek their input during the review. We will provide more details as we move through the process".