“[F]or years I thought what was good for our country was good for General Motors, and vice versa.” Those words came from “Engine Charlie” Wilson, the one-time chairman and CEO of General Motors, who went on to become Dwight D. Eisenhower’s Secretary of Defense in 1953.
If that’s still true today, things aren’t so hot. In the face difficult economic realities, General Motors announced today that it would take “proactive steps to improve overall business performance including the reorganization of its global product development staffs, the realignment of its manufacturing capacity and a reduction of salaried workforce.”
The biggest immediate impact is the closure of three long-term General Motors factories, along with the commensurate reduction in staff. The plants slated for closure include:
Oshawa Assembly: One of GM’s most historic plants, preceding General Motors itself. It opened originally in 1907, and it was one of six facilities that built Chevrolet vehicles before Chevrolet was part of the merger that formed General Motors in 1918. Early on, it built Buicks under the aegis of McLaughlin Motor Company, and it produced Canadian-spec versions of Pontiac automobiles in the 1950s, including the Laurentian and the Acadian Beaumont. The plant currently does some final assembly on Silverado and Sierra models, but the reason it’s no longer seen as viable is the fact that most of its work was on the Chevrolet Malibu and Cadillac XTS, sedans that seem to have fallen out of favor with the driving public.
Detroit-Hamtramck Assembly: Detroit-Hamtramck was located on a piece of property once owned by Dodge. The original Dodge factory was leveled, and the all-new Detroit-Hamtramck facility opened in 1984, producing cars from the BOC (Buick-Olds-Cadillac) group. The first vehicle to roll off the line was a 1985 Cadillac Eldorado on February 4, 1985. GM currently builds the Buick LaCrosse, Chevrolet Impala, Cadillac CT6 and Chevrolet Volt at this facility.
Lordstown Assembly: Since 1965, General Motors has produced more than 16.5 million vehicles at the Lordstown Assembly plant. The plant currently builds the Chevrolet Cruze, sales volume of which has been in freefall, losing 27 percent of its sales volume since last year. The Lordstown Assembly plant is historically remembered for the 22-day factory worker strike in 1972 which reportedly cost General Motors $150 million in lost sales. GM dumped $75 million into the plant specifically to build the Chevrolet Vega and its twin, the Pontiac Astre. The plant was designed to churn out 100 Vegas per hour, but when GM cut staff and sped up the line, quality suffered dramatically.
GM also plans to mothball two propulsion factories:
Baltimore Operations: The Baltimore Operations plant is responsible for building the Allison 1000 transmission in diesel powered 2500 and 3500 Series Chevrolet Silverados and GMC Sierras.
Warren Transmission Operations: GM’s Warren Transmission Operations facility builds the 6T70/6T75 six-speed automatic transmissions for the Chevrolet Impala, Cadillac XTS and GMC Acadia. It shares this six-speed transmission with several Ford models, but those are built in Ford facilities. It also builds the GFE Electric Drive Unit for the Chevrolet Volt and Malibu Hybrid.
“We are right sizing capacity for the realities of the marketplace” CEO Mary Barra said.
That right sizing includes the elimination of 15 percent of its salaried and salaried contract staff, and 25 percent of its executive staff.
There were no specific announcements in the press release regarding GM product, but with Lordstown closing, the Cruze is not long for this world. It was hailed as the most significant product introduction following GM’s 2009 Chapter 11 restructuring. At the ceremony of the start of production of Cruze at Ohio, Mark Reuss, the president of GM’s North American operations said, “This is everything for us.”
According to GM, “These actions are expected to increase annual adjusted automotive free cash flow by $6 billion by year-end 2020 on a run-rate basis.”