GM Announces Layoffs and Deeper Production Cuts

More bad news today for our ailing US economy. General Motors stated that it will lay off 2,000 workers at two of its plants and will further cut production in response to continuing sluggish sales. All of the jobs will be cut from two facilities, one in Lordstown, Ohio and one in Delta Township, Michigan.

General Motors has received about $13 billion in federal loans over the past month or so but it appears uncertain how they intend to prove to Washington that they can reverse the current sales trend. Could it be that the US populace has lost its infatuation with the automobile? Certainly in hard economic times, the last thing people really need is a new vehicle. At any rate, these announcements will affect production for the first two quarters of 2009.

From Automotive News:

"General Motors will cut about 2,000 jobs at two plants and plans periodic shutdowns at about half of its 19 U.S. factories as consumers continue to shun new vehicles.

The automaker will eliminate one shift at the end of the quarter at its Lordstown, Ohio, plant and its Lansing Delta factory in Delta Township, Mich.

The cuts mean a loss of about 800 jobs in Lordstown, where workers make the compact Chevrolet Cobalt and Pontiac G5. The Delta Township plant will lose about 1,200 workers, who make the Buick Enclave, GMC Acadia and Saturn Outlook crossovers.

In addition, GM will stop production intermittently at nine other U.S. plants and one Canadian factory for "some number" of weeks in the first and second quarters, GM spokesman Chris Lee said today.

The production cuts stem from depressed sales, Lee said. This month GM lowered its 2009 industry sales forecast to 10.5 million vehicles from a projection as high as 12 million in December.

"We're just aligning production with market demand," Lee said. "Nobody was able to buy any cars," he said, referring to the credit crunch that has deepened the U.S. recession.

The Lordstown plant ramped up from two shifts to three last summer as soaring gasoline prices increased sales of compact cars. But in November GM said it would return the plant to two shifts Feb. 2.

The changes announced today mean Lordstown will drop to one shift April 6, with the first and second shifts working alternate weeks starting Feb. 9.

The Delta Township plant's two shifts will alternate starting Feb. 2, with the reduction to a single shift going into effect March 30.

GM began 2009 with a 102-day supply of new vehicles, down from a 139-day stock Dec. 1. GM's figure is higher than the Jan. 1 industry average of 94 vehicles, which in turn is 50 percent higher than the level considered normal.

GM sold 3 million vehicles in the United States last year, down from 3.8 million in 2007. The industrywide total last year was 13.2 million, following fourth-quarter sales rates that dropped to 26-year lows."