GM to Close Lordstown Plant In March
“GM is continuing to 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 company said in a news release.
“We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success,” said GM Chairman and CEO Mary Barra.
“GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures. As the current vehicle portfolio is optimized, it is expected that more than 75 percent of GM’s global sales volume will come from five vehicle architectures by early next decade,” the release said.
According to GM, three assembly plants — Lordstown, Detroit-Hamtramck in Detroit, and the Oshawa plant in Ontario, Canada — will not have products allocated in 2019.
Propulsion plants that will not be allocated product next year include GM’s Baltimore operations in White Marsh, Maryland; and the Warren transmission operations in Warren, Michigan. Two other plants outside North America will cease operations by the end of 2019, the company said. The measures are part of a larger restructuring of GM’s operations that includes a reduction of 15% of the company’s global salaried workforce.
Workers were informed this morning that the Lordstown plant will close March 1, 2019. About 1,500 workers remain at the plant, which produces the Chevrolet Cruze.
The plant went down to a single shift this summer as Cruze sales have declined in recent years in favor of trucks, sport utility vehicles and crossovers.
Mayor Arno Hill said that he has received several phone calls stating that the company has opted to cease production of the Cruze because of slow sales. “Unless I hear the words ‘permanently shuttered,’ I’m holding out hope.”
“It’s disappointing but not exactly a surprise given the overtures coming out of Detroit,” James Dignan, president and CEO of the Youngstown/Warren Regional Chamber, said.
Dignan said he heard this morning from the office of U.S. Sen. Rob Portman, which GM informed the announcement was forthcoming, as well as from Kristi Tanner, senior managing director, automotive, with JobsOhio. Around 9 a.m. he and Green began exchanging emails regarding the meetings at the plant this morning.
On Sunday, he also heard from a counterpart in Ontario who forwarded him an article about the closing of the Oshawa assembly plant there.
A message of hope was what Dave Green, president of United Auto Workers Local 1112, which represents hourly workers at the plant, attempted to put out. Late this morning, he emailed a statement assuring that Drive It Home, the community support campaign Local 1112 and the chamber launched just a week ago, was “alive and well.”
Despite GM’s announcement, “we are not hopeless, we are hopeful,” Green said. “And we are determined to do everything we can to convince General Motors to make Lordstown part of the future of auto manufacturing for this great company that we have been like family with for 52 years.” The objective is to convince GM “to grow jobs in the Mahoning Valley, protect manufacturing in Ohio and make sure that American-made cars and trucks are made in America.”
Yet the shutdown stands to impact not just plant workers, but also those companies that supply the Lordstown Complex.
“It’s a big hit for everybody, really,” said Stan Osborne, plant manager at Jamestown Industries in Austintown. The company supplies front and rear fascia for the Cruze and employs 23 hourly and another six on salary. “We definitely didn’t see this coming.”
Osborne said that the revamped 2019 Cruze required additional labor, and allowed some employees who were placed on layoff after the elimination of the second shift at Lordstown to return to work this year. “We’re hoping that the company does something and look at retooling the plant,” he said. “We would love to continue working for GM, but it doesn’t look promising.”
Meanwhile, the company is pursuing other options in the market such as securing new sorting and packaging business for the company, Osborne said. “Right now, my mind is focused on what to do here and get them back to work,” he said. “This could be catastrophic for the entire region.”
As a new employee at a local dealership in 1982, Greg Greenwood recalls a recruitment drive for the displaced workers from the steel mills that closed throughout the mid-1980s since Black Monday. More than 100 workers came out looking to get sales jobs at the dealership, Greenwood said. As more news unfolds about the announcement of GM halting production at the Lordstown plant, he hopes it will not be a permanent one.
“It’s not the easiest thing to get through for their families,” Greenwood said. “Our hearts and thoughts are with the folks at GM Lordstown who have supported us through the years and now require our support.”
On Monday around noon, it still wasn’t clear if the closure would be permanent, Greenwood said. A permanent closure would be disappointing, “but not totally unexpected the way the marketplace is supporting small sedans,” he said. Sales of GM sedans have dropped steadily over the last few years with the most recent numbers showing a 33% decline for the year, which includes the Lordstown-built Cruze as well as the Chevrolet Malibu, Impala and Volt, he said.
That compares to increasing sales of SUVs like the Chevrolet Trax, which itself is up 30% year-over-year, he said.
“Ten years ago, we could have had a dealership that only sold sedans,” he said. “GM doesn’t have an appetite to live in unprofitable marketplace conditions or situations.”
John Russo, retired director of Youngstown State University’s Center for Working-Class Studies, asked in an email to The Business Journal, “What has changed so much for GM that the adopt the slash and burn – other than short term orientation and desire to hoard cash?”
As Russo noted, the number of GM “units” sold is about the same as two years ago, as is company revenue. “The current dividend is 4.01% — very healthy,” he says, and “EBITDA is solid and not varying widely.”
Russo also points out that Barra earns in the range of $22 million annually. “She earns 295 times the average worker — $74,500.”
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