GM to lay off 3,550 at 4 pickup truck and SUV factories
By TOM KRISHER, AP Auto Writer1 hour, 2 minutes ago
The dwindling U.S. auto market and an accelerating shift from trucks to cars has brought grim
layoff news to four General Motors Corp. factories.
The company announced Monday that it plans to cut one shift each at pickup truck and large
sport utility vehicle plants in Flint and Pontiac, Mich.; Janesville, Wis.; and Oshawa, Ontario,
resulting in about 3,550 layoffs.
The world's largest automaker by sales said the cuts, to take effect this summer, were brought on
by weak demand due to high gasoline prices and an economic downturn.
GM said it will make about 88,000 fewer pickups and 50,000 fewer big SUVs this calendar year
because of the cuts. The layoffs represent just over 4 percent of GM's hourly manufacturing work
force of about 80,000 in North America.
The announcement came after stock markets closed. GM shares rose 56 cents, or 2.6 percent, to
$21.94 Monday, then lost 3 cents in after-hours trading.
"With rising fuel prices, a softening economy and a downward trend on current and future market
demand for full-size trucks, a significant adjustment was needed to align our production with
market realities," GM North America President Troy Clarke said in a statement.
For about the past three years, the U.S. auto market has been shifting from pickup trucks and
SUVs to cars and crossover vehicles, but the trend picked up in recent months due to gas prices
that have reached $3.60 per gallon, on average.
GM expects the layoffs to begin July 14 at the Flint, Janesville and Pontiac plants, and Sept. 8 at
Oshawa. Most of the factories had already seen layoffs and production cuts due to a parts
shortage from a two-month strike at American Axle and Manufacturing Holdings Inc.
GM spokesman Tony Sapienza said the company will eliminate shifts with 750 workers each at
Flint and Janesville, 1,150 workers in Pontiac, and 900 workers in Oshawa. Final numbers must
be worked out with unions, he said.
Laid-off workers will get unemployment benefits and supplemental pay that total 80 percent of
their normal 40-hour gross pay, said GM spokesman Dan Flores.
Greg Gardner, an analyst with the Oliver Wyman Group, said the cuts look like "a realistic
assessment."
"The full-size pickup and SUV market is not going to rebound anytime soon," he said. "It looks like
that they don't plan on making up very much of the production loss due to the American Axle
strike."
Gardner said GM's announcement reflects the industry's overall production forecast this year,
down to about 15 million light vehicles from an earlier forecast of 15.5 million.
The Flint, Pontiac and Oshawa plants make the Chevrolet Silverado and GMC Sierra pickups,
while Janesville manufactures the Chevrolet Tahoe and Suburban and GMC Yukon big SUVs.
GM said it did not forecast how many of those vehicles it expected to make this year, but it sold
about 1.1 million of them in the U.S. last year, according to Autodata Corp.
GM said pickup sales overall are down 15 percent through March, while sales of large SUVs are
off 26 percent.
Jesse Toprak, chief industry analyst for the auto information site Edmunds.com, said GM has a
92-day average supply of large trucks. A 60-day supply is considered optimal in the business.
Toprak said the automaker will lose about $4.4 billion in gross sales because of the production
cuts, but it's nearly impossible to determine the impact on GM's net profits.
The production cuts should help GM keep its inventory under control, said Catherine Madden, an
analyst with the consulting firm Global Insight.
The cuts come as 74,000 U.S. workers represented by the United Auto Workers face a May 22
deadline to decide on GM's latest round of buyout and early retirement offers.
___
AP Business Writer Jeff Karoub in Detroit contributed to this report.
Copyright © 2008 The Associated Press. All rights reserved. The information contained in the AP News report may
not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated