GM Ending Shift At Ohio Small-Car Factory; More Cuts To Come
24 January 2009 - 5:22AM
Dow Jones News
General Motors Corp. (GM) will eliminate a shift at a
once-booming small-car factory in Lordstown, Ohio, this spring, a
local union leader said Friday, signaling the auto maker's struggle
to match production with sinking demand and fast-changing consumer
tastes.
The reduction in Lordstown is part of broader production cuts GM
plans to announce as soon as Monday, sources familiar with the
plans said Friday. The factory, where GM builds the compact
Chevrolet Cobalt and Pontiac G5 will go down to a single shift
starting in April, said Dave Green, president of United Auto
Workers Local 1714 in Lordstown.
Just this summer the factory was a rare bright spot for GM,
running three shifts as the auto maker and its rivals raced to meet
demand for small cars at a time when gas cost $4 a gallon. But GM
canceled the third shift in December and, like most of the auto
maker's U.S. factories, the plant was idled this month.
Along with a U.S. market running at per-capita lows unseen since
World War II, volatile gas prices are hampering auto maker's
ability to predict customer tastes. When fuel prices soared this
summer, Detroit's auto makers and their foreign rivals raced to
bolster small-car production and slash output. Now, with gas price
around $2, demand for small cars cooled and many buyers are
returning to the pickup truck and sport-utility vehicle market.
GM, struggling to survive with help from a $13.4 billion federal
loan, must convince the government it can become viable or risk
losing the money. Production cuts will be a significant part of
GM's recovery plan. After slashing North American production by
nearly 20%, or 800,000 cars and trucks, last year, is still
building too many cars and trucks in a depressed U.S. auto
market.
U.S. sales fell 18% in 2008 to 13.2 million car and truck sales,
with many in the industry predicting they will fall as low as 10
million this year.
GM shares recently rose 17 cents, or 5.1%, to $3.49.
-By John Stoll, The Wall Street Journal; 248-204-5533
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com.
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