GM Plant Closings

[August1991]

GM will close assembly plants in Doraville, Georgia; Lansing, Michigan; Oklahoma City; Spring Hill, Tennessee, and a car plant in Oshawa, Ontario. The automaker will shut down engine plants in St. Catharines, Ontario, and Flint, Michigan. GM will also reduce shifts at plants in Moraine, Ohio, and a second car plant in Oshawa.

The majority of the closings and shift reductions will be complete by next year. The Georgia and Oshawa closings will come by the end of 2008. The plan to cut 30,000 jobs is the biggest since 74,000 were eliminated during the early 1990s.

Bloomberg

How many of the 30,000 will be in Ontario? And didn't the federal government just hand over a big chunk of cash to GM/Ford for plant upgrades?

[Leafless]

August1991

You wrote- " How many of the 30,000 jobs will be in Ontario."

That question is totally inconsequential.

The fact of the matter is people are not buying cars because they are afraid of high gas cost.

What do you expect???

[politika]

This is a repeat all over again of what happaned to Abitibi workers all over Canada. It's all about high gas and energy prices. The government is making millions on energy yet they arn't doing anything to keep these industries open. So my question to the federal government is how much profit from energy and gas is enough, before they start lowering costs?

[August1991]

You wrote- " How many of the 30,000 jobs will be in Ontario."

That question is totally inconsequential.

Not for the people who lose their jobs.

The fact of the matter is people are not buying cars because they are afraid of high gas cost.

Huh?

From article above:

Toyota, by contrast to Wagoner's plan to cut plants, is adding plants in North America and has released cars this year such as a redesigned Avalon sedan targeted at people who might otherwise buy GM's Buick Lucerne. Toyota plans to open a factory for Tundra pickups in San Antonio next year and a plant for the RAV4 sport-utility vehicle in Woodstock, Ontario, in 2008.

[lenwick]

You wrote- " How many of the 30,000 jobs will be in Ontario."

That question is totally inconsequential.

Not for the people who lose their jobs.

The fact of the matter is people are not buying cars because they are afraid of high gas cost.

Huh?

From article above:

Toyota, by contrast to Wagoner's plan to cut plants, is adding plants in North America and has released cars this year such as a redesigned Avalon sedan targeted at people who might otherwise buy GM's Buick Lucerne. Toyota plans to open a factory for Tundra pickups in San Antonio next year and a plant for the RAV4 sport-utility vehicle in Woodstock, Ontario, in 2008.

<{POST_SNAPBACK}>

3600 jobs in Ontario

[PocketRocket]

A few weeks ago, on CBC radio, there was an interview.

I don't recall what the guy's name was, but he was an economic professor with some university, and he has been specializing in a study of the auto industry for the past several years.

His take on the current state of the auto industry is simple.

The big 3 have geared themselves primarily towards sales of SUV's, Minivans, and pickup trucks.

Apparently all 3 of these can be produced more cheaply, yet sold for far more money, than an ordinary sedan.

They have also, through vigorous ad campaigns, pushed these type of products.

Now, with escalating gas prices, people are once again looking for fuel-efficient alternatives.

The Oriental car companies have continued to produce fine smaller cars, and the occasional small SUV (which is generally better on gas than its larger domestic counterpart).

(The big 3, on the other hand, each have 1 small car. Chrysler=Neon=Toilet. GM=Cavalier=Trashcan. Ford=(Sorry, can't remember)=MoreTrash.)

Also, if you look at some of the newer domestic cars, we're seeing a lot of new "muscle" cars. Nothing like the Shelby's of the 60's, but still pretty damn impressive powerhouses. Think of all the recent TV ads featuring lines like "300HP V-8 Engine", and stuff like that.

It seems that most of the big 3's marketing campaign is aimed at upscale baby-boomers wanting to relive their collective adolesence.

Unfortunately, in the real world, while most of us may WANT to drive one of those powerhouses, the vast majority of us cannot afford to, or, at the very least, would have to make financial sacrafices in other areas of our lives to be able to accomodate such a ride.

In addition, companies like Toyota, Mazda etc have a reputation for producing excellent quality vehicles which hold up well for several years.

One other thing he pointed out was the number of recalls we've heard about the past few years.

The big 3 are recalling a vehicle pretty well every year.

When was the last time you heard Mazda do a recall of any of their vehicles??? Or Toyota, or Hyundai or any of the Oriental companies???

When you consider that some of the most consistently best-selling auto companies (VW, Toyota, Mazda, etc...) have been producing essentially the same, fuel efficient small cars for decades, that should be a good indeicator for the big 3 as to where they should be setting their sights.

Just as in the 70's during THAT energy crisis, the big 3 are going to have to re-invent themselves once again if they expect to stay competitive.

[Leafless]

August1991

There is a smaller following for Toyota products and to that I say 'so what'.

Our domestic automobile manufactures need everyone's support to stay viable.

There is not much profit in 'run of the mill' vehicles like the Sunfire or Neon and not a lot of consumers are interested in RAV4 SUV's.

Ive seen a few articles on this subject and the suggestion was if consumers don't support domestic auto makers there will no longer be a lower priced line of domestic vehicles to choose from.

[Biblio Bibuli]

  It's all about high gas and energy prices.

<{POST_SNAPBACK}>

I thought that that would do the opposite, that drivers would start looking at replacing their gas guzzlers.

I couldn't help but notice that none of the Mexican plants are being affected.

I also couldn't help but notice that the phrase `Up in the Air' appeared several times in the article.

Could our upcomming election have anything to do with that?

GO STEPHEN GO! GO STEPHEN GO!

[politika]

  It's all about high gas and energy prices.

<{POST_SNAPBACK}>

GO STEPHEN GO! GO STEPHEN GO!

<{POST_SNAPBACK}>

HOORAH!!!

The Conservatives will rise again!

[PocketRocket]

HOORAH!!! 

The Conservatives will rise again!

<{POST_SNAPBACK}>

Like a balloon.

They can't help it with all the hot air they generate

(Sorry, I couldn't resist. NOT trying to start an off-topic argument, just making a joke)

[shoop]

I wonder how the plant closings would effect the election.

One would think that would play into the NDS hands, but you never know.

Regardless, GM is in serious, serious trouble.

Is a takeover by Toyota possible?

[PocketRocket]

Not likely. GM is too much a part of the American landscape, and one of those "beacons" of American capitalistic success.

They'll probably get a massive infusion of government money (on both sides of the border) to help out, and they'll look at the marketplace and start producing realistic vehicles.

At least IMHO.

[Chimera]

August1991

Ive seen a few articles on this subject and the suggestion was if consumers don't support domestic auto makers there will no longer be a lower priced line of domestic vehicles to choose from.

<{POST_SNAPBACK}>

Supply and demand. This would be the free market in action, n'est pas?

[sharkman]

I big factor in the problems facing domestic auto makers are the employee costs per car manufactured. They are markedly higher. In the U.S., medical plans and pension plans are listed as the main culprits. So right off the bat the domestic product is more expensive. And they have always been behind japanese makers in the 4 cylinder engine, multi-valve engines and over all quality. Add these factors to the focus on trucks and suvs when gas prices are becoming a big concern and you can see nothing but trouble for the big three.

They are starting to predict that GM will go bankrupt. This may actually save them as they can be freed from union contracts and this is about the only time when the unions would then sign on for less. And the U.S. gov. would not allow such a huge part of the economy to go under, as they did when they assisted Chrysler in the early 80s.

[theloniusfleabag]

Dear shoop,

Regardless, GM is in serious, serious trouble.

Is a takeover by Toyota possible?

Hardly, nor is GM in serious trouble. Their biggest worry is probably this...from: http://start.shaw.ca/start/enCA/News/Natio...rc=n112111A.xml

The automaker could be facing a strike at Delphi Corp., its biggest parts supplier, which filed for bankruptcy protection last month. GM spun off Delphi in 1999 and could be liable for billions in pension costs for Delphi retirees.

and this...

GM also is under investigation by the U.S. Securities and Exchange Commission for accounting errors

However, they still supply the US military with vehicles, as well as many other nation's armed forces. I have seen actions like this before, and usually mass layoffs and plant closures are followed (after a suitable amount of time) by massive hirings and plant re-openings.

August1991,

QUOTE

You wrote- " How many of the 30,000 jobs will be in Ontario."

That question is totally inconsequential.

Not for the people who lose their jobs.

You amaze me with this. You are often derisive towards the 'left', saying things such as "The left doesn't understand even simple economics", etc. (to paraphrase) and yet you make a comment such as this. It is for the good of the free enterprise system, isn't it? How could you cast in in a bad light? (perhaps you aren't, and are just being pragmatic, but it didn't need to be said, unless it was a concern to you).

[August1991]

August1991,

QUOTE

You wrote- " How many of the 30,000 jobs will be in Ontario."

That question is totally inconsequential.

Not for the people who lose their jobs.

You amaze me with this. You are often derisive towards the 'left', saying things such as "The left doesn't understand even simple economics", etc. (to paraphrase) and yet you make a comment such as this. It is for the good of the free enterprise system, isn't it? How could you cast in in a bad light? (perhaps you aren't, and are just being pragmatic, but it didn't need to be said, unless it was a concern to you).

<{POST_SNAPBACK}>

Why are you amazed?

I am derisive towards the Left because it ostensibly wants to help ordinary people but too often what the Left advocates achieves the exact opposite. Thelonious, only 20 years ago (heck even now), there were (are) Leftists arguing in favour of State-ownership of the means of production despite all evidence that this impoverishes ordinary people and makes their lives misery.

In the case of the several thousand GM workers, they're going to lose their jobs. It appears this will happen because GM is badly managed (choosing to make cars people don't want, often with the connivance of government subsidies) and because the workers are unionized (pricing themselves out of the market). These are ordinary, honest people who don't deserve this.

----

The Left always assumed that it had the moral high ground. This is false.

[Leader Circle]

These people working at GM, were working on borrowed time as it was. The auto industry has been taking a hit for a long time now and their only thing to do is to cut the fat.

Why do you think we have been seeing all of these promotions for cars 0% here, 0% there for most of the big auto dealers? Wanna know why? Because they are hurting... they need the numbers and by going 0%, it hurts us all. It hurts the manufacturer by giving them no profits on their money and the consumer, because if you pay no interest up front, the vehicle is worth less down the road.

It is a quick fix for auto dealers, because they sell more cars to jump start the auto industry, but in the long run, profits go down and you have cut backs. They all knew it was coming, but were avoiding the inevitable. Now they make cuts, their shares go up and they make more money. These companies are so mismanaged, the only way to turn a profit is to build up production and cut back jobs. If they spent less time on vehicles that were not selling and developing fuel efficient engines, instead of building some suped up space ship looking rig, that 1 in 1 million people are actually interested in, just to keep up with the Jones'.

It is a pathetic look at the way thing are going.

Lots of these decisions, like 0% interest, are going to come back and haunt us. Sept 11 was the beginning of the slide and now with high energy costs, we are going to see a shitty down turn in the economy. Interest rates are climbing, inflation is up and if the economy doesn't soon get a boost, there is going to be huge cutbacks! This 3900 job cut will look small compared to what will happen!!

[err]

A few weeks ago, on CBC radio, there was an interview.

I don't recall what the guy's name was, but he was an economic professor with some university, and he has been specializing in a study of the auto industry for the past several years.

His take on the current state of the auto industry is simple.

The big 3 have geared themselves primarily towards sales of SUV's, Minivans, and pickup trucks.

Apparently all 3 of these can be produced more cheaply, yet sold for far more money, than an ordinary sedan.

They have also, through vigorous ad campaigns, pushed these type of products.

Now, with escalating gas prices, people are once again looking for fuel-efficient alternatives.

GM put all its eggs in the SUV basket. 50% of all new car sales. The advertising campaign was outstanding. They also had the benefit that there is a 25% duty on all light trucks coming into the USA from foriegn markets... Which made it extremely difficult for the Japanese car makers to compete.

Hindsight says that this was a very foolish decision putting all of their eggs in one basket.... but that's what they did...

[fellowtraveller]

Ive seen a few articles on this subject and the suggestion was if consumers don't support domestic auto makers there will no longer be a lower priced line of domestic vehicles to choose from.

People haven't switched out of disloyalty, they've switched because buying a new car is a big investment for many families and the GM/Big Three vehicles aren't as good as the Japanese. That is what people want, and GM just doesn't get it.

Many GM midsize cars - meat and potatoes territory, where you build generational loyalty - is filled with bland, slow, expensive offerings using outdated technology. What do they expect? In Alberta, a full 50% of GM sales are light trucks (not SUVs). They are now getting killed by new offerings from Honda and Nissan......

A story on CBC News tonight interviewed GM assembly line workers. They stated they make about $65K per year, plus excellent benefits(valued at about $35K per year). All this for semi-skilled work, all training provided on site. That is a problem, a big one.

The first thing to do to fix this is to shoot Buzz Hargrove. Three weeks ago he was trumpeting Ford as the 'strike target'. Give me a break. Better yet, give the auto industry a break Buzz.

[Shakeyhands]

While I agree that shooting Hargrove is not a bad thing....

I live in Oshawa, I grew up in Oshawa, my Dad worked at GM (Salaried Retired), my Brothers work at GM (Salaried), Hell, even I worked at GM for summers during university! ALL of my friends parents work for GM, except one that worked at Lasco Steel, this city revolves around GM, this will hurt the city of Oshawa tremedously. And if any of you have been to or know Oshawa... this can't be good.

More so than labour, I think its retiree benefits and not taking an attractive car to market that is killing them. GM started to turn it around with the reissue of the Cadillac and Chevrolet brands (perhaps made a mistake killing off Oldsmobile?) but its a case of too little too late.

[Argus]

There are a couple of problems for GM. The worst is probably that they make cars with little regard to what people want to buy. They make a lot of dull cars which don't catch people's imagination. Ford is the same. Their management is hidebound, often compared to the government in the old Soviet Union. Some auto analyst pointed out on CBC this morning that Chrysler isn't having the same problems selling cars as GM and Ford because when Daimler took over they cut away the dead wood and made them look further ahead rather than trying to maximize quarterly profits to raise stock prices. An example, used, ironically, iin terms of the suggestions here about fuel prices, is the 300, which he said is flying off showroom floors. The 300 is hardly an economy car.

Someone said GM and other NA manufactuers are geared too much for SUVs. That's partly because they are hugely profitable, and partly because of a poorly designed tax incentive in the US for businesses to help pay for delivery vehicles. Trucks can be written off on taxes, and big SUVs qualify as trucks. So all across the US businesses, and anyone who can claim they travel on business is buying up tons of them in order to write off the cost on taxes.

[BHS]

I don't know if it's the dullness of GM's products that's to blame here. The Honda Civic isn't an entirely inspiring car (though it seems to have caught the imagination of young men who like to "do" cars). What makes the difference is the general assumption that the Japanese brands cost more but offer unbeatable quality, an assumption that gets bolstered every time a Big Three vehicle gets recalled (which happens way, way too often). Stories about drunken assembly line workers don't help either.

[Yaro]

Actually GM has many problems, uncompetitive contracts, irresponsible funding practices, massive bonuses and insane benefits packages at the top, top heavy management, piss poor engineering etc... quite frankly I could go on for some time here.

At the end of the day however its hardly difficult for employees to not want to make less then there parents made for the exact same job. Productivity has been rising for 25 years, and wages have been falling for just as long...

May you live in interesting times... (old Chinese curse)

[Canuck E Stan]

Actually GM has many problems, uncompetitive contracts, irresponsible funding practices, massive bonuses and insane benefits packages at the top, top heavy management, piss poor engineering etc... quite frankly I could go on for some time here.

In defense of GM, The problems you list are the same for all the car companies. This is the automotive world we live in.

We only hear about the domestic companies because they make the news here in North America and affect us. The Japanese and Germans have their fair share of problems just as much as GM has.

The quality issue of American cars I don't believe is as bad as some make it out to be, I would rather drive a domestic car and not have to pay the costs of repairing foreign vehicles, which far exceeds the repair costs of domestic cars.

I drive a 20 year old GM car that is reliable,fairly efficient on gas and and cheap to repair.

I also believe you should buy the car your neighbour builds.

[Leafless]

Yaro

You wrote- " May you live in interesting times"...(old Chinese curse)

For sure--Globalization is destroying the American and Canadian dream--and who is to blame for that--well companies themselves and --

SHAREHOLDERS.