GM to lay off 2,000 workers as it reduces small-car production

General Motors Co. will permanently lay off around 2,000 hourly workers in January at two car plants to cut bloated inventory as sales of small cars continue to slow. The automaker also would invest more than US$ 900 million at three plants for future products.

The company plans to cut the third shift at its Lansing Grand River Assembly Plant and Lordstown Assembly Plant in Ohio beginning in the first quarter to match supply with demand.

The Lansing plant, which has 2,700 workers, will lay off 810 hourly workers and 29 salaried workers effective January 16, 2017. The layoff figure includes more than 300 temporary workers, a GM spokeswoman said.

The Detroit automaker builds the Cadillac ATS, Cadillac CTS and Chevrolet Camaro at Lansing Grand River; days supply of those cars rose to 118, 136 and 138, respectively, at the end of October. That was higher than the month earlier and more than double what the industry considers a healthy days supply to carry.

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The Lordstown plant builds the Chevrolet Cruze. Its third shift will end January 23, 2017, affecting 1,200 hourly workers and 43 salaried workers. It employs more than 4,500 workers. Supply on the Cruze hit 105 days at the end of October, up from the end of September.

The Detroit automaker said the production cuts are related to the continued expectation that customers will continue to prefer crossovers and trucks over cars. Sales of all four cars the plants build are down sharply this year through October compared to the same months in 2015.

GM plans to invest US$ 211 million at Lansing Grand River for new tooling and equipment and for a 32,000-square-foot addition to the body shop. The company would not say what the vehicle is or when it would be coming to the plant.

Other investments include US$ 667.6 million for future products at Toledo Transmission, retaining 739 jobs, and US$ 37 million at Bedford Casting Operations in Indiana, retaining 45 jobs. GM declined comment on other details of those programs.

GM cut one of two shifts at Lansing Grand River in early 2015 also to lower inventory levels. In May 2015, it announced it would add the second shift back and earlier this year added a third shift when Camaro production was shifted to Lansing from Oshawa, Ontario. Camaro sales are down 9 percent through October.

Last month, Ford Motor Co. announced some temporary downtime was slated at five North American plants to cut inventory such as the Flat Rock Assembly Plant that builds the Ford Mustang muscle car, as well plants in Kansas City and Louisville, Kentucky, that build the Ford F-150 pickup and Ford Escape and Lincoln MKC compact SUVs in the U.S. Two plants in Mexico that build the Ford Fusion and Lincoln MKZ sedans and Fiesta subcompact also were impacted.

Ford at the end of October said it plans to reduce fourth-quarter North America production 12.5 percent from the same 2015 quarter to match inventory with consumer demand and as it sees the U.S. new car sales market plateauing. The Dearborn automaker said it plans more plant downtime, including two weeks by the end of the year at its Michigan Assembly Plant in Wayne. That plant builds the small Focus and C-Max, cars that Ford will shift production of to Mexico.

GM has said it remains committed to small car production in the U.S. but also is investing US$5 billion in Mexico over six years. It has been relatively quiet about what vehicles and engines it will build in Mexico, though some analysts believe some next-generation Chevrolet Equinox and GMC Terrain small crossover production will shift from Canada to Mexico.

GM Chief Financial Officer Chuck Stevens told analysts last month that GM’s dealer inventory in the fourth quarter would be higher than a year ago as it builds stock ahead of launching newly designed crossovers in 2017 and as pickups sell more at the end of the year. Stevens said supply would come down by the end of the year and that the company would watch inventories on cars and reduce levels when required.

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