GM cuts 1,100 staff at Lordstown plant to meet slowing demand
Click above for more high-res shots of the Chevy Cobalt SS
Less than 2 months ago the headline here was GM ramps up Cobalt production to meet demand. It's amazing how quickly things change in this crazy environment. Just months after adding a third shift at the Lordstown, OH assembly plant where the Chevy Cobalt and Pontiac G5 are built, on Friday GM gave 1,100 employees at the facility layoff notices. The company isn't getting rid of the third shift but, it is slowing the build rate in line with current sales demand. Earlier this summer, GM was selling Cobalts as fast as they could build them and now all of a sudden, those sales have dried up. The spike was triggered by $4 gasoline, and even though gas prices have dropped to half that level, you might not expect sales to fall so fast. The real problem is the lack of available credit for financing. Most of the inherent customer base for cars like the Cobalt simply can't afford to pay cash for a new car. With credit increasingly hard to get, car sales have crashed almost across the board in October. Even the Honda Civic that sold 53,000 copies in May got just under 19,800 in October. Expect to hear more about slowdowns at other carmakers, including mighty Toyota and Honda, very soon.
[Source: Vindy.com]
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Reader Comments (Page 1 of 3)
Stumpy 10:58AM (11/08/2008)
GM: "You're hired"!
[Wait 5 Minutes]
GM: "You're fired"!
Reply
arturo 12:09PM (11/08/2008)
The market for cars is getting a smaller as less people buy new cars. I hope the car industry doesn't become the cause of another great depression.
race1foru 1:54PM (11/08/2008)
@arturo If you want to avoid a depression, go out and buy a new vehicle produced by the big 3. The car auto industry will not be the cause of a depression; rather, the consumer who chooses to support businesses outside our own country by purchasing foreign goods will be the demise of our domestic economy.
remy 8:38AM (11/09/2008)
race1foru:
If I want a small hatchback, should I buy the korean made pontiac wave, the chevrolet aveo or a japanese yaris? Or maybe the european made Saturn Astra?
What should I do??
race1foru 3:09PM (11/08/2008)
remy: Don't be lulled to believe that because those vehicles are built in another country that the dollars don't come back to this country. When someone buys a US built car from a foreign manufacturer, those dollars go right back to that country, not ours.
alex 6:17PM (11/08/2008)
@ remy
you could go with the american built pontiac vibe
Big Rocket 1:23PM (11/10/2008)
race1foru @ Nov 8th 2008 1:54PM wrote: "... the cause of a depression ... the consumer who chooses to support businesses outside our own country by purchasing foreign goods ..."
Wrong. Every American consumer who bought foreign-made goods was a victim of uncompetitive domestic products from uncompetitive domestic companies. If you want to blame the bad guys, here is a list:
• Executives who drain the financial health of their companies with multi-million-dollar salaries and corporate private jets.
• Union workers who drain the financial health of their companies with excessive labor costs -- a whopping $60 or more an hour on average in places such as the domestic auto industry.
• Marketing departments that focus solely on short-term profits, and lose sight of market trends that would have ensured the companies' long-term viability.
Avinash machado 11:10AM (11/08/2008)
Compared to the Civic and Corolla the Cobalt seems quite a mediocre car. Only the sudden increase in gas price would cause interest in it due to the good MPG. Hopefully the Cruze will help GM compete better against Toyota and Honda.
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Gabagool 11:40AM (11/08/2008)
But it was supposed to come in 2010, and after that GM said that they will postpone rolling out new cars by a year.
Cruze was supposed to go head to head with brand new Civic, and now it looks like Civic will beat it to the market.
Sam Abuelsamid 12:30PM (11/08/2008)
GM confirmed yesterday that the Cruze and the Volt will not be delayed. They both launch in 2010
Lar 1:27PM (11/08/2008)
This is dreadful news across the board, and as with other fields we sympathize with the workers and families who will be discharged for causes not their fault.
Because their buyers cannot secure financing, carmakers are halting a lot of (most?) new product development. Ironically, Cobalt (and HHR and Astra and G5?) may be around a while. A line was drawn straight through new large SUV development.
jv2k 11:58PM (11/08/2008)
I've compared them and I really never saw what the huge difference is, especially with the Corolla which has plastic coming out the ass.
Judy Zik 11:19AM (11/08/2008)
This is how things work these days. Any cut GM makes right now is a step in the right direction. GM needs two things to be happening.
1) Their dealers need to step up to the plate and find financing for their customers even if it is the local Guido the Loan Shark's High Interest Leasing. Getting an approval isn't as easy as faxing GMAC anymore but your survival depends on you going the extra mile to find other sources. A good finance manager can get ANYONE approved with some work the only thing that changes is interest rates and payments.
2) The bosses at GM should be burning up the phone lines talking to major banks and trying to work out a deal with one of them to offer financing for GM vehicles. This isn't going to be an easy job either but the companies survival depends on it.
Thankfully gas prices have eased so the big 3 may see more short sighted folks willing to buy an SUV again. But long term they need to be able to sell small cars.
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Gabagool 11:44AM (11/08/2008)
"Their dealers need to step up to the plate and find financing for their customers even if it is the local Guido the Loan Shark's High Interest Leasing. Getting an approval isn't as easy as faxing GMAC anymore but your survival depends on you going the extra mile to find other sources. A good finance manager can get ANYONE approved with some work the only thing that changes is interest rates and payments."--------------But that is the key, financing in it self is not a problem at all. You can go to any bank and get a car loan, only interest will be 10% compared to GMACs 3%-4%, the costumer can chose to get 10% from the bank or simply go and buy Ford, who probably offers better financing.
Jack 1:56PM (11/08/2008)
As a GM dealer, I will tell you Judy, getting financed, at any rate, is way more difficult than you make it out to be. Trust me, lenders who buy difficult paper like Wells Fargo and other local credit unions have restricted their lending practices to somewhat mimic what GMAC has enacted. If it were as easy as you make it, we could have sold another 20 cars last month, easily.
As far as what GM execs should do, they should take some of the loan money they receive here shortly and take back controlling stake of GMAC. By selling the controlling stake of GMAC to Cerberus, they have hung their dealer network out to dry. GM needs to have control of the money tap in order to sell more cars. Even in a horrible market like we experience now, it is estimated that GMAC cost GM 70,000 sales last month, not to mention what local banks cost.
Judy Zik 12:18AM (11/09/2008)
There is no way Cerberus is going to sell back to GM that critical 2%. In fact in order for GMAC to qualify for some of the bank bailout money GM is going to be forced to sell them an even bigger chunk.
I didn't say it was easy to find financing. I just don't believe it isn't out there at all.
EscapedFromMichigan 3:33AM (11/09/2008)
The credit markets are a lot more dire than you think. Banks already have enough trouble with the tanking housing market - do you really think they are going to take on additional risk loaning money to people for new cars at the start of a recession?
For the next 2-3 years, either buy your cars cash or expect sky high interest rates.
ed 11:29AM (11/08/2008)
I know I have been asking this B4 but I really need an answer, what happends if GM declares bankruptcy or "dies"? I am buying a Malibu, Vibe or VUE this weekend so I really need to know. Thanks.
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Gabagool 11:38AM (11/08/2008)
SO GM can't even sell efficient cars now?
Does that mean that fuel efficiency has never been the issue in the first place?
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Harry Ariola 12:00PM (11/08/2008)
Seeing as "the Honda Civic that sold 53,000 copies in May got just under 19,800 in October" shows that not only have GM's sales of efficient cars slowed, obviously so have Hondas. Maybe Civic sales are down 63% because Honda is so grossly mismanaged.