Softening demand hits GM full-size truck production

The continuing ramping up of fuel prices and ramping down of the real estate market has taken a toll on sales of big trucks. GM has announced their response with plans to cut production shifts at four factories that build big trucks. With gas at and beyond $4 a gallon and credit getting tighter, people who in recent years have bought or leased full-size SUVs for personal transportation are increasingly looking elsewhere. And with the market for new houses in free-fall in much of the country, contractors aren't buying new pickup trucks. All that adds up to too much production. For a change GM is being proactive and cutting production before they have to start stacking trucks in parking lots around the country. Starting after the summer shutdown in July, one shift of production will be eliminated at the Flint and Pontiac MI plants and the Janesville, WI plant. In September, one shift will be eliminated at the Oshawa Ont. factory. The Oshawa factory will begin producing the Two-Mode hybrid version of the Silverado and Sierra pickups this fall, but it seems unlikely that will be enough to revive the extra production.

[Source: General Motors]

GM to Reduce Full-Size Truck Production

Move to bring production in line with market demand
Company to explore options to expand car production

DETROIT – GM announced today that it is eliminating one shift of production at its full-size pickup truck assembly plants in Pontiac, Mich.; Flint, Mich.; and Oshawa, Ontario; and its full-size SUV assembly plant in Janesville, Wis. The decisions were made to bring production capacity more in line with market demand.

Under this plan, approximately 88,000 units of full-size pickup and 50,000 units of full-size SUV production will be removed from GM's North American production capacity for the remainder of the 2008 calendar year.

Based on current plans, the shift reductions will be effective on the following dates:

• Flint Assembly (Heavy Duty Chevrolet Silverado and GMC Sierra) – July 14
• Janesville (Chevrolet Tahoe and Suburban, GMC Yukon, Yukon XL) – July 14
• Pontiac Assembly (Chevrolet Silverado, GMC Sierra) – July 14
• Oshawa Truck (Chevrolet Silverado and GMC Sierra) – September 8

The full-size pickup truck and full-size SUV segments have softened for the entire industry – down 15 and 26 percent, respectively, through the first quarter of 2008. Nonetheless, GM remains the segment leader in both instances, with nearly 40 percent share of full-size trucks and more than 63 percent share in the full-size SUV market.

"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," said Troy Clarke, president GM North America. "This is a difficult move, but we remain committed to retaining and growing our leadership position in the full-size truck market."

Clarke noted that with the market shifting toward cars and crossovers, GM is seeing strong sales of the new Chevrolet Malibu, Cadillac CTS, Chevrolet Cobalt, Pontiac G6, Chevrolet Impala, Buick Enclave and GMC Acadia. He added that the company is continuing to explore options to increase car and crossover production, but there are no changes to car production at this time.

The full-size truck production cuts will result in lower staffing requirements at all four plants, and those details will be worked out over the next several weeks with the UAW and CAW.