General Motors Corp. will furlough entire shifts of workers at some truck factories and may move them to nearby car plants as it restructures to adjust to a rapidly changing U.S. market brought on by $4 per gallon gasoline.
GM Chairman and Chief Executive Rick Wagoner and top managers are finalizing additional restructuring moves and likely will announce details at the automaker’s annual meeting on Tuesday in Wilmington, Del., two people familiar with the plan told The Associated Press. The people requested anonymity because the plan is not finished.
One said production cuts were part of the plan. Neither would give details.
Key to the plan are the 19,000 hourly workers who signed up to leave the company by July 1 through buyout and early retirement offers. GM on Thursday announced the number of takers in the latest round of offers, which amounts to a quarter of the company’s U.S. hourly work force.
The world’s largest automaker expects to replace some of the workers at a new entry level wage of about $14 per hour, about half the rate of current production workers. The new wage rate for up to 16,000 non-assembly workers is part of the national contract negotiated with the United Auto Workers last year.
“This attrition program gives us an opportunity to restructure our U.S. work force through the entry-level wage and benefit structure for new hourly employees,” GM North America President Troy Clarke said in a statement Thursday.
Already GM has announced that it will accelerate indefinite layoffs of one shift each at the Pontiac and Flint pickup truck assembly plants. The layoffs were to begin July 14 due to slow sales of the plants’ products, the Chevrolet Silverado and GMC Sierra pickups.
Workers laid off at those plants could be moved to a car assembly factory in nearby Orion Township, where GM is negotiating with the UAW to add a third shift, said Mike Dunn, bargaining chairman of UAW Local 5960 at the Orion plant.
The Orion plant near Pontiac makes the Chevrolet Malibu and Pontiac G6 midsize cars, both of which are selling well as consumers shift from trucks and sport utility vehicles to smaller cars and crossovers. Malibu sales were up 37 percent in the first four months of this year, while G6 sales were up 22 percent.
Dunn said the additional shift could bring 1,100 jobs to the plant, which currently has 2,780 hourly workers on two shifts.
“We haven’t got anything final,” he said. “We’re always looking to bring work in. We’re hoping before the year’s out that we can accomplish this goal.”
GM has relocated about 175 workers from other factories to the Orion facility in the past few weeks, Dunn said.
It was unclear Thursday if any other pickup truck or SUV factories would be targeted to lose shifts or even be closed. GM spokesman Tom Wilkinson would not comment.
But the automaker may add a third shift to its Lordstown, Ohio, assembly plant near Youngstown, where it makes the Chevrolet Cobalt and Pontiac G5 small cars, another person familiar with GM’s production plans said Thursday. The person also requested anonymity because plans are not finalized.
UAW Local 1112 at the Lordstown plant reached a tentative local contract agreement with GM Wednesday night. Local contracts are outside of the national UAW agreement and govern work rules, overtime and other items. The deal could clear the way for the third shift and for next-generation vehicles.
“This agreement will secure the future of the Lordstown Complex for many years to come and help in securing the future for our families and the Mahoning Valley,” Local 1112’s Web site said.
A message was left for local President Jim Graham.
Cobalt sales were up 17 percent through April, while G5 sales were down slightly. Silverado pickup sales were down 21 percent in first four months of the year.
Lehman Brothers auto analyst Brian Johnson predicted GM will have to cut North American production by 16 percent this year because of weak sales of trucks and SUVs. Despite minimal truck production recently due to a strike at parts maker American Axle and Manufacturing Holdings Inc., GM still had a 125-day supply of pickups and a 139-day supply of SUVs at the end of April, Johnson said. A 60-day supply is considered ideal in the industry.
“GM’s inventories of large trucks have grown to worrying levels, and we expect GM to plan large production cuts over the remainder of the year,” he wrote Thursday in a note to investors.
One of the people familiar with GM’s restructuring moves said there should be little change in GM’s product plan because the company already was moving to bring more cars and crossover vehicles to market.
GM offered buyouts to all 74,000 of its U.S. hourly workers in February. The company never said how many it hoped would leave.
Under the program, retirement-eligible workers were offered financial incentives to retire with full pension and benefits, while workers who were within four years of their 30th anniversary with GM were allowed to retire early and get reduced pay until their benefits kicked in. Workers could also take up to $140,000 to leave the company with no ties.
GM wouldn’t say how many workers took early retirement and how many took buyouts, nor would it state the cost to the company.
JPMorgan analyst Himanushu Patel said the acceptance rate was better than expected. He predicted GM won’t replace up to 15,000 of the 19,000 departing workers, for total annual savings of $2.1 billion.
Detroit-based GM conducted its last round of buyouts in 2006, when 34,410 workers left. GM had 113,000 U.S. hourly workers at the time.
GM’s move follows big changes at Ford Motor Co. due to the shifting market. Ford on Wednesday confirmed it is looking at involuntary layoffs of salaried employees, perhaps as many as 2,000 workers.
Ford said earlier this month that it will cut North American production by 15 percent in the second quarter, 15 to 20 percent in the third quarter and 2 to 8 percent in the fourth quarter, primarily affecting pickups and SUVs.
GM shares rose 23 cents to close at $17.38 Thursday after dropping as low as $16.73 earlier in the day, their lowest level in nearly 26 years.