GM Settles with UAW – But Product Puzzle Less Resolved

GM Settles with UAW – But Product Puzzle Less Resolved

By Bill Visnic

With a fresh four-year labor agreement with the United Auto Workers (UAW) ratified last week, General Motors now can get on with the business of ensuring its UAW workers and U.S. assembly plants have desirable product to build.

During the negotiations, documents emerged detailing the commitments GM has made to the UAW for 16 U.S. plants. But while the question of who “won” and “lost” in the labor pact will be long debated, a more important concern for both entities’ long-term viability is how effectively those plants –- and, more vitally, the products they make –- can improve GM’s competitiveness versus fast-moving and still-leaner rivals.

The UAW’s goal is to keep jobs for its membership by keeping plants open, regardless of whether anybody’s buying what comes off the line. GM’s job is to make a profit by selling vehicles customers want to buy. Those goals are not mutually supportive: three decades of GM market-share decline has proven that keeping plants open to produce non-competitive products has not helped it, or the UAW, to thrive.

Based on the GM future-product information made public by the UAW, Auto Observer decided to grade each plant and its products on the potential to boost GM’s competitive outlook (UAW-represented labor figures as of April 30).

Plants With Hands-Off Product

There are no less than five U.S. plants slated to produce nothing but some type of full-size light-duty pickup truck or SUV, or commercial pickups and vans:

• Arlington, Texas: currently producing full-size SUVs; 2,072 represented workers.
Future product: next-generation light-duty pickups and full-size SUVs beginning in 2013.

• Flint, Michigan: currently producing light- and medium-duty versions of the Chevrolet Silverado and GMC Sierra pickups; 2,970 workers.
Future product: next-generation light-duty pickup and commercial trucks beginning in 2012.

• Fort Wayne, Indiana: currently producing light-duty Silverado and Sierra pickups; 2,559 workers.

Future product: next-generation light- and medium-duty pickups beginning in 2012.

• Janesville, Wisconsin: currently producing full-size SUVs and Isuzu-badged pickups; 2,259 workers.

Future product: next-generation pickups and full-size SUVs beginning in 2013.

• Pontiac, Michigan: currently producing Silverado and Sierra pickups; 2,784 workers.

Future product: next-generation light- and medium-duty pickups beginning in 2012.

Grade: C-
Lots of plants and lots of workers dedicated to large pickups and SUVs that may or may not be in demand four years from now.

Given current sales trends, it seems a foregone conclusion at least one of these facilities will not be necessary for the presently designated product. Unless there is a marked rebound in both the light-pickup and full-size SUV segments, GM will have too much volume dedicated to this architecture.

In the best-case scenario, one or more plants could be retooled to assemble other vehicles in demand. If GM’s overall market share continues to decline, however, it is unlikely the capacity can be utilized.

• Bowling Green, Kentucky: currently producing Chevrolet Corvette and Cadillac XLR; 772 workers.

Future product: next-generation Corvette and XLR beginning in 2012 –- and possibly next generation of GM’s Compact Rear-Wheel Drive platform, presently employed for the Pontiac Solstice and Saturn Sky two-seat roadsters, although the potential for these models at Bowling Green is speculation.

Grade: B
Corvette is an evergreen halo model; the current XLR is a slow mover. Nonetheless, Bowling Green is unassailable and vital, despite its comparative low volumes, which might spur the decision to move other boutique models, such as the Sky/Solstice, to the site.

Plants in Transition

• Hamtramck, Michigan: currently producing Buick Lucerne and Cadillac DTS; 1,847 workers.

Future product: front-wheel-drive multipurpose vehicle in 2009, a FWD compact in 2012 -– and one of GM’s most critical vehicles, the heavily hyped Volt plug-in hybrid-electric vehicle, slated for 2010.

Grade: B+
While the storied Hamtramck site currently is a cul-de-sac in the GM manufacturing empire, and the full-size FWD Buick and Cadillac little more than oddities, the future product assignment appears first rate, particularly the high-profile Volt.

If GM can roll out the Volt on time and at a profit, this plant and its products (including probable other hybrids) could be stars in the GM cosmos.

• Delta Township, Michigan: currently producing Buick Enclave, GMC Acadia and Saturn Outlook midsize crossovers; 3,345 workers.

Future product: replacements for models built on this architecture beginning in 2012.

Grade: B
Although these new models are selling briskly, they are sized at the plump end of the segment and at 16/22 mpg for an all-wheel-drive Outlook, for example, are not particularly fuel-efficient.

The next-gen models may have to be re-thought if proposed Corporate Average Fuel Economy increases become a reality, but for now, these high-volume surrogates for the old-school, body-on-frame Chevy Trailblazer/GMC Envoy definitely have GM shifting in the proper direction.

•Fairfax, Kansas: currently producing Chevrolet Malibu and Saturn Aura midsize FWD sedans; 1,874 workers.

Future product: midsize FWD Buick and Saturn models beginning in 2009 and a Chevrolet-badged four-door in 2010.

Grade: B-
Although there is no doubt Fairfax is integral in GM’s manufacturing footprint, this grade comes because of the extreme importance of the new ’08 Malibu, which goes on sale in November.

GM desperately needs to catch some tailwinds with the Malibu’s sleek new sheet metal and overcome the inclination buyers in this segment have for import nameplates. If that doesn’t happen, the company’s strategy to take the perception battle directly to imports will be deeply scarred. Adding tension is the fact the Saturn Aura, by all accounts a fine enough car -- and rides on the same architecture –- has failed to draw buyers from Toyota, Honda and Nissan showrooms.

• Lansing Grand River, Michigan: currently producing RWD/AWD Cadillac STS, CTS and SRX; 1,568 workers.

Future product: CTS in various body styles beginning in 2009 and new models based on GM’s global RWD architecture in 2011.

Grade: B-
Despite all the talk of Cadillac’s resurgence, it has enjoyed mixed success with its cars based on the expensive Sigma architecture churned out of this all-new plant. Yes, the CTS put Cadillac back on the map, but the STS has floundered and the SRX was ill-conceived.

GM will have to properly manage its soon-to-be-burgeoning global capacity for rear-wheel-drive passenger cars, and the wild card remains whether the company can get traction with its scheme to refit some of its mainstream lineup for RWD, such as struggling Pontiac and key models for Chevrolet that include the return of the hallmark Camaro.

Plants in Doubt

• Lordstown, Ohio: currently producing Chevrolet Cobalt, Pontiac G4/G5 and Pursuit; 2,645 workers.

Future product: four-door FWD compact car beginning in 2010 and a rear-wheel-drive compact beginning in 2011.

Grade: C
Although there is firm product commitment to compact cars here, the situation is much the same as that for GM’s midsize plans: the product must be competitive -– and profitable -– and GM hasn’t built up much of a track record for those qualities in this end of the market.

GM isn’t the only manufacturer to be gambling on rear-wheel drive in the compact segment, and it remains to be seen how the market will accept the layout after decades of dominance from front-drive layouts. Engineers are betting advanced new chassis controls will mean most customers won’t notice the difference.

• Orion, Michigan: currently producing Pontiac G6.

Future product: committed to G6 through 2013.

Grade: C-
Some industry watchers wonder about Orion’s contribution, producing a single model that’s far from burning up the sales charts. With a plan through 2013, it’s almost assured the plant will be tooled for another model –- perhaps the new Chevy Malibu, if it lures buyers as GM hopes and it needs extra manufacturing capacity in addition to Malibu’s Fairfax, Kansas, home plant.

• Shreveport, Louisiana: currently producing Chevrolet, GMC and Isuzu-badged midsize pickups and Hummer H3; 1,659 workers.

Future product: H3 replacements beginning in 2011.

Grade: D
After 2011, it appears GM is giving up on the midsize pickup as we know it. While there are whispers of unibody pickups in the spirit of Honda’s Ridgeline, there’s not much information.

Meanwhile, Shreveport appears to be standing on the prospect for the ongoing future of Hummer, a shaky proposition if current market conditions continue.

• Spring Hill, Tennessee: currently producing no models.

Future product: Chevrolet Traverse, a variant of the midsize crossover platform built primarily in Delta Township, Michigan, beginning in 2008, and a new FWD-based crossover beginning in 2011.

Grade:C
Once the backbone of the Saturn brand’s manufacturing base, this facility has twisted in the wind and currently is idle, so promise of a Chevy version of the new midsize crossovers and another product beginning in 2011 is welcome to the UAW -– apart from the Chevy Traverse, the 2011 model based on a hybrid of GM’s midsize crossover platforms almost surely would have been built outside the U.S.
But this setup, as well as GM’s dangling of the potential for the next-generation version of the Traverse in 2012, has the whiff of a stopgap commitment.

• Wentzville, Missouri: currently producing Chevrolet Express and GMC Savanna vans; 1,837 workers.

Future product: Nothing promised beyond 2012; potential for next generation of the commercial vans if business warrants.

Grade: D
Somebody’s gotta make big vans, we suppose. It just may not be GM after 2012.

• Wilmington, Delaware: currently producing Pontiac Solstice and Saturn Sky rear-wheel-drive roadsters; 1,406 workers.

Future product: None after 2012.

Grade: F
GM’s game experiment with these flashy but dynamically uninspiring two-seaters will end in 2012 -– at least for Wilmington. Speculation says there is some probability for a shift to Bowling Green, Kentucky, to increase efficiencies and maximize possible synergies with the next-generation Corvette architecture.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.