Although GM Rebounding, Plant Shutdowns Won't Stop

Although GM Rebounding, Plant Shutdowns Won't Stop

By Michelle Krebs June 10, 2010

Last month marked the production of the final Hummer sport-utility vehicle from the former division of General Motors Co.

Workers at GM's assembly plant in Shreveport, Louisiana, assembled the final Hummer, an H3 model, on May 25 as part of a large fleet order from Avis Car Rental Co. GM officials said at the beginning of June there were just 1,056 unsold Hummers remaining on dealer lots.

With Hummer production gone, GM's Shreveport plant is producing only Chevrolet Colorado and GMC Canyon midsize pickups on a single shift -- and with midsize pickup sales being anything but robust, some sources now are suggesting GM may shutter the plant sometime prior to its scheduled shutdown in 2012.

Shreveport's situation underscores a tertiary aspect of GM's rebound that been largely overlooked now, almost a year after the company emerged from bankruptcy: GM is still in the throes of a downsizing -- largely resulting from the elimination of four brands -- that cuts across the entire company -- and the entire country.

Assembly plants, powertrain plants, component-making operations. When GM filed for bankruptcy last June, it said it would idle or permanently close 14 manufacturing plants and three service and parts operations.

So Downsizing Goes

The dismantling of the Hummer brand is one reason the Shreveport plant will close, but another is that the midsize pickup market plumbs new depths almost monthly, and GM is finding fewer and fewer buyers for the Colorado and Canyon pickups.

In 2009, Colorado sales plunged 40 percent and 2010 year-to-date sales are off another 30 percent from 2009. Through May, GM sold just 9,776 Colorados, an average of fewer than 2,000 per month for a truck that averaged more than 10,000 sales per month in 2005.

If GM has plans for a direct replacement for its body-on-frame midsize pickups, it isn't sharing them. Speculation rests on an import from a low-cost Latin American plant or perhaps a radical departure to a unibody replacement, but neither solution involves Shreveport. And with the current pickups' sales dimming, the plant may be shuttered before its 2012 appointment.

Chapter Closes on Cadillac Northstar Engine

Another plant closing driving a potentially major strategic product shift for GM is the Livonia, Mich., powertrain plant, home of the once game-changing Northstar V8. The plant was earmarked to close this month, but a company spokesman told AutoObserver the last Northstar engines will be made at the end of July, after which the plant will be closed.

The end of the Northstar means the end of an era for GM, which made headlines when it launched the innovative V8 in 1993 for the Cadillac Allante roadster. More importantly, GM has no direct replacement for the Northstar, having shelved development of a planned replacement -- the Ultra V8 -- when money got tight in 2007. "We think we did the right thing for this moment in time," Tom Stephens, GM vice president for global product development, told AutoObserver in 2008.

The loss of the Northstar means GM goes to market with no overhead-cam V8, a positioning that, going forward, may hurt its Cadillac division in particular; all of Cadillac's direct competitors offer overhead-cam V8s. GM is planning a significant upgrade of its celebrated "small-block" V8 engine family, but that is an overhead-valve design that often is considered less refined and technologically inferior to an overhead-cam layout -- despite the fact that engineers currently generate formidable power density from the small-block architecture.

Fewer Brands = Fewer Plants

For other plants getting or awaiting the axe, the formula was simple: GM cut the Pontiac and Saturn brands, which together accounted for a significant portion of the company's total sales volume, even as they dwindled in recent years. Pontiac trailed only the giant Chevrolet division in annual sales volume and immediate arguments can still be touched off by wondering aloud whether killing Pontiac was a wise choice.

And GM's share of the U.S. market, which many thought not that long ago had been battered to an unthinkable low of 30 percent, currently is less than 19 percent.

The end result is that except for the Orion, Mich., assembly plant that had be scheduled to close but won clemency to build the 2012 Chevrolet Aveo subcompact and a small Buick crossover, the demise of Pontiac and Saturn -- combined with GM's still downward-trending market share -- means GM has carried out two of its four planned assembly plant closings and one remains in limbo:

- The Pontiac, Mich., plant that built full-size pickups.

- The low-volume Wilmington, Del., plant that last built the Pontiac Solstice and Saturn Sky roadsters.

-The Spring Hill, Tenn., assembly plant that once was the home base of Saturn manufacturing. GM idled the plant last November as it attempted to sell the Saturn operations and transferred production of the Chevrolet Traverse it had been building, but the company has not committed to permanently closing the plant, which many speculate GM will refire if an industry recovery takes hold and GM sales swing upward in tandem.

At the time of its announced bankruptcy restructuring, GM said it intended to be at 100 percent utilization of assembly-plant capacity by 2011. The continuing industry slump makes that goal unlikely - particularly with under-utilization flashpoints such as Shreveport - but the company is doing what it said it needed to do after bankruptcy, aligning its manufacturing footprint with its sales and share of the U.S. market. -- Bill Visnic, Senior Editor

Photos by GM

1 - Workers put the finishing touches on a Hummer on the now-idled line at GM's Shreveport, La., assembly plant.

2 - Chevrolet Colorado sales continue falling.

3 - GM's Northstar V8 engine was once a mainstay in Cadillac models.

 

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