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GM Closing Indiana Semi-Conductor Plant

Aging technology too cost prohibitive to replace, company says.

by on Nov.30, 2016

GM is closing its semi-conductor plant in Kokomo, Indiana, mid-year next year.

After six years of employment stability, the layoff notices are starting to pile up at General Motors.

GM has announced that by the middle of 2017 it will eliminate 160 jobs at a semiconductor plant in Kokomo, Indiana. The layoff notices in Kokomo followed GM’s announcement that it would drop the third shift, employing 2,000 workers at the big Lordstown, Ohio, assembly plant in northeastern Ohio.

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GM Kokomo will begin winding down its semiconductor production operations shortly, leaving about 20% of the plant’s employees idled. An estimated 100 hourly and 60 salaried positions will be affected by the production changes

Semiconductor production at the Kokomo plant will end by the middle of 2017, according to an official a statement GM provided to employees.

“There’s been rumors of the fab closing for a good four or five years,” an official who asked not to be identified told the Kokomo perspective. “This is the first time we’ve had anything concrete. This is the first concrete evidence we’ve had.”

“The technical capabilities of the current equipment set does not allow the business to compete at a global level,” GM said in a statement. “It is cost prohibitive to invest in new equipment to produce semiconductors in GM Kokomo due to the available capacity and capability of existing suppliers to meet demand for semiconductors.”

GM Kokomo Plant Manager Steve Hartwig focus on the changing competitive landscape made the elimination of semi-conductor production necessary.

“For you, and for me, this is very difficult today,” said Hartwig in a recording made at an employee meeting obtained by the Kokomo Perspective. “This is a decision to wind this down based upon several factors that you should understand.”

GM cut the third shift, about 2,000 workers, at its massive facility in Lordstown, Ohio.

(GM closes four plants in the wake of earthquake. Click Here for the story.)

“There are semiconductor companies, and that’s all they do. And they continue to invest in new equipment. This is not core business for General Motors. Back in the 1960s, ‘70s, and early ‘80s it was very important for General Motors to be vertically integrated and invest in the semiconductor business because at that time it was a competitive business,” Hartwig added.

The total workforce at the facility is now set to drop from more than 755 employees to around 600 after the layoffs, which amounts to a 20% cut to the labor force. However, workers will continue to fabricate integrated circuits, airbag control modules, engine control modules and other parts for GM and other automakers, GM said.

Kevin Nadrowski, a plant communications manager for GM, said the company decided to cut the semiconductor unit at the plant because current production volumes of the electrical chip had stopped making a profit.

“The bottom line is it’s not a core business element for GM anymore in this area,” Nadrowski said. “The technology is old, the equipment is old, and it would be cost prohibitive to invest in any new equipment.”

(Click Here for details about GM’s diesel production plans.)

The release from GM noted that all UAW/GM employees who presently work at the site will be “treated in accordance with applicable provisions in the UAW Local and National Agreements. We will similarly be identifying opportunities and options for affected salaried employees in the upcoming months.”

Back in the 1970 and 1980s when semiconductors were starting to show up in new cars, the Kokomo plant was considered a showcase of GM’s manufacturing prowess.

It was still important enough for GM to “take back” when Delphi, once a part of GM, emerged from its four-year journey through bankruptcy court in 2009.

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At the time, GM said the Kokomo operations and three other plants were important enough re-acquire to protect its business with other manufacturers provide a reliable source of supply and protect vital intellectual property.

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