Hourly employees at two General Motors plants are going to get some extra time off this summer as the company is extending the normal two-week shutdown period to as many as five weeks to help shave off some bloated inventory.
The company’s Lordstown, Ohio, and Fairfax, Kansas, plants produce the Chevy Cruze and Malibu respectively. The two cars are suffering through sluggish retail sales performances this year, although overall Cruze sales are up 36% due to fleet and commercial sales.
GM is likely to take the time to change up the lines to adjust to the stark increase in SUV and crossover sales in the U.S.
In fact, Ford Motor Co. announced recently it would be cutting back its summer shutdown from two weeks to just one week at its Louisville, Kentucky, plant that makes its hot-selling Ford Escape and Lincoln MKC small utes in order to keep up with demand.
(Ford raising production levels of small utes. Click Here for the story.)
UAW Local 1714 President Robert Morales told the Associated Press that the company will use the extra time off to provide additional training as the company transitions to account for an increase in utility vehicles
“We’ll still have some people in here training and learning,” he said, “but it is an extra three-week downtime that is usually two weeks.”
Morales told the Associated Press that the plant would stop production for the last two weeks in June and another three weeks in July. GM cut a third shift at Lordstown last November as it attempted to adjust to consumer demand. The plant has about 3,000 hourly and salaried workers.
In the meantime, the Fairfax plant, which employs about 3,500 people, is going to be sitting through the same thing: a simple adjustment to demand, union officials told the Wall Street Journal.
(Click Here for details about GM’s job cuts.)
This move isn’t entirely surprising. GM has a 95-day supply of new cars and extending shutdown is a simple way to shrink inventories. That said, the Malibu (67 days) and Cruze (87 days) are below industry standard, but with new model year vehicles hitting showrooms in August, there’s no point in sending out more “old” new vehicles.
Additionally, GM’s North America President Alan Batey said a few months ago that the company would close down some plants U.S. plants for a combined total of 10 weeks of production time in the second half of the year to cut inventory levels. Fairfax and Lordstown were among those expected to be targeted.
Through May, U.S. car sales were down 11% while truck and SUV sales rose nearly 5%, according to Autodata Corp.
(GM to lay off up to 1,100 Michigan workers. Click Here for the story.)
Also, overall demand for vehicles is slowing after seven years of growth. Total U.S. sales are down 2% through May and many analysts are predicting that full-year sales will slow to 17.2 million, compared with last year’s record of 17.5 million.