The Detroit News reports that GM will be cutting one shift from its Flint, Pontiac, Oshawa, Ontario, and Janesville, WI factories by July 14. The slashing eliminates some 3,500 jobs from GM's North American workforce. The move eliminates produciton of some 50k body-on-frame vehicles– which have already fallen 100k due to the ongoing American Axle strike. Analyst Joe Phillippi of AutoTrends Consulting says this is gonna leave a mark. "These are the most profitable things they make, and losing those profits is going to hurt for the next three quarters." Still, there's no point in building 'em if nobody wants to buy them; GM has seen a 17 percent decline in pickup sales and a 29 percent drop in large SUVs in the first quarter of this year. Sure, cutting makes the powerless feel like they're in control, but until GM goes "down the road, not across the street," expect the misery and moodiness to continue.
Find Reviews by Make:
Read all comments
Watch this space for many many more cuts coming down the road.
I suspect that by the time Chrysler starts producing Nissan Titan replacement trucks in Mexico, they won’t be needing any production capacity in the United States for pickups and will be able to churn out all they need with both Dodge and Nissan sheet metal from Mexico.
As for GM, I suspect that one Mexican plant (currently building some Escalades and some other trucks) will suffice for all of GMNA’s heavy SUV and pickup needs. At least they may be able to turn a small profit by paying the workforce 60 cents an hour.
That’s how bad I think it may well get. The only people who will need pickups will be working folks who don’t want used stuff and have worn out their work trucks, and a few rich guys in Texas and other truck-centric places will take the few up-market rigs not sold by Toyota.
The very few on-frame SUVs will be bought by the rich, but I think this segment is going to evaporate like a snowman on a July day in Florida.
Detroit Inc = Kaput?
There is no question now that Rick Wagoners multi year turnaround plan is kaputsky. The loss of these sales will devastate gross profit. I can’t imagine how bad the dollar losses to come will be. These are the only vehicles that they have made good money on for years and now that gross profit is gone. Chapter 11 is getting much closer. Watch for Wagoner to announce his retirement as well as many high executives who Rick has them set up to make the golden exit from the ill fated SS GM ( Titanic) .
Yeah right. Like the import transplants are immune from a recession. With a huge bucket of crap there’s more than enough to splatter everyone.
GM’s full size trucks are actually more fuel efficient thatn the transplants and they (Toysanda), don’t have a diesel.
Once again,we see the good old union rob the american folks…we have paid to much for cars and trucks for years,because of their high demands..I say good for G M and all others that move to other countries…With the drmos and unions,this country will be completly ruined in just a few more years…high taxes and unions cause companieds to relocate..wake up folks.
Mikey didn’t happen to be on CityTV this morning when they interviewed workers about this was he?
Thank you gawdodirt. Think of the m(b)illions Nissan has sunk into Mississippi to build the soon-to-be-gone Quest, Titan, and Armada and with gas shooting up another .15/gal this morning alone in SW Ohio, that just makes selling those guzzlers harder to sell. Ditto with Toyota’s investment in San Antonio. Honda might be OK since (and correct me if I’m wrong) don’t they build the Ridgeline up the road in Marysville? Of course they could probably afford to give a free Ridgeline to anyone who asked at this point.
I posted comments earlier about diesel’s pollution/CO2 amounts/price on this and other sites and I need to clarify something. Almost all major gas stations in this area sell auto diesel alongside unleaded fuel. Of course the price hit $4.25/gal today… When I lived in the Philly and DC-areas, diesel was much harder to find. Diesel trucks/SUVs would/could survive out here but I’m not sure about out east.
Detroit put way too many eggs into one basket and the Japanese imports were way to eager to jump on in. Of course with those markups, why shouldn’t they? Party’s over guys. Honda/Toyota/Nissan will survive but Ford especially should be bracing themselves. With the exception of the Fusion, I just haven’t seen too many new Ford cars.
I was too young to remember the 1970’s oil shocks and recessions…does this compare, or at least to the early paths we are on compare?
Hi theflyersfan. “I was too young to remember the 1970’s oil shocks and recessions…does this compare, or at least to the early paths we are on compare?”
In 1973 I was learning how to drive. Gas was about 30 cents a gallon. By the time I got my first car, gas was 60 cents a gallon, there was talk of rationing gas for the first time since World War II (the US Government even wasted money printing up the coupons ahead of time but never used them), you could only buy gas on even days if the last number in your license plate was even, odd days for odd numbers, stations ran out of fuel, etc etc.
BTW this was a time when a new cheap car could be bought for $3000, whereas now a roughly equivalent car cost 5 times that.
Back then, when the arabs turned off oil exports because they were angry with America over its support of Israel, we only imported about 20-30% of our oil needs.
Now, we import 60-65% of our oil needs. Some of our major suppliers are stalwarts of national stability (extreme sarcasm alert) such as:
Venezuela
Mexico
Nigeria
Saudi Arabia (enemies of Iran/note Hillbillary’s statement that she’d defend the Saudis with nukes)
By the time 1975 came along, I recall reading that more money over the prior 12 months had been sent to OPEC (read: arab nations at that time) to pay for oil, than the entire worth of every single property, car, home, business and savings account in the state of Wisconsin.
The arabs turned the oil back on, but it was now 300% higher than it was before 1973.
The reason we Americans supported the Israelis? Because had we not, the Israelis were going to use the Samson option and take out the entire middle east with their nuclear weapons. So the thanks we got from the arabs (ultimately caused by their religious and irrational anti-semitic genocidal hatred of jews) was – to cut off our oil.
So what did we Americans do? By 1975, the American oil industry knew very damn well that peak oil was fact (pertaining to US sourced oil).
Go out and drill for more oil in Alaska? Yes, but only a little bit…. a mere drop in the bucket.
Go out and use the Fischer-Tropsche (sp) method to make American coal into gasoline? No.
Go out and build more nuke power plants and go to electric cars? No.
Did we simply do more of the same thing, importing more and more oil? Yes.
So by 1979, we had 50% unemployment in parts of Michigan, we had inflation running at 15% a year year on year, huge numbers of business failures, a nearly collapsed economy, we had mortgage rates of 17% or 19%, a massive slow-down in sales of homes, we had real incomes dropping for almost all Americans and we had Detroit nearly prostrated by a 2nd oil crisis caused by the arabs turning off the oil a 2nd time.
Oh and lest we forget, we had the Iranians holding several hundred American citizens captured from US soil (i.e. the American Embassy in Tehran).
Follow the money as to why America did not wise up starting 35 years ago, and establish a true national energy policy for energy independence.
Our rep was in here a couple of days ago trying to
strong arm us into taking Yukons and Solstice
we refused and he did not like it one bit.We have sold 1 Solstice this year and 1 Yukon this month
and maybe 8-10 for the whole year
I hope Mikey (regular TTAC poster based, IIRC @ Oshawa) is OK. While I don’t always agree with his posts, he does provide a unique insider’s perspective.
Once again,we see the good old union rob the american folks…we have paid to much for cars and trucks for years,because of their high demands..I say good for G M and all others that move to other countries…With the drmos and unions,this country will be completly ruined in just a few more years…high taxes and unions cause companieds to relocate..wake up folks.
That’s a nice, simplistic analysis. Where’d you get the PhD? AM radio?
German manufacturers have been saddled w/insane labor contracts for decades, yet they still remain solvent (eek…maybe even successful). How is that? Maybe it’s because they build cars people want. It seems even those darn Frenchies…w/their Poo-joe’s and Citroen Ducks…are doing a better job than Detroit. How can that be? They don’t even wear flag pins on their lapels!
The Detroit problem is more about a “perfect storm” rather than this anti-union blathering. High legacy costs, unpopular products, a society over-extended on credit, rising fuel costs…these all act together. Unions and “drmos,” whatever that is, are not the sole reasons why American manufacturers are tanking. Here’s a suggestion: Turn off the drug addicts, production assistant molesters and draft dodgers on talk radio university and formulate your own opinions.
Honda Ridgeline is built in Ontario at Alliston, or it used to be along with a lot of other Honda Vehicles
Finance Guy: You should see the full-court press Chrysler reps are laying on to get orders for the
Aspen…at least GM has a class-leading product to sell. Can you imagine a harder vehicle to move right now than an Aspen?
What about the huge losses coming for ChryCo Financial, GMAC, and Ford Financial due to all of the underwater lease vehicles they have on the books?
Honda is moving the Ridgeline to the United States, it was only announced recently. Unsure why, but they have great flexibility in their plants and the Ridgeline has some shared components with their minivans so they’re sharing the US plant, and I think the Canadian plant is going to be rejigged to churn out smaller cars.
Which is totally smart.
Honda Accord was the number 1 selling vehicle in March, ahead of Camry, Silverado, and F-150 and just might be again in April.
Not good for the Detroit 3 at all, from a profits standpoint.
Sammy Hagar: German manufacturers have been saddled w/insane labor contracts for decades, yet they still remain solvent (eek…maybe even successful). How is that? Maybe it’s because they build cars people want. It seems even those darn Frenchies…w/their Poo-joe’s and Citroen Ducks…are doing a better job than Detroit.
VW, Opel and Daimler-Benz have all demanded givebacks and concessions from their unions in recent years.
The French market was protected from Asian imports for many years. Also note that the French government, until recently, owned a substantial share of Renault, so it wasn’t about to let it fail. It is not really comparable to the American new-vehicle market.
Yes the unions have made it good for their members but that good has percolated down through the economy. Have any of you union haters looked down the road at what happens to the economy when all the high paying union jobs go overseas. Some people say who gives a sh*t if the manufacturing sector has to take drastic pay cuts, my job isn’t tied to manufacturing so I’m safe. Without this money local, state/provincial, and federal governments lose tax revenue so they cut services. Educational institutions lose enrollment because students can’t get loans from the gov’t and their parents don’t make enough to pay their tuition. You get the idea.
Maybe you need to stop bashing the unions and ask why we allow anyone to ship product to our country without barriers but we can’t ship to them.
Potemkin:
Have any of you union haters looked down the road at what happens to the economy when all the high paying union jobs go overseas. Some people say who gives a sh*t if the manufacturing sector has to take drastic pay cuts, my job isn’t tied to manufacturing so I’m safe.
There are reasonable unions and UNreasonable unions. The UAW was – until the last contract – completely, utterly UNreasonable. Do you think costs from the Job’s Bank, Healthcare for Life, and 30+ Job Classifications per plant are reasonable???
Many manufacturers (like Caterpillar, Cummins, GE) successfully deal with unions. The domestic automakers generally have not. That’s one reason they may die.
I still think it would be a smart move, if technically feasible, to install the Atlas inline-6 into their trucks and maybe spare some of the bloodletting. It has substantially more horsepower (285 vs 195) and more torque (276 vs 260) than the Vortec V6, with roughly the same mileage. Maybe returning to an inline-6 would salvage some sales at the bottom (more frugal) end.
Regardless, there will be bloodletting aplenty, and I wished I could say that was the end of it. Not a chance….just watched a show about the housing bust in Phoenix and the factors that led to it. Factors that are common in many places. The day of reckoning is not quite here yet, I fear.
The announcement that GM would start the demise of the shift at there factories in July this year, in the local press here in Ontario it states the layoff will be Sept 8th 2008, who is right?