News that doesn't receive the necessary attention.

Monday, December 26, 2016

10,000 workers to be idled by GM, Fiat Chrysler at 7 plants. Additionally, 1300 GM Michigan factory workers will be laid off starting in March 2017-AP, Bloomberg, Zero Hedge

12/19/16, "General Motors to temporarily close five factories next month, move affects 10,000 workers," AP 


12/19/16, "Car-tastrophe - GM, Fiat Chrysler Idle 7 Plants; Over 10,000 Workers Affected," zero hedge

"Just weeks after Ford idled four plants "due to slowing sales", GM and Fiat Chrysler announced today that they will idle seven plants across Canada and US as they work to reduce near-record high inventories amid weakening sales.

With an inventories-to-sales ratio above historical peaks (only beaten by huge spike in 2008 when sales stopped), the pain for automakers has only just begun...

For example, GM's inventory of vehicles on dealer lots at the end of November stood at 874,162, up 26.5% from the same time a year ago. And so, as AP reports:

DETROIT (AP): "General Motors will temporarily close five factories next month as it tries to reduce a growing inventory of cars on dealer lots.

The factories will close anywhere from one to three weeks due to the ongoing U.S. market shift toward trucks and SUVs, spokeswoman Dayna Hart said Monday. Just over 10,000 workers will be idled.

The company's Detroit-Hamtramck factory and Fairfax Assembly plant in Kansas City, Kansas, each will be shut down for three weeks, while a plant in Lansing, Michigan, will be down for two weeks. Factories in Lordstown, Ohio, and Bowling Green, Kentucky, each will be idled for one week.

The factories make most cars in the General Motors lineup including the Chevrolet Cruze, Camaro, Corvette, Malibu, Volt and Impala; the Cadillac CT6, CTS and ATS; and the Buick Lacrosse.

At the current sales pace, GM dealers have enough Malibus to last for 84 days and enough Camaros to last for 177 days, according to Ward's Automotive. Normally automakers like to have a 60-day supply on lots.

Last month, trucks and SUVs made up almost 62 percent of all vehicles sold in the U.S., a record level.

GM, like other automakers, was caught with too many cars on dealer lots as the shift continued, said Jeff Schuster, senior vice president of forecasting for the LMC Automotive consulting firm. Automakers have started discounting cars, but they need to cut production as the shift continues, he said.

"There's nothing that suggests a move back to cars," Schuster said.
He predicted strong December sales but said it won't be enough "to overcome some of this bloating of inventory."

Buyers are snapping up SUVs largely because they like the high seating position and the ability to haul things.

Gasoline prices around $2 per gallon have helped the sales, but SUVs also have become more fuel efficient in the past five years. GM's inventory of vehicles on dealer lots at the end of November stood at 874,162, up 26.5 percent from the same time a year ago.

Workers at the plants will get company supplemental pay and unemployment benefits that add up to most of their pay."...

"If that were not bad enough, Fiat Chrysler said it is adding four off days to the Jan. 2 observation of New Year’s at its minivan assembly plant in Windsor, Ontario, and its large-car facility in Brampton, Ontario....

And these shutdowns follow Ford Motor Co., which said in October that it was cutting production at plants that make the Escape small SUV and F-150 pickup in the face of slowing sales. 

Worst of all, while the rest of the US manufacturing sector has been in secular decline, the auto industry was perhaps the last shining light for battered US manufacturing during the past several years. However, if demand for cars continues to collapse, forcing supply to follow suit, it is only a matter of time before the US manufacturing recession returns with a vengeance, and at the worst possible time: when not even the US service sector can hinder the realization that the US economy is on the verge of contracting."....

Added: Michigan layoffs in addition to above:

12/20/16, "GM Sends Layoff Notice to 1,300 Michigan Workers as Sales Slow," Bloomberg, David Welch, Jamie Butters

"General Motors said it plans to eliminate a production shift at a Michigan factory starting in March, resulting in layoffs for about 1,300 workers as demand for passenger cars slows. 

The announcement, contained in an official notice to the state of Michigan, goes a step beyond temporary production cuts for January that both GM and Fiat Chrysler Automobiles NV disclosed earlier Monday. Detroit-based GM said eliminating the second shift at Hamtramck will affect 493 regular production employees, 638 temporary workers, and others covered by United Auto Workers. About 30 salaried workers will transfer to other plants.

The automakers are acting to reduce swelling inventories as Americans turn away from sedans and other passenger cars, choosing instead to buy sport utility vehicles and light trucks. GM said earlier Monday it was idling some production at five U.S. passenger-car plants in January, and Fiat Chrysler said it’s halting output for New Year’s week at two Canadian vehicle factories."...

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