WDET News
- GM Announces Plant Closures
-
Jun 3, 2008Automotive & Business
Chevy Volt ConceptIf you want an illustration of the impact of high gas prices...look no further than the announcement from General Motors Tuesday. The automaker says it will close four truck assembly plants. Demand for SUVs and pick-ups is down sharply...and the company is betting that the shifts in consumer demands it sees …aren’t likely to change anytime soon. Detroit Public Radio's Jerome Vaughn reports.
SOQGeneral Motors released some dismal sales figures Tuesday afternoon. For the month of May sales were down 27 percent from May a year ago.
Earlier in the day, GM Chairman and CEO Rick Wagoner announced a new round of plant closures.
“Today’s high energy prices…along with the rapid change in auto industry sales mix…require further action to position us for sustainable profitability and growth. ”
The plan calls for truck assembly plants in Janesville, Wisconsin…Oshawa, Ontario…Moraine, Ohio…and Toluca, Mexico to be shut down.
Some production lines will stop as soon as this year. Some won’t be shut down until 2010.
Roughly 10,000 workers will be affected by the plant closures.
The sales numbers released Tuesdayshow the depth of changes in consumer demand. The company says truck sales dropped nearly 37 percent.
Center for Automotive Research Chairman David Cole says he’s not really surprised by the sales numbers or the automaker’s decision to close plants.
He says gas prices hovering around four dollars per gallon have changed consumer habits -- and by default -- the auto industry.
“Many people at three dollars per gallon – it didn’t really hit them too hard. It was reasonably stable. But when it bumped up into the region of four dollars per gallon – that’s when it really changed the game. And with so much talk about even five and six dollars per gallon…the market psychology has changed dramatically.”
Cole says automakers have to believe what their customers believe – and make appropriate changes. He says the industry is likely to make more announcements like the one GM made today in the days ahead.
GM says it’s working to follow consumer demand. The company will begin production of a new compact car at its Lordstown, Ohio plant in the coming months and will start building the Chevy Volt electric car in 2010 -- both moves officials hope will cater to a more fuel-conscious public.