GM Closing 4 Truck and SUV Plants in North America

GM Chairman and CEO Rick Wagoner arrives at a news conference prior to attending the annual shareholders meeting Tuesday, June 3, 2008 in Wilmington, Del. Wagoner said Tuesday before the automaker's annual meeting the plants to be closed are in Oshawa, Ontario; Moraine, Ohio; Janesville, Wis.; and Toluca, Mexico. He also said the Hummer brand may be discontinued.
GM Chairman and CEO Rick Wagoner arrives at a news conference prior to attending the annual shareholders meeting Tuesday, June 3, 2008 in Wilmington, Del. Wagoner said Tuesday before the automaker's annual meeting the plants to be closed are in Oshawa, Ontario; Moraine, Ohio; Janesville, Wis.; and Toluca, Mexico. He also said the Hummer brand may be discontinued. (Bradley C Bower - AP)
By Howard Schneider
Washington Post Staff Writer
Tuesday, June 3, 2008; 11:03 AM

General Motors will close four of its truck and SUV plants in coming months, expand production of its more fuel efficient cars and move forward with development of an electric vehicle, as the auto giant adapts to skyrocketing energy costs and changing consumer preferences.

As if emphasizing the end of an epoch in which American car companies drew profits from building bulk and passenger capacity into family vehicles, the company also said it may dump the Hummer brand -- perhaps the ultimate in auto excess.

Two of the plants to be closed are in the United States -- in Moraine, Ohio, and Janesville, Wis., where the company makes vehicles like the Envoy and the Suburban. The others are truck plants located in Oshawa, Canada, and Toluca, Mexico.

Four-dollar-a-gallon gasoline "is changing consumer behavior, and rapidly," GM chief executive G. Richard Wagoner Jr. said this morning in comments delivered before the company's annual stockholders meeting in Delaware -- its 100th such meeting. He said he viewed current high oil prices as "a structural change, not a cyclical change" that warranted revamping the company's strategy. Production of less efficient trucks and sport-utility vehicles will be scaled back, while development will begin on a new subcompact car, and the all-electric Chevy Volt will stay on track to hit showrooms by the end of 2010.

As for the Hummer, the gas-guzzler developed for civilian streets from the military's workhorse Humvee, the company said in a news release that it "is undertaking a strategic review of the Hummer brand to determine its fit within the GM portfolio. At this point, the company is considering all options, from a complete revamp of the product lineup to a partial or complete sale of the brand."

GM, along with the other Big Three automakers Ford and Chrysler, is in the midst of a restructuring that began well before the recent spike in oil prices to more than $125 a barrel. The companies have removed tens of thousands of workers from their payrolls through layoffs, buyouts and early retirement programs, closed down plants and shaken up their management--primarily to bring their costs in line with more efficient automakers such as Japan's Toyota. At GM, the latest round of buyout and retirement offers cut 19,000 workers from the payroll, about a quarter of the company's U.S.-based hourly workers.

Those changes seemed to help revive the company's prospects. Its stock climbed steadily into last fall, rising to a recent high of around $40 per share. But GM shares have lost well over half their value since then, as the company's apparent drive back toward profitability slipped to a $3.3 billion loss for the first three months of the year.

Wagoner's comments today showed the company reacting to even broader trends than the challenge from Toyota, including shifts in the global energy market that he said he views as permanent. The changes announced today are expected to cut the company's costs by about $1 billion.

There is "a long-term trend toward higher energy costs," Wagoner said in comments excerpted on CNN. The higher prices at the pump and the changes that is reinforcing among consumers are "by and large permanent," Wagoner said.

Along with shutting down some of its truck and SUV lines, the company will add shifts at plants that make the Malibu and the higher-mileage Cobalt. It is planning a redesigned version of the four-cylinder Aveo and announced a "next-generation compact" car, to be built in Flint, Mich.

And in what Wagoner called a hunt for "robust alternatives" to traditional gasoline-powered vehicles, the company said that its board had approved production funding for the all-electric Volt.

"We believe this is the biggest step yet in our industry's move away from our historic, virtually complete reliance on petroleum to power vehicles," Wagoner said.

The car is due in showrooms by the end of 2010.

It is not clear how many more jobs will be lost because of the plant closures, which are expected to take place in 2009 and 2010. According to wire service reports, the Canadian Broadcasting Corp. said that 1,000 layoffs were expected at the plant in Oshawa, Ontario.


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