TOPICS > Economy

GM to Close 4 SUV, Truck Plants as Demand Dips

BY Admin  June 3, 2008 at 9:55 AM EST

Worker at auto plant; file photo

CEO Rick Wagoner said Tuesday before the automaker’s annual meeting in Delaware that the plants to be closed are in Oshawa, Ontario; Moraine, Ohio; Janesville, Wis.; and Toluca, Mexico. He also said the iconic Hummer brand may be discontinued, according to the Associated Press.

The Wall Street Journal reported that the closures, which are intended to save $1 billion by 2010, will be staggered over 2009 and 2010 but could happen sooner “if market demand dictates,” the company said.

“U.S. economic and market conditions have become significantly more difficult,” Wagoner said. “Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix.”

Wagoner said the GM board has approved production of a new small Chevrolet car at a plant in Lordstown, Ohio, by mid-2010 and the Chevy Volt all-electric vehicle in Detroit by the end of 2010.

Wagoner said the shift in the U.S. market to smaller vehicles likely is permanent. “We at GM don’t think this is a spike or a temporary shift,” Wagoner said.

On the Hummer brand — the large military-derived truck much maligned for being a symbol for gas-guzzling excess — the company is considering “all options … from a complete revamp of the product lineup to a partial or complete sale of the brand.”

GM Chief Operating Officer Fritz Henderson said the company decided to review the Hummer due to “a lot lower sales,” according to the Journal.

The cuts will affect about 2,500 workers at each of the four facilities, although Wagoner did not know exact numbers. Many will be able to take openings created when 19,000 more U.S. hourly workers leave later this year through early retirement and buyout offers.

Detroit’s automakers have been making the shift to more fuel-efficient vehicles, but not at a pace that matches consumers’ shift to hybrids and high mileage models made overseas.

Some analysts questioned whether the embattled automaker, which has grappled with labor problems and sluggish profits in recent years, had moved too slowly, particularly with regard to weighing its options for the Hummer.

“Unfortunately, it’s just a sign that once again they’re behind the curve,” Peter Jankovskis, a chief investment officer with OakBrook Investments, which owns GM shares in some of its portfolios, told Reuters.

“If they were looking to sell the Hummer brand, the more sensible thing would have been to do it three years ago,” he said.