Wall Street Journal / Tech - Game

GM to Idle Detroit Car Factory Amid Slow Demand

General Motors plans to close a Detroit factory through the end of the year and deepen production cuts to slow-selling cars the plant manufactures, idling some workers and letting go others in response to weak sales.

By

Mike Colias

General Motors Co. plans to temporarily close a Detroit factory and deepen cuts in production of slow-selling cars at the plant, idling some workers and letting others go around the holiday season.

GM’s Detroit-Hamtramck assembly plant will shut down for about six weeks starting in mid-November, said people familiar with the plan. Roughly 1,500 workers who help build four passenger-car models at the plant will be laid off.

When operations resume, production will be scaled back 20%, costing about 200 workers their jobs, the people said.

A GM spokesman declined to comment.

The nation’s largest auto maker already laid off several hundred employees at the Detroit-Hamtramck factory by eliminating the evening work shift earlier this year.

GM, like other auto makers, is revising production plans amid cooling U.S. vehicle sales, punctuated by a sharp contraction in the market for passenger cars. Consumers are opting for larger and more versatile sport-utility vehicles, with low prices at the fuel pump boosting the segment.

The upshot is dealer lots packed with compact and midsize sedans that were staples of the U.S. auto market a few years back. GM, which has more passenger-car-only factories than its competitors, has moved aggressively to realign production amid the shift in consumer tastes.

Over the past year, GM has slashed passenger-car output, resulting in nearly 3,000 laid-off workers overall. Some have been transferred to busier plants making SUVs or components.

The Detroit-Hamtramck plant, which straddles the border of the Motor City and its smaller neighbor, is GM’s least-productive assembly factory in North America, according WardsAuto.com. And the 32-year-old plant has been hit especially hard by the passenger-car slump.

Workers there build four nameplates, including the small Chevrolet Volt plug-in hybrid and the Cadillac CT6, a large sedan introduced last year as the luxury brand’s flagship car. Demand for three of the plant’s products has fallen sharply in recent months, with the models piling up at dealerships.

Dealers are sitting on a roughly 10-month supply of the Buick LaCrosse, another car built at the plant, according to WardsAuto.com. A two-month supply is considered healthy. The cars are struggling to attract buyers even though most were recently redesigned. A fresh look for a model typically translates into stronger sales.

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  • GM’s Conundrum: Too Many Factories Making Slow-Selling Cars

Critics lauded the CT6 as on a par with German luxury cars, but sales are nonetheless falling short of GM’s goals.

GM executives repeatedly have said they would cut output to align with demand, even though the reduced production hurts revenue. Car companies book revenue when they ship vehicles to dealerships, and GM had long been criticized for cranking out too many cars that require steep discounts to sell.

GM finance chief Chuck Stevens told analysts in July that the company is “committed to take action on passenger cars, which we have done and will continue to do as required to align supply and demand.”

Write to Mike Colias at Mike.Colias@wsj.com

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