GM extends summer shutdown at 2 plants amid car slump

on Jun15

U.S. deliveries of the Malibu are off 30 percent amid an industrywide drop in demand for midsize sedans. Photo credit: REUTERS

UPDATED: 6/14/17 11:35 pm ET – corrected

Editor’s note: An earlier version of this story incorrectly labeled the body style of the new Chevrolet Cruze model made in Mexico. The Cruze hatchback is built there.

General Motors is extending the normal two-week summer shutdowns at two U.S. assembly plants to as many as five weeks amid a slump in car demand and high inventories.

The Lordstown, Ohio, factory builds the Chevrolet Cruze compact sedan and the Fairfax, Kan., plant assembles the Chevrolet Malibu midsize car.

UAW Local 1714 President Robert Morales said that the extra downtime at Lordstown will enable GM to adjust to market changes as consumers shift to SUVs and crossovers.

“We’ll still have some people in here training and learning,” Morales said Wednesday, “but it is an extra three-week downtime that is usually two weeks.”

Morales told the Associated Press that the plant would stop production for the last two weeks in June and another three weeks in July.

U.S. sales of the Cruze are up 36 percent this year, behind the new Cruze hatchback, but retail demand for the Cruze sedan is down 3 percent. The Cruze hatchback is built in Mexico.

U.S. deliveries of the Malibu are off 30 percent amid an industrywide drop in demand for midsize sedans.

The plans for extended downtime at the two plants were reported by The Wall Street Journal.

GM’s factory near Kansas City, where the Malibu is produced, will be idled for five weeks starting in late June, Vicky Hale, president of UAW Local 31, told the Journal.

GM, which eliminated a third production shift in Lordstown in November, declined to comment on the reasons for the extended downtime and whether more temporary shutdowns are scheduled.

“At times, there are going to be plants that need downtime to adjust to the market, and this is our turn,” Morales said. “We’re looking forward to getting back and to reach [manufacturing, productivity and quality] benchmarks given to us by GM. If GM offers us another vehicle as they adjust for the market, we want to be able to raise our hand and be ready.”

GM had a 95-day supply of cars at the beginning of June in the U.S., down slightly from 97 days on May 1, but well above normal industry levels, according to the Automotive News Data Center. Stockpiles of the Malibu stood at 67 days at the start of June, down from 91 days in early May, while Cruze inventories stood at 87 days on June 1, up from 73 days in early May.

After seven straight years of gains capped by record 2016 volume, U.S. light-vehicle deliveries have slipped 2 percent this year, behind weaker car volume and fleet demand.

At GM, car deliveries have slipped 13 percent while light-truck volume has climbed 4.1 percent this year. GM also plans to reduce shipments to daily rental customers by 50,000 cars and light trucks this year.

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