General Motors Co.’s Toledo Transmission plant and Defiance foundry both appear to have been spared from the massive job cuts and plant closings announced by the carmaker Monday.
GM stunned workers and observers Monday with its plans to cut 14,500 jobs and shut three assembly plants and two powertrain plants to save $6 billion annually by year-end 2020.
While company representatives said they did not anticipate any impact on GM’s Toledo plant or the Defiance casting operation — which employs 656 people and makes cylinder blocks and crank shafts for a variety of vehicles — other communities were not so lucky. The Lordstown Assembly Plant in Lordstown, Ohio, is one of the five North American factories that GM intends to shutter next year as part of its restructuring.
The Toledo plant, GM’s largest U.S. transmission factory which makes a diverse portfolio of products, is actually poised to see a return to its full-strength, 1,600-employee hourly workforce by early 2019, said Dennis Earl, president of UAW Local 14. The factory has about 145 workers on layoff following GM’s decision six months ago to cut production of the Chevrolet Cruze at Lordstown from two shifts to one. But Toledo Transmission has committed new orders for mostly pickup and SUV transmissions that will necessitate calling back the workers,
“We are very fortunate,” Mr. Earl said.
All three of the assembly plants targeted for closure, including Lordstown, predominantly produce sedans, which have fallen out of favor with consumers for pickup trucks and SUVs.
The Chevrolet Cruze compact has seen sales declines over the past two years to the extent that GM cut a shift earlier this year and is now down to about 1,600 workers. Lordstown joins Detroit-Hamtramck Assembly in Detroit and Oshawa Assembly in Oshawa, Ont., as the three assembly plants to be axed.
Detroit-Hamtramck’s most notable product is the gasoline-electric Chevy Volt, while Oshawa makes the Chevrolet Impala among other vehicles.
The assembly plants, along with the Warren, Mich., Transmission operations and GM’s Baltimore operations, will idle about 6,700 factory workers as they are mothballed until another purpose can be found for them or they are permanently closed.
GM also is firing about 5,750 salaried employees after just 2,250 took a voluntary buyout. The 8,000 jobs are 15 percent of GM’s 54,000 salaried employees in North America.
GM said Monday the moves will save about $4.5 billion annually in direct costs and it will save another $1.5 billion from reducing its investment to keep the plants operating. Several media reports say the Cruze and Impala are vehicles that GM will be discontinuing.
GM said it will redeploy a good deal of that capital in electric and automated vehicles.
Consumers want trucks and SUVs over cars today, said Autotrader analyst Michelle Krebs.
Whereas five years ago cars comprised 50 percent of U.S. vehicle sales, today they stand at slightly less than 30 percent.
Sedans, like the Cruze, have been supplanted by pickup trucks, SUVs and so-called crossover vehicles that have greater passenger and cargo capacity than sedans but get gas mileage almost as good, Ms. Krebs said. That’s because of huge strides that engineers have made for making gasoline engines more efficient and the bigger vehicles lighter, she said.
Two years ago, Fiat Chrysler Automobiles, the parent company of Jeep, announced that it was halting production of cars in the United States and Ford Motor Co. earlier this year said the same.
Toledo Transmission is well-positioned to cater to both cars and light trucks, the UAW’s Mr. Earl said.
It makes six-speed and eight-speed, rear-wheel-drive transmissions for mostly light trucks and six-speed front-wheel-drive transmissions predominantly for cars. The plant supplies all four GM brands: Chevrolet, Buick, GMC and Cadillac.
As demand for cars has declined, there’s been a commensurate increase in demand for truck transmissions, leaving the factory humming, Mr. Earl said.
GM has invested or has committed to invest about $1 billion in the Toledo plant since 2011, GM said on its website. It opened in 1916.
GM entered the year with far too much car-making capacity and it is taking steps now, while it is still profitable, to right-size its operations, said Dave Cole, chairman emeritus of the think-tank Center for Automotive Research in Ann Arbor.
GM is investing in electric vehicles and other alternative propulsion because it has to be ready for an oil shock or tougher mileage standards, even as the Trump Administration has boosted U.S. oil production to minimize those shocks and has sought to freeze or rollback fuel-economy standards, Mr. Cole said.
“GM’s trying to get ahead of the game,” he said.
The future of the mothballed plants will be subject to national bargaining between GM and the UAW next year, Mr. Cole said. Those talks in recent years have seen the UAW settle for product and job commitments along with profit-sharing over salary raises.
A by-product of today’s heavy cuts may be to manage the UAW’s bargaining expectations in next year’s master negotiations, he said. The UAW’s four-year contracts with Fiat Chrysler and Ford also expire next September.
First Published November 26, 2018, 10:07 p.m.
