GM Cutting Truck Output in Indiana While Adding Shifts at Michigan Plant
General Motors Co. (GM), the biggest U.S. automaker, will extend a temporary shutdown at its full-size truck plant in Indiana and add shifts to a pickup factory in Michigan to improve the balance of inventory on dealer lots.
Fort Wayne Assembly, which makes Chevrolet Silverado and GMC Sierra pickups in Roanoke, Indiana, will close the first week of January in addition to the last week of December, Rich LeTourneau, shop chairman at United Auto Workers Local 2209, said in a phone interview. Saturday shifts at the plant have been canceled for the rest of the year, he said.
“We got a lot of trucks on hand,” LeTourneau, whose local represents hourly workers at Fort Wayne, said today in a phone interview. “The yard is full of trucks, and the market is fluctuating, which is controlling a lot of the buying power.”
The automaker is adjusting its mix of trucks as it reduces inventory of the vehicles. GM is targeting 90 days’ supply of Silverado and Sierra full-size trucks by the end of the year, from 115 days at the end of July, Don Johnson, GM’s vice president of U.S. sales, said on an Aug. 2 conference call.
GM will add shifts on two Saturdays in September and three in October at Flint Assembly, which builds bigger, four-door crew cab Silverado and Sierra pickups that aren’t made in Fort Wayne, according to UAW Local 598’s website.
The automaker is trimming truck inventory “through production adjustments rather than through incentives,” Jim Cain, a spokesman for Detroit-based GM, said in a phone interview.
“We expect there’s going to be a stronger market for full- size pickups between now and the end of the year,” Cain said. “If consumer behavior changes, we don’t want to have an overstock situation. We set an objective of 90 days that we intend to meet.”
Earnings in the second half may be lower than the first six months because GM is reducing pickup production, Chief Financial Officer Dan Ammann said on an Aug. 4 conference call. The automaker reported a second-quarter profit of $2.52 billion and increasing truck inventory added about $350 million to the bottom line, he said.
GM planned to build a “buffer” of higher truck supply throughout 2011 to offset shutdowns next year, Ammann said on the call. The automaker is updating its pickup plants to assemble next-generation versions of the trucks.
Slower selling rates in April and May pushed inventory higher than anticipated, and Ammann said Aug. 4 GM would adjust second-half production schedules without giving details.
The extended shutdown at Fort Wayne is in addition to down time to update the factory for next-generation trucks, LeTourneau said.
GM has a third full-size truck plant in Silao, Mexico. Normal capacity in Silao, Fort Wayne and Flint is about 780,000 pickups annually, Ammann said on Aug. 4. Those plants will be able to make about 640,000 vehicles next year.
The current lineup of GM full-size trucks haven’t been updated since the 2006 model year.
GM fell 89 cents, or 3.4 percent, to $24.94 at 4 p.m. in New York Stock Exchange composite trading. The shares have declined 24 percent from their $33 initial public offering price in November.
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