General Motors raising output at 3 factories

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September 23, 2009
— General Motors Co. will go to 24-hour operations at factories in Kansas, Michigan and Indiana to handle an expected increase in demand and to make up for production lost from a large-scale factory consolidation announced earlier in the year.

The automaker says it will add a third shift at its Fairfax plant in Kansas City, Kan., in January. That will be followed in March or April by third shifts at factories in Delta Township, Mich., near Lansing, and Fort Wayne, Ind.

About 2,400 production workers will be recalled as a result of the added shifts, and another 600 will be recalled at parts factories across the country, said Tim Lee, group vice president for global manufacturing.

The increases announced Tuesday, coupled with other production increases unveiled during the summer, will allow GM to raise North American production from about 1.9 million vehicles this year to 2.8 million in 2010, Lee said.

The increase also is necessary because of an expected sales increase next year and because GM's inventory of cars and trucks was at a record-low level of 378,000 at the end of August, said Mark LaNeve, vice president of U.S. sales.

The Fairfax plant makes the midsize Chevrolet Malibu, Saturn Aura and Buick LaCrosse, while Delta Township makes the Buick Enclave, GMC Acadia and Saturn Outlook large crossover vehicles. The Fort Wayne factory makes pickup trucks.

GM says in a statement that Fairfax will get all production of the Malibu when a midsize car factory in Orion Township, Mich., closes Nov. 25. It will be converted to a small-car plant and reopen in 2011.

Delta Township will get production of the Chevrolet Traverse large crossover when the Spring Hill, Tenn., factory that now makes the vehicles closes, also on Nov. 25. That plant will go on standby in case demand increases.

Fort Wayne will add production of heavy-duty versions of the GMC Sierra and Chevrolet Silverado pickups that are being made in Pontiac, Mich. That factory is to close at the end of September, the company said in a statement.

Lee said GM will not hire new workers to staff the additional shifts. Instead, the company generally will first offer the jobs to workers at the plants that will be closed. After that, they will be offered to workers in the region and then across the nation, he said. GM, under its contract with the United Auto Workers union, will pay to move workers from other cities, he said.

Although the company's dealer inventory is low now, it will take a minimum of three months to add the shifts because workers must be moved and because machinery must be disassembled and moved from Spring Hill and Pontiac, the company said.

"This is a massive move for us in terms of the transference of people," Lee said.

GM's September sales have been slow following the end of the government's Cash for Clunkers program, LaNeve said. The company, though, predicts an increase in total U.S. sales from 10.5 million this year to 11.5 million to 12 million next year, he said.

Currently GM has about a 40-day supply of large crossover vehicles, a 52-day supply of Malibus and a 60-day supply of Silverado pickups, according to Ward's AutoInfoBank.

Jeff Schuster, executive director of forecasting at J.D. Power and Associates, said GM has a low supply of many models and should have 1.5 to 2 times what is now on dealer lots. The low inventory, combined with an expected uptick in sales starting next year, means the production increase is justified, he said.

"They've got some successful vehicles now. The new products are doing well," Schuster said, adding that it's reasonable to assume GM will pick up a share of any increase in overall U.S. sales.

Brian Fredline, president of the UAW local at the Delta Township crossover plant, said the increase at his factory is not just due to the closure of the Tennessee plant.

"It's because we have increased demand for our product," he said. "We build a world-class vehicle and the marketplace is responding to it."

Workers at the plant, while unhappy that Spring Hill is closing, are happy to get the additional work, Fredline said.

"It creates job and income security for our UAW workers," he said. "Any job and income security in this economic climate is a good thing."

GM plans to move tooling for the Traverse from Spring Hill later this year, and hopes to begin build Traverses, which are similar to the GMC and Saturn crossovers, by January of next year.

About 800 workers will be recalled at Delta Township, 900 in Kansas City and 700 in Fort Wayne, Lee said.

Last month GM announced it would add shifts at factories in Ingersoll, Ontario, and Lordstown, Ohio, mainly in the fourth quarter. The Ontario plant makes the brand-new Chevrolet Equinox and GMC Terrain crossover vehicles, both of which get 32 mpg on the highway. Lordstown makes the Chevrolet Cobalt small car, GM's highest mileage vehicle at 37 mpg on the highway.

Production also was to be boosted at other North American factories, including those that make the Chevrolet HHR small wagon, the Chevrolet Colorado and GMC Canyon midsize pickups, the Chevrolet Camaro muscle car, Buick LaCrosse sedan and the Cadillac SRX and CTS Wagon.

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