GM Will Idle 4 Facilities; 4,100 Layoffs Slated at Van Nuys Plant
DETROIT — General Motors will temporarily close four major manufacturing plants around the country--including its Van Nuys assembly facility--over the next few weeks in order to reduce its bulging inventories of unsold cars, the company said Monday.
GM said the closings will temporarily idle 11,100 hourly workers, including 4,100 workers for two weeks at Van Nuys, where GM builds its slow-selling Chevrolet Camaro and Pontiac Firebird models.
GM’s action had been widely anticipated by industry analysts, who have been saying for months that the auto maker’s ambitious production schedules could not be supported by its current level of sales.
Like the rest of the industry, GM has been running its plants at close to capacity, but it has recently been forced to offer discount financing and other sales incentives in order to reduce its inventories.
Series of Shutdowns Expected
Despite the incentives, GM’s dealers still had 78 days’ worth of unsold cars on hand at the end of February (a 60-day supply is considered normal), and it had even larger inventories of most of the cars produced at the plants affected by Monday’s announcement. For example, there were 142 days’ worth of unsold Camaros and 120 days’ worth of Firebirds sitting in dealer lots at the end of the month.
The analysts added Monday that the latest moves could be just the start of a series of temporary plant shutdowns throughout the domestic auto industry this spring, as U.S. auto makers ratchet back their production schedules in order to bring them in line with sales.
“It’s the first of a string of announcements that will probably keep coming until May,” said John Hammond, an analyst with Data Resources, a Lexington, Mass., economic forecasting firm.
“The number of units GM is taking out of its system in this announcement is not nearly as significant as the fact that GM is conceding that there are cracks developing” in the demand for its cars, Hammond added.
Hammond also said that Chrysler, which has a 90-day supply of unsold cars on dealer lots, will soon be forced to follow GM’s lead by cutting back its production schedules. But Ford, which has just 58 days’ worth of cars on hand and still has shortages in some of its newest car lines, may be able to avoid any cutbacks, he added.
GM officials in Los Angeles said that workers at the Van Nuys plant would be cushioned from the temporary layoffs this month by a supplemental salary plan that will provide workers with 95% of their regular take-home pay while they are off.
The plan, which applies to workers nationwide, is part of the collective bargaining agreement, and contributions come from GM.
Last Shutdown in 1983
K. C. Beck, personnel director for the Van Nuys plant, said 4,100 workers--mostly in production--would be furloughed for two weeks beginning Monday. About 4,800 people work at the facility, including 500 salaried workers, he said.
Peter Z. Beltran, president of United Auto Workers Local 645 in Van Nuys, said the last such shutdown was in December, 1983. “It’s been a couple of years since we had one, and I guess they just have to take place from time to time,” he said.
Besides the Van Nuys plant, GM said two other assembly plants will be idled. Its Pontiac, Mich., assembly plant, which builds Oldsmobile Cutlass Supreme and Buick Regal models, will be shut down for one week beginning March 31, idling 1,600 workers. Another 2,700 workers will be laid off when GM’s Lakewood, Ga., facility, which makes Chevrolet Chevette and Pontiac 1000 subcompacts, closes for one week starting March 24.
In addition, GM said its Flint, Mich., plant, which produces outer bodies for the Pontiac assembly facility, will close for a week, idling another 2,700 employees.
The cutbacks announced Monday follow GM’s earlier decision to shut down its Pontiac Fiero plant in Pontiac, Mich., this week, resulting in brief layoffs for 2,700 workers there.
Times staff writer Alan Goldstein in Los Angeles contributed to this story.
