More cutbacks at General Motors may be in the offing soon. Market slippage could affect 5 plants in addition to the 11 where closures are already announced
Nearly a dozen General Motors plants are scheduled to be closed. Further car production cuts were announced last week. And that may not be the end of GM's corporate downsizing. A new study by a well-placed automotive consulting firm indicates that as many as five more GM assembly lines could be shuttered relatively soon, primarily because of a lack of demand.
One month ago, GM announced it would close or partially shutdown 11 of its assembly lines and body stamping plants in an effort to save about $500 million.
At the time, GM president F.James McDonald said there could be further closings in the future. According to William Pochiluk, chief analyst at Autofacts, a Paoli, Pa., research firm, that seems a certainty.
Mr. Pochiluk notes that in November General Motors' share of the domestically produced new car market fell to 49 percent, an eight-percentage-point drop in 12 months. And he expects that slide to continue.
``The days when General Motors got half of the domestic new car market is probably just about over,'' he says. ``In our analysis, we have GM falling down to the low 40 percent range over the next five years.''
The result, according to the Autofacts study, is that the nation's largest carmaker will have substantially more production capabilities than it needs by the end of the decade. As a result, he says, GM will have to close three to five more plants between 1987 and 1992.
``They will be vulnerable with their compact J- and N-car plants,'' which produce such cars as the Chevrolet Cavalier and Pontiac Grand Am, Pochiluk says; ``also with their mid-size G- and A-car plants,'' producing the Buick Regal and the Oldsmobile Cutlass Ciera.
Since last month's closings affected only the company's most aging plants - factories that have been replaced by newer assembly lines since 1980 - the move did not actually reduce capacity, according to GM chairman Roger Smith.
But Pochiluk notes that any new closures will directly reduce production capacity, because there are no replacements for those plants.
The Autofacts forecast comes as no surprise to many other industry analysts, including John Hammond of Data Resources Inc., a Lexington, Mass., consulting firm.
``If you look at the actions GM has taken so far,'' Mr. Hammond says, ``they only deal with mid- and large-size cars. That's not where the real problem occurs.''
Hammond notes there is an increasing flood of small cars coming into the US market, not only from Japan, but from newer low-cost auto manufacturing nations, including South Korea, Brazil, and Taiwan.
``Clearly, GM is going to have to make further adjustments,'' he adds. ``We don't think they'll close more than three plants, but they'll be cutting capacity in other ways, such as dropping shifts and trimming line rates at other facilities.''
This is already beginning to happen. In recent weeks, GM has announced plans to trim production at four separate plants - three in Michigan, another in Missouri - indefinitely idling 5,100 hourly employees. Thousands more are being temporarily laid off.
Whatever the actual number of assembly plants GM ultimately closes or trims back, there will be a definite spinoff effect, meaning that a number of smaller component plants will also be partially or fully closed. And outside suppliers will likely also be affected.
GM officials are trying to play down their continuing capacity problems. John Grix, a spokesman for the company's Buick-Oldsmobile-Cadillac group, says he hopes demand will actually be picking up, rather than declining, but ``we're certainly prepared to respond to the market.''