DETROIT – General Motors Corp. is cutting back on pickup truck production, but the truck assembly plant in Allen County won’t feel the squeeze.
The company said Monday it plans to cut one shift at four North American factories that make pickup trucks and big sport utility vehicles, laying off about 3,500 workers.
“At this point, these cutbacks don’t affect the Fort Wayne facility,” GM spokesman Chris Lee said.
The world’s largest automaker said the cuts are caused by sagging sales, brought on by high gasoline prices and an economic downturn.
GM said the cuts will affect pickup factories in Pontiac and Flint, Mich., and Oshawa, Ontario, as well as the full-size SUV plant in Janesville, Wis.
The company said the cuts mean it will make about 88,000 fewer pickups and 50,000 fewer large SUVs this calendar year.
GM said the exact number of layoffs will be worked out with its unions. Workers will get unemployment benefits and supplemental pay that total 80 percent of their normal 40-hour gross pay, GM spokesman Dan Flores said.
“With rising fuel prices, a softening economy and a downward trend on current and future market demand for full-sized trucks, a significant adjustment was needed to align our production with market realities,” GM North America President Troy Clarke said in a statement.
For about the previous three years, the U.S. auto market has been shifting away from pickup trucks and SUVs to cars and crossover vehicles, but the trend accelerated in recent months because of gas prices that have reached $3.60 a gallon, on average.
Mark Gevaart, communications coordinator for United Auto Workers Local 2209, the union representing Allen County GM workers, also said the truck market has dramatically changed compared with just nine months ago.
The Allen County truck plant assembles light-duty GMC Sierra and Chevrolet Silverado pickups.
Lee said while the plants in Michigan also produce the Sierra and Silverado, they make the heavy-duty models.
Oshawa also assembles the Sierra and Silverado, Lee said, but crew cab models.
“The plants were identified … based on their model mix,” Lee said.
Because production is based on market demand, Lee said he couldn’t speculate on whether there would be future production cuts or where future cuts might happen.
But local union members are getting nervous about the trend, Gevaart said.
“You can’t have these kinds of things happening throughout the market and not know that it could happen here just as fast as it’s happening at these other plants,” Gevaart said.
The company expects the layoffs to begin July 14 at the Flint, Janesville and Pontiac plants, and Sept. 8 at Oshawa.
Most of the factories had already seen layoffs and production cuts after a parts shortage from a two-month strike by the UAW at American Axle and Manufacturing Holdings Inc.
The Allen County GM plant employs 2,700. Workers there lost about five weeks on the job because of the American Axle strike, which began in late February. GM also has a foundry in Defiance, Ohio, that has been affected by the American Axle strike.
GM spokesman Tony Sapienza said the company will eliminate shifts with 750 workers each at Flint and Janesville, 1,150 workers in Pontiac and 900 workers in Oshawa.
“Those are the people that we believe will be impacted based on what the shifts are,” he said. “We’ll be working with our partners to determine how that’s brought to fruition.”
Greg Gardner, an analyst with Oliver Wyman Group, said the cuts look like “a realistic assessment.”
“The full-sized pickup and SUV market is not going to rebound anytime soon,” he said. “It looks like that they don’t plan on making up very much of the production loss due to the American Axle strike.”
Gardner said GM’s announcement reflects the industry’s overall production forecast this year, down to about 15 million light vehicles from an earlier forecast of 15.5 million.
“Obviously, the larger, heavier vehicles are taking the biggest hit,” he said.