GM cuts truck production, considers selling Hummer brand

Broad restructuring plan pushes GM stock higher

General Motors said today that it is ending truck production at four plants that build full-sized pickups and SUVs and is considering "all options" with its Hummer brand -- including a possible sale.

The moves are the result of high gas prices, which GM now views as permanent, CEO Rick Wagoner said.

GM stock rose 3.4 percent on news of the restructuring plan, trading at $18.04 as of 11:42 a.m. EDT

The automaker also announced it will add a third shift to its small-car plant in Lordstown , Ohio , Wagoner confirmed.

As first reported by Automotive News on Monday, June 2, GM said it will build a new Chevrolet compact car at Lordstown.

Finally, Wagoner said GM's board of directors approved the production funding for the Chevrolet Volt, a gasoline-electric car.

"In other words, the Chevy Volt is a go," Wagoner said in a teleconference before the company's annual meeting today in Wilmington , Del.

Wagoner said GM still intends to start selling the Volt at the end of 2010 and to build it at its plant in Hamtramck , Mich.

PRODUCTION CUTS

GM is reacting to $4-a-gallon gasoline prices by making major cuts in its full-sized pickup and SUV production.

The automaker said it will cease production at its Oshawa , Ontario , truck assembly operations in Canada , which builds the Chevrolet Silverado and GMC Sierra, likely in 2009.

GM said its plant in Moraine, Ohio -- which builds the Chevrolet TrailBlazer, GMC Envoy and Saab 9-7x-- will end production at the end of the 2010 model run or sooner, if demand dictates.

Janesville, Wis., will cease production of medium-duty trucks by the end of 2009 and of the Chevrolet Tahoe, Chevrolet Suburban and GMC Yukon in 2010 -- or sooner, if market demand dictates.

Production of the Chevrolet Kodiak medium-duty truck will also end in Toluca , Mexico , by the end of this year.

Wagoner said each plant employs about 2,500, but it's unclear whether employees will be transferred or laid off.

These cuts, along with the recent moves to remove shifts at U.S. truck plants, Pontiac and Flint, Mich., will result in annual cost savings of more than $1 billion by 2010, Wagoner says.

"Employees of these facilities were notified this morning," Wagoner told reporters. "These are difficult decisions and we'll work with our union partners."

The shutdowns will reduce GM's pickup and SUV capacity by over 700,000 units.

On the plus side, GM said it will add a third shift to the Orion, Mich., plant starting in September. GM builds the Chevrolet Malibu and Pontiac G6 sedans at Orion. Also in September, the company plans to add a third shift at Lordstown Car Assembly in Ohio, which builds the Chevrolet Cobalt and Pontiac G5. That plant will also build the new compact car coming to Chevrolet in 2010.

Hummer HX Concept

HUMMER

GM will began a strategic review of its Hummer brand to determine its fit within the GM portfolio, Wagoner says.

"At this point, we're considering all options, from a complete revamp of the product lineup to a partial or complete sale of the brand," Wagoner says. "We're communicating that to our Hummer dealers today."

Wagoner declined to say how much value GM would achieve by selling Hummer. He says Hummer is an iconic luxury brand that has brought value to GM's portfolio, but in light of the rising gasoline prices, "that equation has changed."

Presently, GM's truck to car mix is about 50/50. Wagoner says within three years, once these changes all take effect, the shift to the mix will be 60 percent cars and 40 percent trucks.

"Once the US market settles down, GM will benefit from the cost it's taken out and the new products it's introducing," Wagoner says.

Chevrolet Volt Concept

VOLT

GM's board approved funding the production of the gasoline-electric Chevrolet Volt, Wagoner says. The funding will cover development costs, tooling and, most importantly, he says, it indicates that GM's leadership believes the technology for the Volt, including the lithium-ion batteries, will be ready for market on schedule.

"We believe this is the biggest step yet in our industry's move away from our historic, virtually complete reliance on petroleum to power vehicles," Wagoner says.

GM plans to show a production version of the Volt in the "very near future", Wagoner said. He says GM still intends to get the Volt to showrooms by the end of 2010.

[Source : Automotive News (Subscription Required)]