1,500 jobs eliminated at GM Lordstown
WARREN — On Friday, General Motors announced the elimination of one of the two remaining shifts at the Lordstown Complex and the laying off of approximately 1,500 workers, which is about half the plant’s workforce.
Sales of the Chevrolet Cruze, including the sedan produced in Lordstown and the hatchback produced in Mexico, have declined recently. In a press release, Tom Mock, the communications manager at the complex, contributed the wave of layoffs to this trend, saying there is a “lower customer demand for compact cars,” and “a shift in consumer demand for crossovers, trucks and SUVS.”
While year-to-year deliveries of the Cruze have fallen over the past six months, the whole picture is more complicated.
The Cruze has remained one of the top GM brands.
Among 43 GM vehicle models delivered in the U.S., the Cruze has remained among the top six throughout 2017 and 2018. While deliveries in January 2018 dropped 45.6 percent compared to January 2017, when Cruze was the second most delivered model, the rate of year-to-year decline has decreased since. In February and March, deliveries fell 16.2 percent and 13.4 percent, respectively.
The numbers also look different when comparing 2018 to 2016, with only a 1 percent decrease to deliveries between February 2016 and 2018 and a 39 percent increase to deliveries between March 2016 and 2018.
Even if sales figures for the Cruze have remained strong, the trend toward SUVs is still a powerful pull for GM to invest resources away from compact cars and the Lordstown plant.
“The industry overall, it continues to reel from the shift to light trucks. In 2018, just 33 percent of new vehicles have been cars,” said Jeremy Acevedo, the manager of industry analysis at Edmunds.com Inc, “That’s an all-time low for the industry.”
GM sales rose 15.7 percent in March, driven in large part by sales of trucks and SUVs, with sales of the Chevy crossovers rising 39 percent in March from the same time last year.
While the trend toward these vehicles is no doubt influenced by relatively steady gas prices, Acevedo said it was not the only factor.
“Leading the way are compact, and sub-compact SUVs. They are vehicles that are fairly efficient, and are comparable to cars in many ways,” he said. “A lot of automakers do see this as the wave of the future.”
Another influence is the profit margins of larger vehicles.
“Directionally there is a whole lot more profit to be made on larger vehicles,” Acevedo said.
The market, however, can be fickle, and Acevedo cautioned against overemphasizing the current dominance of these vehicles.
“We’ve seen in the past what happens when you get too one-sided, and this pendulum does seem to swing from very truck heavy to very car heavy and very truck heavy again,” he said.
GM recently assured the United Auto Workers that as long as the Cruze sedan was manufactured in the U.S., it would be manufactured in Lordstown, but these layoffs could portend GM shifting production abroad. Acevedo, however, said this was unlikely.
“I think cost cutting by moving abroad might not be the same kind of savings that encourages them to, especially in this political climate,” he said. “I have not heard anything about the Cruze moving anywhere, and those are normally year long plans that normally there is something in the air about it before.”
Despite the decision, Acevedo said the Cruze is an important part of the lineup.
“It is difficult to say that with something like the 2019 refresh, the Cruze won’t climb back,” he said. “I don’t think [this decision] has much to do with the merits of the vehicle, but the current climate.”