First it was the Vega. Then the Cobalt. Now, it's an unnamed, next-generation compact car that will help keep workers at General Motors' assembly plant in Lordstown, Ohio, in business, even as GM downsizes elsewhere.
The automaker announced plans yesterday to close four North American plants and revamp, or perhaps unload, its biggest gas-guzzler of all, the Hummer.
The tone of yesterday's news, which came out of General Motors Corp.'s 100th annual stockholders meeting, was seminal, signaling what may be a long-term if not permanent shift away from the large trucks and SUVs that had brought the American automaker such huge sales in the '90s and early 2000s.
The restructuring at GM -- as well as those at Ford and Chrysler -- has been under way for some years, driven thus far by burdensome legacy costs and the success of overseas competitors. But in the era of $4-a-gallon gas, the company that lost $38.7 billion in 2007 now seems to be less restructuring than it is rebuilding, from the ground up.
"We at GM don't think this is a spike or a temporary shift," said CEO Rick Wagoner, of climbing gas prices and per-barrel oil costs, as well as America's shift toward smaller vehicles.
The four plant closures, which will help cut truck capacity by 700,000 units and will take effect in 2009 and 2010, are slated for Canada, Mexico, Wisconsin and Moraine, Ohio. But the bad news for those locales couldn't do much to temper the mood in northeast Ohio, where the Lordstown plant, already churning out the Chevrolet-model Cobalt and Pontiac G5, learned definitively that it will soon be building a high-mileage compact Chevy, possibly by next year.
The plant, which lost a shift in July 2006, also will get its third shift back sometime in September. Those extra workers, added to the 2,400 union auto workers and the 1,200 union metalworkers nearby, will in the short term be called upon to build more Cobalts, whose sales are up 17 percent over last year.
"Anytime [GM] has its annual meeting, we take a deep breath," said Michael J. O'Brien, mayor of Warren, Ohio, near Lordstown. That's because the Lordstown plant is the area's biggest economic driver. Not only are thousands employed at the GM plant itself, but many more depend on ancillary jobs at factories supplying the plant.
"It's not only good news for GM, it's good news for the entire supplier base that feeds supplies to the plant," said Walter Good, interim executive director of the Youngstown/Warren Regional Chamber of Commerce. Automodular, for example, assembles subcomponents for GM and others. Intier Seating Systems supplies interiors and car seating.
"The spin-off," Mr. Good said, "is very significant."
The new model will, according to GM, improve on Chevy's most fuel-efficient cars by nine miles per gallon, meaning it will probably get 40-45 mpg. GM hasn't identified the model by name, but it's rumored that the new Lordstown car could be the winner of a three-way "global minicar" concept contest between the Groove, the Beat and the Trax, all three of which were introduced at the 2007 New York International Auto Show.
Yesterday's announcements capped a good week at the enormous Lordstown plant, near the junction of interstates 76 and 80, about 90 minutes northwest of Pittsburgh. Late last week, the United Auto Workers announced that its Lordstown unit, Local 1112, had approved a contract with GM management.
It was that deal that partially paved the way for yesterday's announcements regarding Lordstown, bringing at least a measure of stability to a community beset by the loss of tens of thousands of manufacturing jobs since the 1970s (the Delphi Packard electric plant that once employed 14,000, for example, now employs 950), and to a plant that has been dogged by labor strife and shutdown worries since it opened in 1966, building the Chevy Caprice, the Impala and the notorious Vega.
The Lordstown complex was most recently rumored to be on GM's short list for shutdown in 2003. But the following year, its workers won the rights to build the new Cobalt line, agreeing in the process to benefits cuts and work-rule changes, and GM spent $500 million improving the plant. That GM spent so much upgrading the plant just a few years ago probably helped preserve the Lordstown jobs.
"It solidifies the plant for 10 to 15 years," said Mr. Good.
The production cuts, plant closures and job shifting announced yesterday are expected to trim $1 billion a year in expenses, starting in 2010. GM also announced it would soon begin production on the Chevy Volt, a plug-in electric car that can be driven 40 or so miles before using a drop of gas.