GM to Eliminate Shift at Tennessee SUV Plant, Lay Off Hundreds -- Update
September 22 2017 - 08:02PM
Dow Jones News
By Mike Colias
General Motors Co. will lay of several hundred workers at a
sport-utility plant in Tennessee, a sign that the slowdown in the
broader car market is spreading to once-hot SUVs.
GM notified employees at its Spring Hill, Tenn., assembly plant
Friday that the company will lay off the overnight shift because of
"moderating" sales of the two crossover SUV models built there.
About 1,000 people work on that shift, though some might be able to
transfer to other parts of the operation, which also makes engines
and other components, a GM spokesman said.
"Although crossovers now make up a larger share of the
automotive industry, overall volumes are moderating," GM said in
its notice. "We believe the best way to react...is to reduce
output."
The factory makes the GMC Acadia and Cadillac XT5 crossover
SUVs. Both vehicles are part of a slew of new or overhauled SUVs
that GM is counting on to drive U.S. sales and profit growth as
demand for passenger cars continues to wane.
U.S. vehicle sales have cooled this year after a seven-year
growth spurt and two straight years of record volumes. Healthy
pickup-truck and SUV demand has helped offset a sharp decline in
sales of passenger cars, though signs of a slowdown in those
more-profitable segments have surfaced in recent months.
GM has been particularly aggressive among auto makers in
responding to cooling demand. The nation's largest auto maker has
laid off roughly 5,000 factory workers across a half-dozen plants
since late 2016. The vast majority of those let go worked at
factories that build passenger cars.
Consumers in recent years have been trading in their sedans and
coupes for crossover SUVs and pickup trucks amid a protracted
period of low gasoline prices. Analysts say more buyers are
choosing crossover SUVs for their functionality and improved
handling in bad weather. Because they ride on car underpinnings,
many also offer better fuel economy than SUVs of years past.
But auto makers in recent months have been forced to offer
heftier discounts on SUVs to keep buyers interested, and a backlog
has begun crowding dealer lots. Yet more SUV models are expected to
hit showrooms over the next few years at car companies seek to
offset weakening car sales.
The industry is "wildly overweight on crossovers," John Murphy,
auto analyst for Bank of America Merrill Lynch, said in a recent
presentation.
GM also disclosed Friday that it plans to spend nearly $300
million to retool the Spring Hill plant in preparation for a new
Cadillac crossover model. That entry could spur hiring at the plant
but it isn't expected to go into production until 2019 or
later.
GM executives have said they believe the company's spate of new
or revamped crossover SUVs will help it offset softer pricing in
other market segments.
"We see our crossover launches driving favorable price
performance throughout the balance of the year," GM finance chief
Chuck Stevens told analysts in April.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
September 22, 2017 19:47 ET (23:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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