Midnight workers wait to hear word on buyouts

The decision not to bring a Saturn car to Lordstown led to the cuts, analysts said.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
LORDSTOWN -- General Motors' buyout program will determine the future of many of the 1,500 midnight-shift workers whose positions are being eliminated in Lordstown.
If enough of their fellow workers quit or retire, the midnight crew can move into open positions on other shifts. Or perhaps many of the midnight workers will take the buyout.
"It's conceivable that no one will lose their job," said Reid Dulberger, executive vice president of the Regional Chamber.
Even if workers are displaced, they will be protected by a labor contract.
Depending on how the action is classified, employees without work would be laid off or placed into a jobs bank, where they are paid for a 40-hour week even though they don't have production duties. Laid-off workers receive 85 percent of regular pay in state and supplemental benefits for 48 weeks and then are placed into the jobs bank.
GM workers left without a job also can transfer to another plant, but it is doubtful the company will have another plant that needs Lordstown workers, said Joe Langley, market analyst with CSM Worldwide in Farmington Hills, Mich.
About 1,000 workers are on the midnight shift at the assembly plant while the adjacent fabricating plant has 500 on that shift.
Effect on local economy
Even if displaced workers are being paid, the local economy will be hurt in the long run by having fewer jobs at Lordstown, Dulberger said. The chamber will be able to gauge the impact better after it's known what happens to the workers, he said.
Dan Flores, a GM spokesman, said Wednesday that it is too early to say what will happen to the workers when the midnight shift is eliminated in June or July. The cut is needed because sales of Chevrolet Cobalt haven't been high enough to meet production, he said.
Flores said more workers will be needed on the two shifts that are being kept but he wouldn't estimate how many.
The line speed in the assembly plant will be increased from 54 cars per hour to 63 cars per hour, he said. The plan calls for Lordstown to produce 1,000 cars a day in two shifts, rather than 1,300 in three.
Erich Merkle, an analyst with IRN in Grand Rapids, Mich., said GM hopes that its buyout plan announced in March will be accepted by so many workers that it won't have to have any workers in a jobs bank. With the closing of a factory in Oklahoma City in February, the company has more than 7,000 idled workers, he said.
Workers have until June 1 to accept the buyouts.
Half of Lordstown's 5,300 hourly workers have at least 30 years of service, so they can retire with full benefits and a $35,000 payment. Younger workers can leave with payments up to $140,000, but they wouldn't have full pensions or health insurance.
Why cancel third shift?
Analysts said GM's decision to cancel the third shift stems from two factors -- a reversal of the company's plan to bring a Saturn model to Lordstown and its move away from sales to rental car fleets.
Last year, GM was considering building the replacement for the Saturn Ion in Lordstown instead of Tennessee. GM had gone so far as to start moving Saturn equipment to Lordstown, Merkle said.
GM abandoned the new car, however, when it decided its price tag would be too high, he said. GM had been planning a premium small car with a higher price than the Ion.
Langley said the new Saturn would have added 100,000 cars a year to Lordstown's production. The plant made 300,000 cars last year.
GM has announced that it will start building a Pontiac version of the Cobalt, called the G5, this summer. It expects to sell only 25,000 to 30,000 a year, however.
Cutting down on sales
Another reason for less-robust Cobalt sales is GM's decision to cut down on less-profitable fleet sales, analysts said. Not only do these sales make less money, but they also hurt a model's image and resale value, Langley said.
Sales of three Chevrolet models -- Cobalt, Impala and Malibu -- will be hurt by lower fleet sales, he said.
Like Lordstown, the Canadian plant that produces the Impala also is cutting its third shift, he said. The Kansas plant that makes the Malibu has been able to retain its production levels because it is making the midsize Saturn Aura.
Last month, GM sold about 20,700 Cobalts in the United States, which was the first time it topped 20,000 in sales since July 2005. The problem, Langley said, was that the plant produced 26,000 cars in March.
Through the first three months of this year, GM sold 52,500 Cobalts, compared with 29,200 in the first quarter of last year, when the car was still in the early stages of its launch.
shilling@vindy.com