Saturday, September 29, 2007
Lordstown will build both a small car and a midsize model.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
LORDSTOWN — General Motors plans to build two new car models in Lordstown, but even more could be coming.
Union leaders at the plant told members Friday that GM intends to build a new small car and a new midsize car at the plant.
“This might be just the beginning,” said Joe Langley, an analyst at CSM Worldwide in Detroit.
The new cars will be built from two new underbody platforms that GM is introducing. Other new models will be built on those platforms, and at least one could come to Lordstown, Langley said. Possibilities include upcoming Saturn and Cadillac models, he said.
Cars built in Lordstown also could be exported because GM now approaches its business on a global basis, he said.
The change at Lordstown starts in 2009, said a flier put out by United Auto Workers Local 1112. Production of the Chevrolet Cobalt and Pontiac G5 would stop, and work would begin on a new compact car.
Replacing Aveo or Cobalt?
Analysts had differing opinions on whether the car would be a replacement for the Chevrolet Aveo, which is now made in Korea, or for the Cobalt. The Aveo is smaller than the Cobalt.
Langley said he is expecting an Aveo replacement to be built at Lordstown because it will be based on a new small-car platform that GM calls Gamma. Friday’s news noted that Lordstown will receive a model that uses the Gamma platform.
However, Erich Merkle, an analyst with IRN in Grand Rapids, Mich., said he expects a Cobalt replacement to be built at Lordstown. GM will make the Gamma platform flexible enough to support both Cobalt-sized and Aveo-sized models, he said.
A year after a small car is launched, GM will bring a midsize car to Lordstown, the union flier said. This car is to be based on a new platform called Alpha.
Analysts said they expect this to be the replacement for the Pontiac G6, which is larger than the Cobalt.
The UAW provided media in Detroit with different information, however. The UAW said the G6 will continue to be made in Orion Township, Mich., through 2013. It listed an unnamed Gamma-based vehicle for Lordstown.
It’s unclear what will happen to the G5 now made in Lordstown. Motor Authority, an industry publication, reported last month that the G5 will be replaced with a new version in 2010.
Langley said GM is turning Pontiac cars into a stable of niche vehicles with sporty designs that all feature rear-wheel drive. The G6 and G5 now have front-wheel drive.
Tentative contract
Greg Gardner, an analyst with Harbour & Associates in Troy, Mich., said GM is able to propose investments in the U.S. only because of a tentative labor agreement reached Wednesday with the UAW.
The deal cuts GM’s operating costs significantly, he said. For example, the deal includes a lower wage rate for new hires in support roles, such as janitorial and landscaping.
How many people are hired at the lower rate will depend on how many workers accept a buyout that’s supposed to be part of the contract, he said.
GM will be looking for even more cost savings as it negotiates local labor agreements, said David Cole, director of the Center for Automotive Research in Ann Arbor, Mich.
“The local agreement is going to be pretty critical,” he said.
One goal for GM is to reduce the number of skilled trades workers it has, he said. Plants operated by foreign automakers have fewer skilled trades workers, he said.
Local contracts can be used to reduce skilled trades workers by combining job classifications so workers are able to do more than one task.
Negotiations on a new local contract at Lordstown were put on hold Sunday because of the two-day UAW strike. Union members are expected to vote next week on the national agreement that ended the strike.
Two local unions at the complex employ about 3,500 hourly workers.
No comment from GM
Dan Flores, a GM spokesman, said GM isn’t making any announcements on plant investments. He said a number of confidential documents are passed back and forth during negotiations, but GM doesn’t comment on future product developments.
Analysts said they were unsure how much investment would be needed so that Lordstown could produce two different types of cars. Merkle said, however, that he expected a sizable investment because the plant would be making both front-wheel and rear-wheel drive cars.
Cole said GM’s strategy is to enable plants to be flexible to produce different vehicles. That way, the plant can shift production between the two cars, depending on consumer preference at any given time.
“That’s something you could build a future around,” Cole said.
shilling@vindy.com