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GM Lordstown plant to shut down Aug. 26
lordstown
General Motors is shutting down the Lordstown plant for an extra week in August to maintain the balance between supply and demand.
The shutdown is coming just two months after the Lordstown-built Cruze set an all-time sales record. GM sold 32,871 units in June, and it has sold 264,843 Cruzes through the first half of the year.
There will be an extra week of shutdown starting Aug. 26, said Glenn Johnson, president of United Auto Workers Local 1112 in Lordstown.
“We were told it was just to align volume with customers,” he said.
GM seems to have a good line on what the customer base is for the Cruze and where sales figures will be, Johnson said.
The union trusts the company to make the right decision in terms of how much supply of the Cruze is needed, he said.
Tom Mock, GM communications manager for the Lordstown and Parma plants, reiterated the point that the closure was simply to “align the product with market demands.”
The plant already took its typical summer shutdown at the beginning of July, Johnson said.
The decision to reduce supply shows long-term thinking by GM, said Eric Lyman, vice president and senior analyst for automotive information website TrueCar.com.
“Incentive spending on the Cruze had increased this year from around $1,200 [per vehicle] to around $2,200,” he said.
Many automakers are taking the step to reduce production as opposed to increasing incentives to sell more vehicles, Lyman said. Increased incentive spending hurts resale value. GM took similar action with Malibu production.
“As a business decision, reducing production to uphold value is one of the best things they could do,” he said.
The most-successful automotive brands do a good job of balancing the “organic consumer demand” with supply while keeping incentives low, Lyman said.
GM took a similar action shutting down for a week to curb supply in December 2012. The company stated that shutdown was to keep supply at an appropriate level during a slow time of the year for compact-car sales.
Lyman said the delay of the next-generation Cruze by a year also may be a long-term decision from GM.
In the short term, the company will lose the typical sales boost that comes from a new vehicle, but it will help GM overall if it improves the quality of the next Cruze.
“We don’t know why [the delay has occurred], but if it has something to do with improving quality, it’s a solid long-term decision for the future of the vehicle,” he added.