FOR RELEASE: 2005-11-21
GM North America to Undergo Major Capacity Reduction
Next Significant Step in GM's North American Turnaround Plan
9 Assembly, Stamping & Powertrain Facilities, 3 SPO Facilities
to Cease Operations - Total Reduction of 30,000 Positions
Total Cost Reduction Running Rate of $7 Billion by End of 2006
DETROIT - General Motors will undergo a wide-ranging restructuring
of its manufacturing operations in the United States and Canada
as part of its comprehensive four-point plan to return the company
to profitability and long-term growth, GM Chairman and CEO
Rick Wagoner announced today.
GM's next step in its North American turnaround plan addresses its
ongoing capacity utilization, a major component of reducing
structural cost. A total of nine assembly, stamping and
powertrain facilities and three Service and Parts Operations facilities
will cease operations.
The additional actions will reduce GMNA assembly capacity by
about 1 million units by the end of 2008, in addition to the
previously implemented reduction of 1 million units between
2002 and 2005. Factoring in the additional capacity from GM's new
Delta Township facility in Lansing, Mich., slated to begin production
next year, the overall net result will be a GMNA assembly capacity
of 4.2 million units. While down 30 percent since 2002, this capacity
level will still provide GM plenty of flexibility to anticipate and meet
market demand, but in a much more cost-effective manner.
A total of 30,000 manufacturing positions will be eliminated from 2005
"The decisions we are announcing today were very difficult to
reach because of their impact on our employees and the communities
where we live and work," Wagoner added. "But these actions are
necessary for GM to get its costs in line with our major global
competitors. In short, they are an essential part of our plan to return
our North American operations to profitability as soon as possible.
"We continue to be equally committed to revenue drivers -
introducing compelling new cars and trucks, and executing our
revitalized sales and marketing strategy - and we have received
ratification of the agreement with the UAW, which will help
significantly to address our health-care cost challenges,"
Wagoner said. "We are making steady and significant progress
in implementing the plan to turn around our U.S. business."
The following six assembly plant sites will be affected in the years
Oklahoma City, Okla., will cease production in early 2006.
Lansing, Mich., Craft Centre will cease production in mid-2006.
Spring Hill, Tenn., Plant/Line No. 1, will cease production at the end of
Doraville, Ga., will cease production at the end of its current products'
lifecycle in 2008.
The third shift will be removed at Oshawa Car Plant No. 1, in Ontario,
Canada, in the second half of 2006. Subsequently, Oshawa Car Plant No. 2
will cease production after the current product runs out in 2008.
The third shift will be removed at Moraine, Ohio, during 2006, with timing
to be based on market demand.
Capacity-related actions affecting stamping, Service & Parts Operations and
powertrain facilities include:
The Lansing, Mich., Metal Center will cease production in 2006.
The Pittsburgh, Pa., Metal Center will cease production in 2007.
The Parts Distribution Center in Portland, Ore., will cease operations in
2006; the Parts Distribution Center in St. Louis, Mo., will cease
warehousing activities and will be converted to a collision center facility
in 2006; the Parts Processing Center in Ypsilanti, Mich., will cease
operations in 2007. One additional Parts Processing Center, to be announced
at a later date, will also cease operations in 2007.
The competitiveness of all unitizing (packaging) operations at the Pontiac,
Drayton Plains, and Ypsilanti Processing Centers in Michigan, as well as
portions of the unitizing operations at the Flint, Mich., Processing Center
will be evaluated in accordance with the provisions of the GM-UAW national
St. Catharines Ontario Street West powertrain components facility in
Ontario, Canada, will cease production in 2008.
The Flint, Mich., North 3800 engine facility ("Factory 36") will cease
production in 2008.
Given the demographics of GM's workforce, the company plans to achieve much
of the job reduction via attrition and early retirement programs. GM will
work with the leadership of its unions, as any early retirement program
would need to be mutually agreed upon. GM hopes to reach an agreement on
such a plan as soon as possible.
"These are difficult moves that will affect thousands of dedicated GM
employees and families, as well as state and local governments," Wagoner
said. "We will work our hardest to mitigate that impact."
There will be a significant restructuring charge in conjunction with this
capacity announcement, and also with any related early retirement program.
The details of these charges will be provided when available.
Wagoner also said the company has further accelerated its efforts in
structural cost reduction, raising the previously indicated $5 billion
running rate cost reduction plan in North America to $6 billion by the end
of 2006. In addition, GM continues to pursue its plans to target $1 billion
in net material cost savings. In total, the plan is to achieve $7 billion
of cost reductions on a running rate basis by the end of 2006 - $1 billion
above the previously indicated target.
"Our collective goal remains the same: to return our North American
operations to sustained profitability as soon as possible, thereby helping
to ensure a strong General Motors for the future," Wagoner concluded.
General Motors Corp. (NYSE: GM), the world's largest automaker, has been
the global industry sales leader since 1931. Founded in 1908, GM today
employs about 325,000 people around the world. It has manufacturing
operations in 32 countries and its vehicles are sold in 200 countries. In
2004, GM sold nearly 9 million cars and trucks globally, up 4 percent and
the second-highest total in the company's history. GM's global headquarters
are at the GM Renaissance Center in Detroit. More information on GM can be
found at www.gm.com.
In this press release and in related comments by General Motors management,
our use of the words "expect, anticipate, design, estimate, forecast,
initiative, objective, plan, goal, project, outlook, priorities, target,
intend, evaluate, seek, impact" and similar expressions, including
references to what the future implementation of our restructuring plan and
the tentative health-care agreement with the UAW will achieve, and when, in
terms of cost savings and capacity reduction, is intended to identify
forward-looking statements. While these statements represent our current
judgment on what the future may hold, and we believe these judgments are
reasonable, actual results may differ materially due to numerous important
factors that are described in GM's most recent report on SEC Form 10-K,
which may be revised or supplemented in subsequent reports on SEC Forms
10-Q and 8-K. Such factors include, among others, the following: the
ability of GM to realize production efficiencies, to achieve reductions in
costs as a result of the restructuring and health-care cost reductions and
to implement capital expenditures, all at the levels and times planned by
management; the pace of product introductions; significant changes in the
competitive environment; changes in laws, regulations and tax rates; the
ability of the corporation to achieve reductions in cost and employment
levels to realize production efficiencies and implement capital
expenditures at levels and times planned by management; changes in
relations with unions and employees/retirees and the legal interpretations
of the agreements with those unions with regard to employees/retirees;
shortages of and price increases for fuel; labor strikes or work stoppages;
market acceptance of the corporation's new products; additional credit
rating downgrades; and changes in economic conditions, commodity prices,
currency exchange rates or political stability.
( The Short Version of the above): "GM builds gasoline hogging, unreliable
motorcars and the Japanese & Kia are eating our lunch. GM will continue
build crap cars and trucks that nobody wants and GM Corporate will cut
of building cars that equal the value of the Honda Civic or Kia Sephia.
We will make
the Shareholders happy and everyone else can go to hell. Thank You."
- Shareholders applause as GM advances on the NYSE and the
(FORD IS NEXT.......................just wait and see)