This Friday, General Motors said that it will close four North American plants for two weeks. These four plants mostly make cars as opposed to making SUVs and trucks, and they are being shut down because of a parts shortage due to the recent earthquakes this month in Japan. GM looked at parts availability and their plants in North America and decided that the four plants chosen to close will help ensure adequate parts supply. They said that these steps are being taken carefully as they "continue to assess the potential impact on its supply chain" of the earthquake, which has slowed down distribution for auto supplier plants in Japan.
The plants that are going to be shut down are in the following towns: Lordstown, Ohio; Fairfax, Kansas; Spring Hill, Tennessee; and the Flex Oshawa in Ontario. They will shut down beginning on April 25th, and GM said that they will make up production lost during the shutdowns by the end of this year. This "temporary adjustment" is not expected to affect GM's full year production plan, as well as its second quarter or full year financial results for North America.
The Lordstown plant makes the Chevrolet Cruze, the Spring Hill makes the Cadillac XT5 SUV, the Fairfax makes the midsize Chevrolet Malibu and the Buick LaCrosse, and the Flex Oshawa makes the Chevrolet Impala, the Buick Regal, and the Cadillac XTS.
As of Friday, GM shares went down 1.5 percent at $32.16.
Wow this is very interesting. I was wondering a couple things about the closures. Since output is being affected by the earthquake causing issues in the supply chain do you these four plants will be reopened once the damage is fixed in Japan, or do you think this is a well timed ploy for GM to mask some failures on its own end. I am also curios on how the company plans to make up for the lost production. The fact that it is claiming to fix it is nice, but I would like to see some plans with substance from the company. With these facts in play I am not surprised to see the stock has fallen some.
ReplyDeleteIt is very interesting of GM to close these plants for 2 weeks due to the supply shortages. Considering how fast these plants are able to manufacture vehicles, a 2-week shutdown is quite a considerable amount of money and lost production. It's also not surprising that their shares were already down as investors will not be happy with a production slow-down.
ReplyDeleteI think that this article was interesting. I think its interesting that GM said that this shutdown of the 4 plants will not effect there yearly goal production. this means that either the people in these plants or other plants will have to put in overtime to make up the two week shut down cause their is a lot of cars not being produced due to this shutdown.
ReplyDeleteAre there any other suppliers they can utilize? Closing factories like this will certainly have a profound effect on the local economies where these plants are located. I wonder if the workers are being given any benefits or if they are just temporarily laid off.
ReplyDeleteI tend to agree with Zach on this one. I am not quite sure how GM will handle the situation but my intuition is that they will force the employees to either work overtime or have some small scrub squad hired to take part in the loss of production. However, I think it makes sense that they closed down if they can’t get supplies due to an earthquake’s destruction. Not sure what Will was speculating above about I doubt that GM can take a whole lot more public animosity towards them. Shutting down the plants might not be in their best interest right now. (with that said that’s my opinion I really don’t know).
ReplyDeleteIt would be interesting to see if this shut down has any effect on the automotive industry.
ReplyDeleteInteresting to see what occurs when it comes to advertising and marketing of other american auto companies
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