LORDSTOWN GM slows design phase for new car
The company has backed away from saying that a decision on a new vehicle for Lordstown is likely this year.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
LORDSTOWN -- General Motors appears to possess just about every item on its shopping list as it plans a massive upgrade to its Lordstown complex.
Dangling $730 million in improvements, GM has received the following from union leaders and government officials:
U A renovation plan that doesn't halt production at the Lordstown Assembly Plant.
U More flexible work rules at the assembly plant and adjacent fabrication plant.
U Local tax abatements.
U An offer of state financial incentives.
What remains is coming up with designs for a new generation of small vehicles that will catch the public's interest and make money.
Stepping back: GM has slowed down this design process, which is good news for Lordstown, said David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan.
"The worst thing is to come out with the wrong product," he said.
GM officials are evaluating how to best replace the current Chevrolet Cavalier and Pontiac Sunfire models, which came out in 1994. The result may not even be a car, Cole said, but a high-space vehicle that is a blend between a car and small sport-utility vehicle.
Whatever the result, Cole and Mike Wall, analyst with IRN Inc. in Michigan, expect GM to put the next generation of small cars in Lordstown.
"They will not walk away from that labor force," Cole said.
Officials at United Auto Workers Local 1112 say GM appears headed toward making a long-term commitment to the plant. The latest sign was a labor contract reached last month with the fabrication plant workers that came along with a promise that GM would invest $230 million in that plant if the assembly plant is renovated, a project estimated to cost $500 million.
"That was a real positive sign for a new product," said Darwin Cooper, Local 1112 vice president. "They wouldn't even be talking with the fab plant if a new product wasn't coming here."
Timetable: Local 1112 officials say they are hoping the Lordstown project will be approved by the GM board of directors next month.
Wall said he hasn't heard that GM is that close to a decision, but Cole said he expects an announcement this fall.
In May, GM said that all of the union and governmental issues were falling into place and it was likely that it would decide Lordstown's future in the second half of this year.
Renee Rashid-Merem, a GM spokeswoman in Detroit, said last week, however, that there is no timetable for the decision. It may come this year, but it may not, she said.
GM executives still are working to make a compelling case that the plant upgrade and new model introduction is a good investment, she said.
Because of a downturn in auto sales, GM is carefully reviewing its investments, Wall said. It recently started building a new assembly plant in Lansing, Mich., but stopped work for a year to save money.
Acceleration? There have been reports, however, that GM wants to speed up the introduction of its new small vehicles. USA Today and Automotive News both reported this summer that GM executives want the vehicles out in 2003, instead of 2004 as was previously announced.
Wall said GM could have the vehicles ready for 2003 if it hustles.
"They would really have to accelerate, but they may be further along in design than we know," he said.
Cooper said the Lordstown plant could handle a new model in 2003 but it would be only a partial renovation. GM could remodel some of the plant to begin production of a new model and finish the renovation later, he said. The original construction plan called for three years of work.
The Chevrolet and Pontiac lineups could use the vehicles as soon as possible, Wall said. The Cavalier and Sunfire's aging designs are hurting sales, he said.
Both models reported sales declines of 40 percent or more last month. Cavalier sales are down 7 percent this year after dropping 13 percent last year. Sunfire sales are off 11 percent this year after a 9 percent drop last year.