The company plans to decrease production of minivans and SUVs.
KNIGHT RIDDER NEWSPAPERS
DETROIT -- If General Motors Corp. is going to ask the United Auto Workers union for the right to close two or three plants over the next few years, the most likely candidates would be a minivan plant in Georgia, an SUV factory in Oklahoma and perhaps another in Wisconsin.
In Michigan, a Saginaw parts plant is already set to close before the current UAW contract expires in September 2007, and the plant in Orion could be at risk if the various versions of the G6 don't sell well enough.
The company recently closed or idled three plants, including one in Lansing, Mich. However, it is also building another in Lansing, which is set to begin production next year.
The minivan plant at Doraville, Ga., and the Oklahoma City plant that makes long versions of midsize SUVs "both have a bleak future, based on the products that they assemble," said Catherine Madden, who studies automakers' production plans for consulting firm Global Insight.
Another plant that is commonly seen as vulnerable to closure after GM's 2007 negotiations with the UAW is the Janesville, Wis., plant that makes the Chevrolet Suburban and other full-size SUVs that are made at other plants.
Longer term, others see the Orion plant that makes the G6 and the Shreveport, La., plant that makes midsize pickups as vulnerable. Parts plants, such as the Saginaw Malleable Iron plant, which is slated for closure, are also at risk.
GM spokesman Stefan Weinmann said it was "way too early" to discuss possible plans or buyout offers.
Shortening to demand
GM isn't looking to close plants just to be mean: It just doesn't need all it has. Last year, GM used only 86 percent of its North American manufacturing capacity. From 1999 to 2003, GM averaged 90 percent, excluding 2001, a year marred by recession and terrorism, when capacity utilization fell to 80 percent.
Individual GM plants ranged from 8 percent to 139 percent -- the highest and lowest of any automaker listed in the Harbour Report, a closely watched annual study of automakers' manufacturing efficiency. Harbour Consulting declined to provide plant-by-plant results.
In a speech to shareholders in Delaware, Wagoner said GM has already cut the number of cars and trucks it can make -- assuming two shifts of straight time at each plant -- from 6 million in 2002 to 5 million.
However, Wagoner said additional assembly and components plants will need to be closed over the next few years. "We need to get to 100 percent capacity utilization, or better," he said. Including the elimination of at least 25,000 U.S. manufacturing jobs, Wagoner estimates the annual savings reaching $2.5 billion.
To get those savings -- largely at the expense of the current and future work force -- Wagoner would need the cooperation of the UAW.
Labor and management at GM have been through some of the worst and the best in America's recent industrial history. The worst was a 1998 strike that cost the automaker $1.5 billion. The best involved streamlining plants for tremendous gains in quality, efficiency and safety.
In its public statements, the UAW appears to be bracing for a battle over the kinds of money-saving cuts that investors tend to like.
"It's one thing to present in a speech specific targets for job reductions and closing plants by the end of 2008; in reality various important factors will come into play, including the natural attrition rate, changes in volume and market share and, of course, the 2007 UAW-GM negotiations," said Richard Shoemaker, the UAW vice president who represents hourly workers at GM.
Madden of Global Insight published a note last week predicting the closure of GM plants at Doraville and Oklahoma City, estimating that GM would be back at 90 percent capacity utilization by the end of the decade.
However, she insisted that such moves are not easy for GM or any company.
"There are so many factors that go into these decisions," Madden said, quickly listing such considerations as product plans, government incentives, nearby engine or transmission plants, the age of the facilities and the efficiency of the work force.