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Lordstown counting on the Cruze



Published: Tue, January 27, 2009 @ 12:00 a.m.

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General Motors Chairman and CEO Rick Wagoner (right) greets attendees at a press conference announcing GM’s $350 million investment to build the all-new Chevrolet Cruze global compact car at the plant in Lordstown, Ohio Thursday, August 21, 2008. An additional $150 million will be allocated the Chevy Cruze product program in the U.S. The Chevy Cruze will be officially unveiled at the upcoming Paris Motor Show.

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Vice President of Daewood Design Taewan Kim with Chevrolet Cruze

The latest layoffs will leave just one-third of the Lordstown plant’s hourly workers on the job.

By DON SHILLING

VINDICATOR BUSINESS EDITOR

LORDSTOWN — General Motors remains committed to its Lordstown complex despite laying off 800 more workers and trimming production to one shift, an analyst said.

Lordstown’s future appears secure because GM is preparing to launch its next small car, the Chevrolet Cruze, from the complex in April 2010, said Erich Merkle, an auto analyst from Grand Rapids, Mich.

The Cruze has the exterior styling and interior design needed to attract strong sales, he said.

“It’s going to be hard to beat that Cruze,” he said.

A GM official said at a car show in Detroit this month that the company was in the midst of spending $370 million to install new equipment at Lordstown for the Cruze. Merkle said GM will not kill the project because Cruze development is too far along — European production will start this spring — and the car is too important for GM.

Merkle said he expects buyers to flock to the Cruze as auto sales and the economy rebound because consumers will be more conservative in their spending and will be looking for good values.

“Lordstown is as secure as any plant,” he said.

The near term is bleak for Lordstown, however.

GM said Monday it is eliminating the afternoon shift at the complex April 6 and laying off 800 workers.

Between Feb. 9 and that date, the assembly plant will alternate weekly between using the day shift and afternoon shift.

Chris Lee, a GM spokesman, said GM needs to align its production with falling car sales.

Lee added that production also will be reduced at the adjacent fabricating plant but he wasn’t sure how the staffing would be handled. The fabricating plant stamps metal parts that are used by the assembly plant.

Merkle said production cuts are needed because dealers have too many cars. He said GM had a 128-day supply of Cobalts on Dec. 31, which is twice the number automakers like to see.

By announcing more production cuts Monday, GM is admitting that January sales haven’t done much to reduce the inventory, he said. GM shut down the Lordstown plant for all of January in order to sell off the Cobalts in dealer lots.

GM was caught with an unusually large inventory last fall when gas prices fell, credit markets tightened and the economy crashed. The field supply of Cobalts jumped to 220 days in October and rose to 239 in November.

The new layoffs will leave just one-third of the complex’s hourly workers, or 1,400 people, on the job. GM announced in November and December that it was laying off 2,000 other workers because it was slowing down the speed of the assembly line and eliminating the midnight shift.

The midnight shift was added last August when the plant could not produce enough cars to meet demand.

A labor contract provides that laid-off workers receive about 85 percent of their regular pay in supplemental benefits from the company and state unemployment insurance.

Those benefits used to last for 48 weeks and then workers were placed into a jobs bank, which continued to provide them with a similar level of pay even if there was no work.

Lee said, however, that such benefits are under negotiation as GM tries to develop a viability plan required by the federal government. The plan has to be approved by March 31 or the company could be required to repay loans it’s receiving from the government.

Lee said the benefits that workers will receive for long-term layoffs should be determined before the April 6 layoffs in Lordstown.

The struggles facing GM create struggles for the Village of Lordstown, as well.

The shift cuts at the Lordstown plant and loss of employees could mean village revenue will dip about $2.5 million, Mayor Michael Chaffee said.

The village has about 30 to 35 full-time employees, and all took an automatic pay freeze to generate some savings, he said.

Council met on Monday to discuss readjusting insurance packages, which will save the village about $115,000 to $120,000 this year.

“We’re still providing very nice coverage to our employees,” Chaffee said.

Laying off employees is not something the village is considering at this time, but the next couple months could yield different plans.

Cutting back on projects such as road paving, seasonal mowing and recreation programs are other saving options the village will consider.

However, Chaffee said, there are still many positives. The past two years enabled the village to build funds, plus Lordstown still has a plant and shifts, he said.

“As long as the Cruze moves forward, we’ll be okay,” Chaffee said, adding, “As bad as things are, we’re still better than most,”

“Although these are tough times, we’ve survived tough times before.” he said. “We hope this is short-lived.”

GM also announced Monday that it was cutting a shift at its plant in Lansing, Mich., on March 30.

XContributor: Vindicator staff writer Katie Seminara


Comments

1dagoat64(38 comments)posted 5 years, 6 months ago

People. Why do we in Y-town have to worry about if GM survives? Why don't we become a region of medical research, or a town with casino's by the mahoning river? Chime in at any time, Grump, Lebowski, the great fall, Stan..etc.etc.. Anyone?

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2Tugboat(759 comments)posted 5 years, 6 months ago

What is with our morbid obsession with cars? Its transforming us into zombies. How about discussing the realities. To improve the conditions of the infrastructure or expanding the existing network. How about an excellent bus system. Improve our national rail network. Bike lanes. Fix the sidewalks. As a part of the bargain you would walk more, get exercise, be healthier and as another bonus spend more time in closer quarters with your fellow Americans, building communities, making new friends on the train or bus.

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3apollo(1227 comments)posted 5 years, 6 months ago

Tugboat, nice thoughts but this is America not Europe. Americans are too lazy to walk or ride a bike. They like those suicide machines. (the Boss) When gas goes back to $4-$5, is the only incentive Americans understand.

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4babs68(58 comments)posted 5 years, 6 months ago

dagoat64 I have to agree with you that the Mahoning Valley needs to look at other income alternatives. I think that it is a problem when we have a college producing graduates, and these graduates have to move out of town to find jobs. Colleges are meant to refurbish the existing workforce. I don't know the fix but I do know that the focus needs to move away from manufacturing and perhaps move towards pharmaceutical or Biotech or even alternative energy sources. Something has got to give.
Also, someone should spear head a think tank with everyone partcipating. We need to realize that it is no longer a black/white thing. All people are suffering from the loss of jobs.

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5binx(81 comments)posted 5 years, 6 months ago

WOW, I agree with those that say to get OTHER forms of income in this dang area. I moved here from Cleveland... wow, 22 years old and MOVED to Youngstown. I see potential in this dump of a town, but there are too many WHINERS and COMPLAINERS and people that WANT WANT WANT. Why not be a little smarter and get some people in this town that are willing to make some better decisions and bring some life back. Heck, there are some people that are smart, read some of these posts! I am 28 now and my friends are middle-aged and up... cause all the young people that are educated and have some aspirations to succeed LEAVE those that stay would rather hang out at Pal Joeys and live with mom and dad. GET A GRIP PEOPLE... this town is going to just keep getting worse and worse.
THANK YOU to those who post that have aspirations of DIFFERENT things in this town rather than sitting around and REMEMBERING what it was.. Time to change Youngstown!!!!

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6aeparish(669 comments)posted 5 years, 6 months ago

Hate to say it, tugboat... but it ain't the olden days anymore.

And binx... it's not a bad thing to remember what Youngstown was. It used to be a great area. Granted, it will never be what it used to, but if some people find comfort in that, let them be.

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7Erplane(475 comments)posted 5 years, 6 months ago

OldMan, your way wrong about the Cruze not coming to Lordstown. First, I saw this car Friday at the Detroit Auto Show. Its a winner. It looks like a premium small car. And analysts I have spoken to all confirm that the 1.4L engine will get near 40 mpg highway. Oil will be at $70-$100 before you know it. And when the credit markets and the economy turn up again, people arent going to run out and get a new SUV. They are going to be conservative with the cash, and small cars will be the first to sell.

And Grump - the Cruze will stay produced loacally b/c if you look at CAFE standards, an OEM has to have cars produced in the USA in order to qualify for the OEM's overall mpg averages.

Good on those folks here who brought up ideas on different streams of income for the valley. I would love to spend all day complaining, but I went to college to be a productive member of society.

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8binx(81 comments)posted 5 years, 6 months ago

I agree parish... I'm sorry, I get going and need to revise my wording :)
I just want to see GM, WCI, WHOEVER stay alive!!! I hate to see people out of work.

Erplane. THANK YOU
"Good on those folks here who brought up ideas on different streams of income for the valley. I would love to spend all day complaining, but I went to college to be a productive member of society."

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9henryviii1509(274 comments)posted 5 years, 6 months ago

With the extremely fertile soil in this area, we should think about using it for something other than grains. We already have the equipment and know how to grow stuff, we just need to explore new markets to find a niche. I propose HEMP, not marijauna. One acre of hemp can produce as much pulp, twice a year, as one acre of trees can produce in 30 years. Pulp from hemp can be used to not only make paper, but, also clothing and other textiles, stuff the world can use. And, it's all natural.

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10Tugboat(759 comments)posted 5 years, 6 months ago

Grump - the Happy Motoring Fiesta is drawing to a close. And obesity will be on the decrease. And you'll be grateful for the WRTA. :-)

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11ldchian(56 comments)posted 5 years, 6 months ago

why am i not surprised to read doom and gloom comments from oldmangrump? has he ever written anything else?

so the UAW needs to make $10 an hour? and gm leaks it's inside information to the vendor of a two-bit operation whose owner proudly drives an acura, pays minimum wage and probably threatens his workers with their job at every turn. can you imagine working for this guy?

you used to be amusing, grump. but i'm growing tired of your consistent bad feelings for this area and the people in it. you're smug, arrogant and negative. your name says it all. you're nothing but an old man and a grump.

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12dagoat64(38 comments)posted 5 years, 6 months ago

First of all, I find it very refreshing that some of our younger generation actually have these great ideas. My hope was almost lost, and I mean this as a true compliment. Secondly, let old man grump have his say, I believe everyone should be able to contribute to any conversation, be it understandable or not. Old man does have some valid points and should not be under attack.We all could obtain something out of every opinion offered. Let us all just celebrate the fact that we still enjoy the freedom of speech.

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13avoiceofreason95(3 comments)posted 5 years, 6 months ago

It never ceases to amaze the naivity among people in this valley! Do you realize just how many jobs are affected by the elimination of all these jobs at Lordstown?

Do you understand the amount of money these workers contribute to the Local Economies and Local Charities? Been to the malls lately? Been to any of the local restaurants lately? Have u been paying attention to incredible amounts of people being laid off because of the lack of production needed due to the slacking auto industry?

Wake up people! You've been duped by your politicians and the media into thinking the American people are undeserving of a decent wage! What other industry has to be OUTSOURCED to a 3rd world country for you people to GET THE MESSAGE!

You were told in the 80's that we were going to upgrade from an Industrial society to a HIGH TECH society .... where do we make computers and over 90% of the software for those computers? Hmmm ... so much for that huh!

For God's sake they are outsourcing TELE-MARKETING services to INDIA! Heard the commercial yet for Legal Services from India? Lab work sent to India? Dr.'s being insourced from foreign countries! Accounting being done in Tax Haven countries!

Where does it all END? It ends when the people in this country figure out that they need to FIGHT BACK at the Free-Trade Globalist Establishment instead of FIGHT WITH ONE ANOTHER!!

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14FormerRes(39 comments)posted 5 years, 5 months ago

It doesn't end "when the people of this country figure out" anything. It'll end when our currency is so debased so that whatever the average American worker's wage is at that time, it will make economic (or political) sense on a global scale to employ that worker. Politicians need to restructure tax laws to provide incentives to American-based employers to hire or keep American based workers. National healthcare would free U.S. businesses from that costs.
Otherwise, we will have lost the econo-war we are currently in to the Chinese. I can't believe how stupidly we have marched to our consumerist destruction. Like lemmings. If we had to answer to the previous generations of Americans, what would we say....?

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15clayor(281 comments)posted 5 years, 5 months ago

I really don't think the Cruze will have much of an impact on anything. People are losing their jobs and their homes, I doubt they are thinking Cruze. How many "Smart" cars do you see driving around with families in them? As for not worrying about GM and diversifying into other areas, good thought, but you just don't get it....nobody wants to bring their companies to the Y-Town area, if they thought it was a lucrative venture it would have been done already, and there will never be casinos because they have been voted down fear fear of the criminal element moving in.......the F.B.I. even moved their office out of downtown Y-Town. What's that tell you. The handwriting is on the wall and nobody is reading it.

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