By Don Shilling
GM plans to add a second shift to Lordstown and says a third shift is possible.
A bankruptcy filing hasn’t
dampened General Motors’ enthusiasm for its Lordstown complex.
A senior executive said the automaker plans to add a second shift to the complex to build the Chevrolet Cruze, which will be launched in April.
“We’re very bullish on the Cruze,” Tim Lee, GM’s vice president of North American manufacturing, said in a conference call Monday with reporters.
Union leaders said a second shift would bring back about 1,500 workers who are laid off.
The optimism about Lordstown stood out in two conference calls that GM officials had after the bankruptcy filing Monday. Mostly, the calls were dominated with questions about GM’s plans to cut jobs, eliminate brands and reduce output through a bankruptcy reorganization.
In addition to closing or idling 17 plants and parts centers, GM plans to inform more dealers this week that they will lose their franchises, said Fritz Henderson, chief executive. The company sent termination notices to 1,100 dealers two weeks ago.
Late Monday, Judge Robert Gerber of U.S. Bankruptcy Court gave interim approval for the Detroit-based automaker’s use of a total of $33.3 billion in bankruptcy financing, with $15 billion available for use over the next three weeks.
He will rule on final approval of the financing June 25. Judge Gerber also approved GM’s sale procedures, setting a sale approval hearing for June 30.
As suppliers wait for the bankruptcy court to determine how they will be repaid, Lee praised them for sticking with the automaker. He said GM paid suppliers early last week to generate confidence in the automaker’s future.
Despite the cutbacks in GM’s plan, Lee said that the automaker needs to build quality cars in North America and Lordstown is the type of plant that it is looking for.
He noted that Lordstown has a metal stamping plant that can supply parts efficiently to the assembly plant and the complex has received large investments recently. GM spent $1 billion, including a new $300 million paint shop, for the launch of the Cobalt and is wrapping up $350 million in upgrades for the Cruze.
The timing for adding a second shift is uncertain.
Lee didn’t mention a date, but Jim Graham, president of United Auto Workers Local 1112 in Lordstown, said he doesn’t think GM will wait for the Cruze launch. He’s expecting a second shift to be added before the end of the year in order to build more Chevrolet Cobalts.
Graham thinks rising gas prices and an improving economy will lead to more demand for the small car now built at the plant.
Graham said the return of a third shift to the complex isn’t out of the question once the Cruze is launched.
“If sales take off and gas prices are high, this thing could take off big,” he said.
Lee, the vice president, said GM doesn’t expect to need a third shift through 2012, but he didn’t rule it out if car sales rebound faster than expected and the Cruze “is hotter than we anticipated it to be.”
GM added a third shift to Lordstown last year as Cobalt sales surged amid high gas prices. Two of the shifts were laid off by January, and staffing was reduced from nearly 4,500 to 1,800.
Lee said that Lordstown is the only production site for the Cruze in North America — for now. He said GM is considering adding a second location.
Edmunds.com, which reports on the industry, reported Monday that GM plans to begin making the Cruze in a Mexican plant six months after the launch in Lordstown. The Mexican plant is to produce 40,000 cars a day, six times less than the number projected in Lordstown, the report said.
To prepare Lordstown for the Cruze, GM is spending heavily to install a new body shop, where the underbody of the car is constructed.
John Donahoe, complex manager, said in February that the flexibility of the new body shop could allow five or six different types of vehicles to be built in Lordstown.
Graham said that flexibility should be good for Lordstown down the road as GM develops new models.
“We’re going to take as much as they can throw at us,” he said.
Lee said the installation of new equipment in Lordstown is more than 60 percent complete.
He said Cruze prototypes are being built in Michigan, but plans call for test models to begin rolling off the Lordstown line before the end of the year.
Even Lordstown leaders said the good news coming out of Lordstown seemed odd on a day when GM filed for bankruptcy.
“I don’t want to say I’m pleased with GM being in bankruptcy,” said David Green of Local 1714. “I’m just glad they finally decided to do something.”
Employees and consumers can now see that GM has a plan and is putting it in place, he said. It’s nice that Lordstown is part of that plan and is receiving a $350 million upgrade while GM cuts back elsewhere, he said.
“We should be in great shape,” Green said.
U.S. Rep. Tim Ryan, D-17th, of Niles, said he realizes the situation is not optimal, but he sees hope for the company.
“The GM bankruptcy is a huge blow to Ohio, which compounds an already bad situation with current employees, but also with retired workers and the security of their pensions,” he said. “I am cautiously optimistic because it seems as though the GM-Lordstown plant will have a solid future and factors prominently into GM’s restructuring plans.”
Senate Minority Leader Capri Cafaro of Liberty, D-32nd, said that despite all the bad news with GM, “there is a silver lining.”
The Lordstown complex “has retained a leading role in building the next generation of small fuel-efficient vehicles. I believe the work being done right now at Lordstown will help position General Motors for a much brighter future,” Cafaro said.