Cruze production to be scaled back
By Kalea Hall
The national shift away from small cars has once again hit home.
Production of the Chevrolet Cruze at the General Motors Lordstown Complex will be scaled back in mid-July to adjust with demand, leading to an unknown loss of jobs that will likely be determined over the next several weeks.
“We are impacted by lower demand for passenger cars,” said a GM official with knowledge of the move who spoke on the condition of anonymity. “It’s industry wide. It’s caused us to adjust our production.”
The plant will continue to operate on two shifts, but fewer Cruzes will be produced each day.
Employees on both shifts were informed of the production cutback Thursday. Production numbers are not released by GM.
“It’s another blow to the complex and to the community as well,” said Robert Morales, United Auto Workers Local 1714, who represents the fabrication plant workers.
GM spokesman Jim Cain told The Vindicator on Wednesday there’s a 99-day supply of Cruzes. Analysts say a healthy inventory level for compact cars is a 60-day supply.
Having a high inventory isn’t good for several reasons. It hurts profitability because they have to discount them so significantly and it hurts resale values,” said Michelle Krebs, senior analyst for Autotrader. “Having more discipline is far better for profitability and strength of the brand.”
Krebs said the shift away from sedans is not only a national trend but a global trend. Small sport utility vehicles are top competition for compact and midsize cars.
“Small sport utilities have more versatility and practicality than small sedans,” Krebs said.
The plant lost its third shift in January costing 600 jobs on the assembly side and 235 on the fabrication side. Originally, 1,202 hourly workers were expected to be laid off when the third shift was cut, according to the Workers Adjustment Retraining Notification Act filed with the state.
In February, GM said there were several weeks of downtime at the Lordstown plant to adjust with the demand for the Cruze. The plant then had a three-week production shutdown in March.
In recent months, Cruze sales have been up over last year. In March, Cruze sedan and hatchback sales combined were up 88.3 percent year over year.
This March, Chevrolet dealers sold 18,607 Cruzes, which compares with 9,881 Cruzes sold last March. Of the 18,607 Cruzes sold in March, 15,054 Cruze sedans were sold and 3,553 hatchbacks were sold in March 2017. The Cruze Hatchback is produced at the Ramos Arizpe, Mexico plant.
The Cruze was selected as a “Top Pick” by Consumer Reports. Its overall score surpassed that of the Honda Civic and Toyota Corolla, making it the first domestically built car to earn “Top Pick” in the compact car category in more than a decade.
Also on Thursday, GM announced that it will add more than 1,100 new jobs and invest $14 million in a new research and development facility for Cruise Automation in San Francisco. The company said the investments will allow Cruise Automation to expand development of self-driving technologies.