Layoffs At U.S. Auto Plants Keep Piling Up As Car Demand Weakens
General Motors (GM) reportedly plans to idle a Detroit factory for six weeks starting in mid-November due to weak sales.
XAutoplay: On | OffThe move follows GM's decision to lay off several hundred employees at the same factory earlier this year by getting rid of the evening shift and comes a month after Ford Motor (F) cut production at five plants producing slow-selling sedans.
According to the Wall Street Journal, roughly 1,500 workers will be affected at GM'S Detroit-Hamtramck assembly plant, which produces four car models that are seeing sluggish demand: the Buick LaCrosse, the Cadillac CT-6 sedan, the Chevrolet Volt plug-in hybrid, and the Chevrolet Impala.
Once the plant resumes operations in the new year, it will likely produce 20% fewer vehicles and cost about 200 people their jobs, sources told the Journal.
Shares of GM fell 1.4% to 44.82 on the stock market today, easing from the post-bankruptcy high of 45.59 set in Wednesday's session but still in profit-taking sell territory. Ford dipped 0.9%, Toyota Motors (TM) eased 0.1% and Fiat Chrysler (FCAU) gave up 1.3%.
IBD'S TAKE: GM stock has seen its Relative Strength Rating rise steadily in recent weeks, but watch if it can hold above this key threshold.
GM, like Ford and other automakers, is realigning production as consumer demand shifts markedly from passenger cars to SUVs and trucks. GM has slashed passenger-car production in the past year, laying off nearly 3,000 workers and transferring some to plants making SUVs, the Journal said.
The compact-car segment has shrunk 5.1% year to date, according to Kelley Blue Book. Meanwhile, the compact SUV/crossover segment has grown 3.2% over the same period. The full-size car segment has declined 14% year to date vs. a 5% gain for the full-size pickup truck segment.
Meanwhile, Reuters reported Wednesday that GM has warned a striking Canadian labor union that if it doesn't call off a monthlong walkout, the automaker will shift production of the top-selling Chevrolet Equinox SUV to Mexico.