LORDSTOWN, Ohio (WKBN) – With too many factories making slow-selling cars, General Motors can’t afford to keep them all operating without making some tough decisions. But the political atmosphere might be limiting its options.
A possible scenario, analysts say, is to close its sprawling Lordstown plant in northeastern Ohio because the compact car it makes also is built in Mexico. The once-bustling factory already has lost two of its three shifts and 3,000 union jobs since the beginning of last year.
But moving that car, the Chevrolet Cruze, south of the border brings the risk of provoking a backlash and tweetstorm from President Donald Trump. And GM also isn’t sure whether he’ll make good on threats to impose 25 percent tariffs on vehicles imported from Canada and Mexico.
Also at issue is that the Cruze plant in Lordstown is in a Democratic and labor stronghold, where Trump won over a surprising number of voters two years ago by reaching out to what he called America’s “forgotten men and women.”
At a rally near the plant last summer, Trump talked about passing by big factories whose jobs “have left Ohio,” then told people not to sell their homes because the jobs are “coming back. They’re all coming back.”
Altogether, GM has five car factories with plenty of unused capacity in Kansas City, Kansas; Lordstown; and Detroit-Hamtramck, Lansing, and Orion Township, Michigan.
Three are running on one shift per day, which is inefficient and costs GM money. Automakers like to run plants on at least two daily shifts.
To deal with the overcapacity, GM will either have to eat the added costs, close one or more plants, or retool them to build trucks and SUVs that now are favored by U.S. buyers.
GM’s closest competitors, Fiat Chrysler and Ford, plan to scrap most car models and convert plants to trucks and SUVs. GM, however, recently revamped much of its car lineup and banked on sales stabilizing. But last month, trucks and SUVs reached a record 68 percent of U.S. new-vehicle sales.
In the U.S., automakers have enough factory capacity to build about 14 million vehicles per year, but last year they manufactured only 11 million. More than one-third of that idle capacity — 1.3 million vehicles — is in the five GM car plants that are operating at 37 percent capacity, said Kristin Dziczek, a vice president at the Center for Automotive Research, an industry think tank.