General Motors plans to scale back production at an assembly plant in Detroit and lay off about 1,500 workers as the company contends with a continued decline in sedan sales, according to a source familiar with the plan.
The No. 1 U.S. carmaker plans to shut the Detroit-Hamtramck factory for about six weeks from mid-November and cut production by roughly 20% once operations resume, the source said.
That reduction in output will cost about 200 workers their jobs. The move was originally reported by the Wall Street Journal.
General Motors (GM) declined to comment.
The Hamtramck plant makes four sedan models that have not been performing well. They include the Buick LaCrosse, sales of which are down 21.5% year to date, and the Chevrolet Impala, which is down 31.8%.
Both GM and rival Ford Motor have struggled for most of this year to rein in high inventories of passenger cars as consumers have shifted to buying pickup trucks and sport utility vehicles.
“This is consistent with our view that domestic (manufacturers) continue to face steep competition in the passenger car segment and production must be aligned with waning sales in order to reduce the elevated amounts of inventory,” Buckingham Research Group analyst Joseph Amaturo wrote in a client note about the Hamtramck news.
Earlier this year, GM eliminated the plant’s second shift, saying it was laying off around 1,200 workers.
GM has reduced the number of shifts at five of its plants and several other facilities. The automaker announced last month that it would cut the third shift at its plant in Spring Hill, Tennessee, as of late November.
A GM spokesman said there are no plans to reinstate any of those shifts at this time.
Although the shifts GM has eliminated so far employed 6,000 hourly and salaried workers, the actual layoffs have been smaller. A spokesman said the company has let go 2,300 temporary workers and 800 of its hourly, union-represented workers have been laid off, for a total of 3,100 job cuts so far.
GM has found alternative work for 2,900 affected hourly workers. More than half the 680 workers on the Spring Hill shift that will be eliminated are hourly workers, and a GM spokesman said the company is trying to find work for them.
Production cuts slice into revenue but also could help automakers avoid deeper price cuts on vehicles they can sell.
General Motors shares were down 1.2% at $44.92 in late morning trading.
