Caution is theme for GM products, plants

GM takes its time
Industry sources say GM has:


  • Delayed decisions on new work or expansions at several plants

  • Bumped back several vehicle programs for rework

  • Trimmed production plans for the new Cadillac CTS

  • Continued to struggle with the problematic Lambda platform, a front-drive architecture for minivans and sport wagons

  • DETROIT — Although General Motors is keeping the marketing pressure on competitors, it is turning cautious about capital expenditures. The company is slowing its product portfolio and plant expansion decisions.

    GM is nervous about slower sales next year. But GM officials and industry sources also say the new team of Robert Lutz and Gary Cowger are in the middle of an extensive product plan review.

    Lutz was named vice chairman for product development in August. Cowger became president of GM North America in November.

    “Everything just seems to be on hold,” said one supplier executive. “We’re not getting the commitments.”

    So far, GM has:

  • Delayed decisions on new work or expansions at several plants, such as Lordstown, Ohio; Orion Township, Mich.; Delta Township, Mich.; and Ingersoll, Ontario.

  • Bumped back several vehicle programs, such as a proposed Saturn minivan and the GMT 900 large-truck program that includes high-margin vehicles such as the Chevrolet Suburban and GMC Yukon.

  • Trimmed production plans for the new Cadillac CTS from 50,000 to about 40,000 units for 2002.

  • Continued to struggle with the problematic Lambda platform, a front-drive architecture for minivans and sport wagons. As a result, GM’s core minivans, the Chevrolet Venture and Pontiac Montana, are not expected to be redone until the 2007 model year, rather than the 2005 model year.

    Hard look at products

    Tom Kowaleski, vice president for communications for GM North America, said that while the economic climate is having some effect, most of the delay is coming from a detailed product review.

    “From the point of view of senior management of North American operations, Bob and Gary, there is a real dedication to make sure we have the absolute best products,” Kowaleski said.

    Most delays are only a matter of a few months as product designs are tweaked and the timing of projects is reshuffled, Kowaleski and suppliers said. Some products have been moved forward, Kowaleski added.

    GM is moving ahead on near-term projects, with new vehicles such as the CTS and Saturn Vue beginning production. Other launches for 2002, such as those for the Pontiac Vibe, Hummer H2, Saturn Ion and Chevrolet SSR pickup, probably will not be delayed.

    Supplier executives agree that many delays represent last-minute tweaks. But they also give the recession more weight. Automakers tend to delay programs to minimize expenses and to avoid launching vehicles in a down cycle, they say.

    A chance to rethink

    The slow economy represents an opportunity to rethink product, one supply executive said.

    “It offers a guy like Bob Lutz a chance to say, ‘Hey, I really don’t want that on the vehicle. Now I have time to fix it,’ ” he said.

    But another supplier executive, whose company is building parts for the CTS, said delays and production cuts play havoc with suppliers. “We’ve got a business plan based on a 50,000-unit job, which definitely isn’t going to happen. It puts a lot of stress throughout the whole supply chain,” the executive said.

    Product programs with tight profit potential, such as the Chevrolet Cavalier replacement that Lordstown plant officials want, face rigorous scrutiny, said Sean McAlinden, analyst at the Center for Automotive Research in Ann Arbor, Mich.

    At Lordstown, GM already has received an Ohio tax abatement for a proposed $500 million plant upgrade to handle a new small car based on the Opel Astra platform.

    The company said this summer that it would decide by October whether to proceed with the upgrade. But so far, no decision has been announced.

    UAW waits for word

    UAW locals say they’re being told that decisions about vehicle assembly sites are being postponed because of the recession.

    “They’re kind of leery of making any kind of commitments on anything, because after the 0 percent financing deal, things could be even worse than they were before,” said Pat Sweeney, president of Local 5960 at the Orion Township plant. Sweeney’s local wants to get the Epsilon-platform version of the Pontiac Grand Am. Epsilon is a global platform for mid-sized cars.

    The GM-Suzuki joint venture, CAMI, also is seeking work for its Ingersoll plant. Sources have said that a new hybrid sport wagon on the Theta architecture used in the Saturn Vue is on tap for the plant.

    But a decision, originally expected this fall, probably will be delayed until “the new year at least,” said Kevin Brooke, shop chairman for Canadian Auto Workers Local 88.

  • You can reach Dave Guilford at dguilford@crain.com

    0

    Shares

    ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

    Newsletters