The company says it will suspend the third shifts at factories in Lordstown, Ohio, near Cleveland, and in Lansing, Michigan, because customers are shifting from cars to SUVs and trucks. (AP Photo/Paul Sancya, File)
AP Auto Writer
DETROIT (AP) – Shifting demand from cars to trucks and SUVS is forcing General Motors to lay off more than 2,000 workers indefinitely at two assembly plants in Ohio and Michigan starting in January.
The company said Wednesday it will suspend the third shifts at factories in Lordstown, Ohio, and in Lansing, Michigan, because of the market change, which is growing and shows no sign of abating.
About 1,250 workers will be furloughed at the Lordstown plant, which makes the Chevrolet Cruze compact car, starting Jan. 23. Another 840 will be idled at the Lansing Grand River factory, which makes the Chevrolet Camaro muscle car and the Cadillac ATS and CTS luxury cars, when their shifts end Jan. 16.
"It’s supply and demand, and right now the demand is not there for what we have," said Glenn Johnson, president of a United Auto Workers union local at the Lordstown plant east of Cleveland.
Cruze sales are down nearly 20 percent this year even though a new version is only in its second year of production.
Of the vehicles made in Lansing, ATS and CTS sales each are down about 17 percent this year, while Camaro sales are off 9 percent, according to Autodata Corp.
Laid-off workers will get supplemental pay and state unemployment benefits that will amount to most of their wages for a year.
The company doesn’t know when the workers will be called back to the factories, said spokesman Tom Wickham. "Looking ahead at 2017 we know that the car market continues to soften and the crossover (SUV) and full-size truck market continues to grow," he said.
Americans have been moving away from cars toward trucks and SUVs for several years now as gas prices have dropped to near $2 per gallon and the larger vehicles have become more efficient. Baby boomers and young people are attracted to smaller SUVs because of their cargo-carrying ability, high seating position and visibility. Also, most are now built on car underpinnings, so they are more maneuverable than old truck-based SUVS.
Last month, 61.6 percent of U.S. new vehicle sales were trucks and SUVs while cars dropped to 38.4 percent, according to Autodata Corp. A year ago trucks and SUVs accounted for 57.6 percent of sales.
General Motors Co. also announced Wednesday that it would invest more than $900 million at a Toledo, Ohio, transmission plant, the Lansing Grand River factory and a casting plant in Bedford, Indiana, to prepare for future new vehicles. The company would not disclose the new vehicles or the transmission components. The investment will preserve jobs but not create any new ones.
The GM layoffs are not the first in the U.S. auto industry this year, which has experienced healthy year-over-year growth since 2009. But sales are starting to slow from the record of 17.5 million set last year.
Last month, GM’s crosstown rival Ford Motor Co. said it would temporarily idle four of its North American assembly plants to better align production with demand. Ford has scheduled one-week closures for plants in Kansas City, Missouri, and Hermosillo and Cuatitlan, Mexico. Those plants make the F-150 pickup truck, the Fusion sedan and the Fiesta subcompact. It also scheduled two weeks of down time for its Louisville, Kentucky, plant, which makes the Ford Escape and Lincoln MKC small SUVs.
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Unable to play video. Neither flash nor html5 is supported!