General Motors closes four truck plants in US

June 4th, 2008 - 3:36 am ICT by IANS  

Detroit, June 4 (DPA) Citing a structural change in the US auto market, General Motors CEO Rick Wagoner announced Tuesday the closure of four truck plants in the US, Canada and Mexico and the launch of an electric car to hit showrooms in 2010. The move by the US auto giant was its most dramatic reaction so far to months of spiralling fuel prices which have pushed Americans to abandon their long love affair with gas-guzzling sport utility vehicles (SUVs) and trucks, as they migrate to smaller more economical cars.

Like the other two US automakers GM has relied on fuel-hogging vehicles for most of its sales, but with petrol prices showing no signs of easing, now accepts that it needs a major shift in strategy to start competing with foreign automakers like Toyota and Honda that dominate what is still the world’s biggest auto market.

Speaking to reporters before the company’s annual general meeting, Wagoner said the shift to smaller vehicles is likely permanent. “We at GM don’t think this is a spike or a temporary shift,” Wagoner said.

The closures will affect 10,000 workers, including 1,800 who work at GM’s oldest factory in Janesville, Wisoconsin where the first car rolled off the production line in 1923. The other plants to close are in Oshawa, Canada; Moraine, Ohio; and Toluca, Mexico.

Reflecting the disenchantment with fuel hungry cars Wagoner also said that GM would consider selling the Hummer brand, which is widely seen as the poster-child for the excesses of SUV brawn. Additionally, Wagoner said that 18 of GM’s next 19 vehicle introductions would be cars or crossover wagons.

Apart from the plant closures Wagoner said GM would consolidate engine, transmission and other parts operations to go with the assembly plant actions.

The moves will save the company $1 billion per year starting in 2010. Combined with previous efforts, GM by 2011 will have cut costs by $15 billion a year over 2005, Wagoner said.

However, it remained unclear whether unions would agree to the unprecedented moves. Buzz Hargrove, president of the Toronto-based Canadian Auto Workers union, said closing Oshawa would violate the three-year contract reached with GM last month.

We are not going to allow this to happen,” he said, according to Bloomberg News.

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