GM plant to cease production

  • General Motors will cease production of full-size SUVs at its Janesville, Wis., plant this December.
  • This is sooner than originally projected, but market demands can be met by the plant in Arlington, Tex.
  • Around 1,100 workers will be laid off, but will receive benefits from GM for a finite period of time

Production of full-size Sport Utility Vehicles at the General Motors Corp. plant in Janesville, Wis., will cease on Dec. 23, 2008, said Mary Fanning-Penny, plant communications manager for the Janesville Assembly Plant.

GM previously announced that this change would occur by the close of 2010, or sooner depending on market demand, Fanning-Penny said.

"The change of date is not attributed to competition, it is more about the state of the economy, the high cost of fuel and an overall shift in the market trend," Fanning-Penny said.

The Janesville plant has two lines of production. Line one produces the Chevy Tahoe, ChevySuburban, the GMC Yukon and Yukon Denali. Line two is a joint venture with Isuzu producing medium-duty trucks, Fanning-Penny said.

"When compared to this time last year, sales of the full-size SUV segment are down by 33 percent," Fanning-Penny said.

Fanning-Penny said production of full-sized SUVs will cease this December, while the other line will tentatively continue through the spring of next year.

"The vast majority of employees will be laid off," Fanning-Penny said. "Around 1,100 employees will be impacted."

Tony Sapienza, manager of communications for GM's manufacturing and labor relations, said GM pays all laid-off workers a supplemental payment. This payment, combined with unemployment benefits, equals 85 percent of a worker's gross pay.

"This is a finite payment. After that time, the workers enter what we call a 'jobs bank' where the workers receive 100 percent of their pay if they report into a GM location every day as if they were working," Sapienza said.

Sapienza said workers are also offered positions at other GM locations and they have a specified time period in which they can accept or decline these offers.

The decision to close the Janesville plant had nothing to do with the quality of the plant or its leadership, rather it was a business decision based on SUV sales, said GM Spokesman Chris Lee.

"The forecast is that the market will continue to shrink," Lee said. "After 2008 we project that we will be able to satisfy the market demand from the Arlington, Texas, plant, but both plants are not necessary for the diminishing demand."

All companies are cutting back production of big cars, said James McGibany, associate professor of economics and executive associate dean in the College of Business Administration.

"There is a very specific reason for the closure of this plant," McGibany said. "If you look at the rest of the economy, there are pockets around the country where employment has declined."

Over the next several months, there will most likely be more places that experience shrinking employment, McGibany said.

"The financial crisis may start spilling over into the rest of the economy," McGibany said. "It may not be felt by everybody, but more and more people will be affected because it is not just a housing or auto industry problem."