General Motors will close entire shifts of workers at some truck factories and may move them to nearby car plants as it restructures in an era of US$4 per gallon petrol.

The Associated Press (AP) said 19,000 hourly workers who signed up (of 74,000 made the offer) to leave the company by 1 July through buyout and early retirement deals are key to a new restructuring plan not yet announced but detailed in part by anonymous sources.

GM on Thursday announced the 19,000 takers of its latest round of offers, which amounts to a quarter of its hourly work force.

AP said GM expects to replace some of the workers at a new entry level wage of about $14 per hour, about half the rate of current production workers. The new wage rate for up to 16,000 non-assembly workers is part of the national contract negotiated with the United Auto Workers last year.

In a statement, GM said it would fill job openings with current employees whenever possible, as spelled out in the provisions of the GM/UAW national labour agreement. In facilities where it needs new employees, those individuals would be hired at the entry-level wage and benefit structure. The extent of the new hiring at each facility would be determined on a plant-by-plant basis.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

“Despite significant challenges in the US market, we continue to reshape our business for long-term success,” said Troy Clarke, group vice president and president, GM North America, in the statement.

“This attrition programme gives us an opportunity to restructure our US workforce through the entry-level wage and benefit structure for new hourly employees.”

AP noted that GM has previously announced it would speed indefinite layoffs of one shift each at the Pontiac and Flint pickup truck assembly plants.

Workers laid off at those plants could be moved to a car assembly factory in nearby Orion Township, where GM is negotiating with the UAW to add a third shift, Mike Dunn, bargaining chairman of UAW Local (branch) 5960 at the Orion plant, told the Associated Press.

Orion, near Pontiac in Michigan, makes the Chevrolet Malibu and Pontiac G6 midsize cars, both of which are selling well as consumers shift from trucks and sport utility vehicles to smaller cars and crossovers. Malibu sales were up 37% in the first four months of this year, while G6 sales were up 22%, the report added.

Dunn told AP the additional shift could bring 1,100 jobs to the plant, which currently has 2,780 hourly workers on two shifts.

GM has relocated about 175 workers from other factories to the Orion facility in the past few weeks, Dunn said.

AP said it was still unclear on Thursday night if any other pickup truck or SUV factories would be targeted to lose shifts or even be closed and GM would not comment.

But another person familiar with GM’s production plans told the news agency the automaker may add a third shift to its Lordstown, Ohio, assembly plant near Youngstown, where it makes the Chevrolet Cobalt and Pontiac G5 small cars, though plans are not finalised.

AP said UAW Local 1112 at the Lordstown plant reached a tentative local contract agreement with GM Wednesday night, outside of the national UAW agreement, governing work rules, overtime and other items, and that deal could clear the way for the third shift and for next-generation vehicles.

According to the Associated Press, Lehman Brothers auto analyst Brian Johnson has predicted GM would  have to cut North American production by 16% this year because of weak sales of trucks and SUVs.

Despite minimal truck production recently due to a strike at parts maker American Axle and Manufacturing, GM still had a 125-day supply of pickups and a 139-day supply of SUVs at the end of April, Johnson reportedly said. A 60-day supply is considered ideal in the industry.

“GM’s inventories of large trucks have grown to worrying levels, and we expect GM to plan large production cuts over the remainder of the year,” Johnson said on Thursday in a note to investors.

One of the people familiar with GM’s restructuring moves told the Associated Press there should be little change in GM’s product plan because the company already was moving to bring more cars and crossover vehicles to market.