General Motors has decided to cease production of Saturn vehicles at its assembly plant near Wilmington earlier than planned, shuttering the plant for almost a year before production of a new vehicle begins, officials told Associated Press (AP) on Monday.
State officials are still trying to gauge the economic impact of the carmaker’s decision, which was announced to plant workers on Monday, the report added.
AP said GM initially planned to continue production of Saturn L-series vehicles to the end of next year as the plant, which employs 1,100 workers, was retooled for assembling the new Pontiac Solstice roadster.
But, on Monday, the company announced that Saturn production would be halted this summer, and that production of the Solstice would not begin until mid-2005, leaving the plant idle for at least eight to 10 months.
“Our understanding is that it essentially will be shut down,” Greg Patterson, a spokesman for state governor Ruth Ann Minner, told AP.
Simultaneously, AP added, GM announced that it will begin producing a Saturn sports car at the plant in early 2006, using the same Kappa platform as the Solstice, a rear-wheel-drive two-seater. The company is investing $US50 million in converting the Boxwood Road plant to the Kappa platform.
“The good news is they got another product today; the bad news is that we have to cease production of the L-300 a little bit earlier than anticipated,” GM spokeswoman Sherrie Childers Arb told Associated Press.
Childers Arb reportedly cited sluggish sales as one reason for halting Saturn production early.
“With the need to convert Wilmington and the sales outlook for the L-300, it just made good sense to cease production later this summer,” she told AP.
Childers Arb also said GM is assessing the impact of the production hiatus on employees but refused to say whether a permanent work force reduction is planned.
“The manpower for the new product is still being assessed,” she told AP, which noted it was unable to get comments from plant manager Dennis Dougherty or Dave Myers, president of the local United Auto Workers union branch.
Patterson and state economic development director Judy McKinney-Cherry told Associated Press that Minner plans to lead a delegation to Detroit in the coming weeks to persuade GM officials to add more new vehicle lines at the plant and boost production to full capacity.
“We just want the plant to be fully utilised,” McKinney-Cherry reportedly said.
Associated Press said production volume for the Solstice is estimated at no more than 20,000 a year, and the still unnamed Saturn sports car is expected to have a similar-sized market niche. The plant has the capacity to produce more than 200,000 cars annually.
Sluggish sales of the L-series Saturn sedan and wagon limited production last year to about 65,000, AP added. Lack of demand for the L-series led to more than 400 layoffs last year and forced the plant to shut down for more than a month.
McKinney-Cherry told the news agency GM has given no indication that it is planning more layoffs. Benefit packages will provide workers with more than 90% of their normal pay during the hiatus, state officials reportedly said.
AP said officials are still trying to measure the potential economic impact of the plant closing on suppliers, but McKinney-Cherry indicated that it could be minimal.
“While I don’t want to make light of it, the impact to the economy … looks to be not as negative as we would expect it to be,” she said, according to Associated Press.