They still dont get it

June 4, 2008
G.M. Closing 4 Plants in Shift From Trucks Toward Cars
By BILL VLASIC
Responding to a consumer shift to more fuel-efficient vehicles, General Motors said Tuesday that it would stop making pickup trucks and big S.U.V.s at four North American assembly plants and would consider selling its Hummer brand.
The moves, announced Tuesday by the company chairman G. Richard Wagoner Jr., will slash 500,000 units from the automaker’s overall production, and pave the way for increased investment in smaller cars and passenger vehicles.
Mr. Wagoner said that rising gasoline prices had forced a “structural shift” by American consumers away from truck-based vehicles built by G.M.
“These prices are changing consumer behavior and changing it rapidly,” Mr. Wagoner said at a briefing before G.M.’s annual meeting in Wilmington, Del. “We don’t believe it’s a spike or a temporary shift. We believe it is, by and large, permanent.”
In what he called “difficult” decisions, Mr. Wagoner said that G.M. would close plants in Janesville, Wisc.; Moraine, Ohio; Oshawa, Ontario; and Toluca, Mexico by or before 2010.
The actions follow previous moves to cut shifts at two truck plants in Michigan.
Mr. Wagoner said it was “unlikely” that the plants would re-open at any point with new products, but declined to provide details about relocating workers to other facilities.
Both Detroit automakers have been hit hard by rising fuel costs that have dramatically curtailed demand for pickups and full-sized S.U.V.s like the Chevrolet Tahoe. The shift toward smaller and lighter vehicles with better mileage is a problem for Detroit automakers because they offer fewer such models than Asian carmakers like Toyota and Honda.
G.M. had been expected to slash its truck production after similar moves were announced by the Ford. Ford recently eliminated a shift at each of four truck plants in Michigan, Wisconsin and Ontario and extended the summer shutdown at several truck plants to reduce inventories. The company also announced last week that it would build its new subcompact car, the Fiesta, at a Mexican factory that assembles full-size pickup trucks.
While G.M.’s production cuts were deeper than anticipated by industry analysts, the decision on the Hummer brand underscored the painful reality G.M. is facing.
Once considered an iconic brand with global market potential, the Hummer has become a symbol of the decline of the large, gas-guzzling sport utility vehicle.
Mr. Wagoner said that G.M.’s directors had approved a “strategic review” of Hummer that could include “a partial or complete sale of the brand.”
Overall, G.M. will reduce its North American production to 3.7 million vehicles from 4.2 million. The moves should add $1 billion in cost savings to an existing target of reducing costs by $5 billion by 2011.
Besides slashing truck and S.U.V. production, G.M. will place a bigger bet on its passenger cars and lighter-weight crossover vehicles.
Mr. Wagoner said G.M. will add third shifts to its plants in Lordstown, Ohio, and Orion Township, Michigan, to increase their output of Chevrolet and Pontiac cars.
He said the G.M. board also approved next-generation versions of two small Chevrolet passenger cars, as well as a new fuel-efficient, 1.4-liter turbocharged engine.
The automaker also set a firm schedule for production of the extended-range, electric-powered Chevrolet Volt. Mr. Wagoner said the Volt, which is powered by batteries augmented by a small gasoline engine, will be available for sale no later than the end of 2010.
“In other words, the Chevy Volt is a go,” he said. “We believe this is the biggest step yet in our industry’s move away from our historic, virtually complete reliance on petroleum to power vehicles.”
“From the start of our North American turnaround plan in 2005, I’ve said that our goal is not just to return G.M. to profitability, but to structure G.M. globally for sustained profitability and growth,” the chief executive, Rick Wagoner, said in a statement announcing the restructuring.
“Since the first of this year, however, U.S. economic and market conditions have become significantly more difficult,” he said. “Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix.”
G.M. shares rose 2.7 percent in early trading.
Tuesday’s announcement comes a few days after G.M. said said that 19,000 hourly workers — a quarter of a unionized work force that already has been drastically pared down — have accepted buyouts.

While Toyota is shooting 100 miles / gallon on the next generation Prius, GM is stuck at boasting about how they're increasing gas efficiency by 9 miles / gallon. 9 miles!!!! from what? 20? Its interesting to me that they see the problem - they have been seeing this for atleast 5 years and they havent developed a single new lineup that can claim what the Prius can. If GM had a Prius equivalent - I bet they wouldnt be suffering right now. The could have shut off the trucks and SUV productions and made up money on the REAL hybrid. Innovation is an AMERICAN sport (think Apple, Google). We are now distinctly following Japan. If I was a GM stock holder I would be extremely unhappy with the leadership's vision and execution