Article States GM Has 1 Million Units Of Excess Production Capacity

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Thread: Article States GM Has 1 Million Units Of Excess Production Capacity

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    Article States GM Has 1 Million Units Of Excess Production Capacity

    Wards Auto
    September 27, 2019



    GM Overcapacity Lurks in Shadows of UAW Strike

    Consultant Alan Baum says even shutting down the Detroit-Hamtramck and Lordstown, OH, plants, which GM announced in November 2018 to bitter opposition by the UAW, won’t necessarily resolve the automaker’s overcapacity problem.

    Any proposed settlement of the UAW strike against General Motors is likely to leave GM with a chronic overcapacity problem that could hobble its efforts to boost efficiency, which has run into a wave of union militancy.

    “GM has more than 1 million units of excess capacity,” says Jeff Schuster, president-Americas Operations for LMC Automotive.

    Eighty percent utilization or above is considered optimal. But GM assembly plants are running below that mark and some are sliding toward 50% to 60% utilization, driving up costs, he says.

    Alan Baum of Baum Consulting in West Bloomfield, MI, says even shutting down the Detroit-Hamtramck and Lordstown, OH, plants, which GM announced in November 2018, won’t necessarily resolve the problem. The assembly line at the GM plant in Oshawa, ON, Canada, is slated to close for good in December.

    However, GM probably has three more assembly plants – Fairfax, KS, Lansing Grand River in Lansing, MI, and Orion Assembly in Orion Township, MI – that are running well below capacity, given the automaker’s shift away from passenger cars, according to both Baum and Schuster.

    But the strike and the course of negotiations indicate further consolidation of capacity is difficult, analysts note.








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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    But the strike and the course of negotiations indicate further consolidation of capacity is difficult, analysts note.
    We have the new definition of "between a rock and a hard place". The length of the walk-out thus far seems to indicate that both sides feel they absolutely need a win. It will be interesting to see how thus turns out, and the up-coming effects on Ford and FCA.









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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    WOW, 1 Million. How much "Over Capacity" did Old GM have before Restructuring?

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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    I am not surprised. GM capacity has been under utilized forever and the process was always going to take years to resolve. Lordstown, Oshawa etc were just another step, I'm sure the union knows it.

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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    GM's overcapacity issue is their own doing. They import more vehicles then Ford and FCA, and their terrible marketing and chronic cost cutting cost them many sales.

    It was only a few years ago Lordstown was humming along just fine. A homerun 2nd Gen Cruze would have helped save the plant but GM gave us more subpar product and allocated some production to Mexico.

    This is a GM problem.
    "The car's brilliant and ... a great surprise, pleasant surprise for all Corvette lovers everywhere ... a huge shock to our competitors ... because I don't think anybody was expecting something that good. What pleases me the most about it was that ... I can say this is the first car that's come out, that was done since I left.

    -- Bob Lutz, former vice chairman and head of global product development at GM

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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    Quote Originally Posted by InCogKneeToe View Post
    WOW, 1 Million. How much "Over Capacity" did Old GM have before Restructuring?
    I don't know about GM specifically, but the global automotive industry overall in 2008 (year before GM's bankruptcy) had excess capacity of 34 million units according to research firm CSM Worldwide.
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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    The problem is not over capacity, but under utilization of existing facilities.
    If GM could manage to raise production even 10% at all of its assembly plants, there would be no over capacity to shout about.

    The problem has been marketing. Deboral Wahl now fulfills a desperate need that GM has been hobbling along with. As the first CMO at GM since 2012, she definitely has her work cut out for her. However, selling a million more GM vehicles per year should be a cakewalk.

    Rationale says that GM should be manufacturing 6 million vehicles a year in NA. Rick Wagoner was absolutely right when he stated GM should be selling 30% of the vehicles in the NA market. What went wrong?

    Mary Barra's cut backs and repositioning of the company are threatening that ideal. GM used to be the biggest Detroit automaker. Now it's Number Three. Love the profits Mary, but it appears that new management is called for soon. The current situation is clearly unsustainable.
    Last edited by jamiepeterson2; 09-30-2019 at 11:39 AM.

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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    Break out the old 29 lapel pins?
    "The car's brilliant and ... a great surprise, pleasant surprise for all Corvette lovers everywhere ... a huge shock to our competitors ... because I don't think anybody was expecting something that good. What pleases me the most about it was that ... I can say this is the first car that's come out, that was done since I left.

    -- Bob Lutz, former vice chairman and head of global product development at GM

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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    This is the problem with these unions. They should have ZERO say in what product is built where. GM is a business, not a welfare program. These UAW members have essentially become welfare recipients now. It's funny how people complain about the bailout, but yet support the UAW with their efforts. That's so hypocritical. It's got to be one way or the other.
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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    Complicated issue - but since GM reduced capacity in the USA, while increasing production in Mexico, I suspect that the over-capacity issue is confined to the USA and Canada.

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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    Quote Originally Posted by 1999 White C5 Coupe View Post
    Complicated issue - but since GM reduced capacity in the USA, while increasing production in Mexico, I suspect that the over-capacity issue is confined to the USA and Canada.
    Actually, overcapacity is an issue that affects GM globally. In addition to the U.S. and Canada, low utilization currently impacts GM plants in Mexico, South Korea, Argentina, and Thailand as well as JV plants in China.
    Last edited by gkr778; 09-30-2019 at 02:10 PM.
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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    Quote Originally Posted by TruckMan View Post
    This is the problem with these unions. They should have ZERO say in what product is built where. GM is a business, not a welfare program. These UAW members have essentially become welfare recipients now. It's funny how people complain about the bailout, but yet support the UAW with their efforts. That's so hypocritical. It's got to be one way or the other.
    A job is not created for the worker, a job is created to fulfill a need for an employer. When I tell a pro-union person that, they go nuts. That's 100% the truth though. This is why I keep pushing people to get out of work that can easily be performed by a robot and learn something that an employer needs to pay a worker for. We have a local community college that just had a tax approved to build a new factory automation facility that will house programs that train workers to repair and maintain the machines that are increasingly taking these factory floor jobs. The writing is on the wall people!
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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    Simple solution: Build where you sell. Why are we building in Korea and Mexico? GM sells a few hundred a month in each country. The Aussies got wacked, why not S. Korea?

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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    Quote Originally Posted by TruckMan View Post
    This is the problem with these unions. They should have ZERO say in what product is built where. GM is a business, not a welfare program. These UAW members have essentially become welfare recipients now. It's funny how people complain about the bailout, but yet support the UAW with their efforts. That's so hypocritical. It's got to be one way or the other.
    I don't think the union care too much what is built where, but they are concerned, nothing is built here; GM has plant after plant with discontinued products.

    How small is GM going to be in another 5 years; will they even exist in 10? Where does it end, when gas spikes and Truck and SUV sales shrink?


    Quote Originally Posted by Clownzilla View Post
    A job is not created for the worker, a job is created to fulfill a need for an employer. When I tell a pro-union person that, they go nuts. That's 100% the truth though. This is why I keep pushing people to get out of work that can easily be performed by a robot and learn something that an employer needs to pay a worker for. We have a local community college that just had a tax approved to build a new factory automation facility that will house programs that train workers to repair and maintain the machines that are increasingly taking these factory floor jobs. The writing is on the wall people!
    So the answer is to go to a community College and get a certificate in automation/robotics? How's that work, when the plants are in Mexico, South Korea or China?
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    Re: Article States GM Has 1 Million Units Of Excess Production Capacity

    Maybe they can try building vehicles that people want and advertising.
    Mary Barra is clueless

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