Bloomberg News

GM Will Idle Michigan, Indiana Plants to Pare Truck Supply

June 17, 2011

(Updates share trading in final paragraph.)

June 17 (Bloomberg) -- General Motors Co. will idle U.S. truck plants for two weeks in July as the automaker pares inventory of pickups and prepares the factories for output of 2012 model year vehicles.

GM’s Flint assembly in Michigan will shut down for the weeks of July 4 and July 11, said Tom Wickham, a spokesman for the Detroit-based automaker. Production at Fort Wayne assembly in Roanoke, Indiana, also will stop during those weeks, said Orval Plumlee, president of United Auto Workers Local 2209, which represents hourly workers among the factory’s more than 3,300 employees.

The two plants make Chevrolet Silverado and GMC Sierra pickups. GM’s truck inventory was 288,000 units at the end of May, up from 275,000 on April 30. The inventory included 258,000 units of large trucks, or 110 days supply, Don Johnson, GM’s vice president of U.S. sales, said on a June 1 conference call. The industry standard is about 60 days supply.

“GM is rightly being quite careful about building products into the summer months and not getting caught with an excess amount of prior model year inventories,” said Michael Robinet, an analyst at IHS Automotive in Northville, Michigan. “They’re going to be careful not to build too much of the older model year vehicles and have to discount them heavily in the face of having newer model year vehicles on the same lot.”

Adjusting Inventory

Mark Reuss, president of GM’s North American operations, said at a June 3 conference that the inventory of trucks was acceptable in the short term and wouldn’t prompt a surge in discounts.

“We’re not going to run big incentives to clear inventory,” Reuss said on Mackinac Island in northern Michigan earlier this month. “We’ll adjust inventory on a production basis.”

GM also makes large trucks in Arlington, Texas, and Silao, Mexico. Those plants will continue normal production while Flint and Fort Wayne are down, Chris Lee, a GM spokesman, said in a telephone interview.

The company’s deliveries in May fell 1.2 percent to 221,192 vehicles, the Detroit-based company said in a June 1 statement. While Johnson said GM is “not anticipating tremendous growth” in the U.S. truck segment, sales may rebound in the second half due to seasonal factors and pent-up demand.

GM rose 41 cents, or 1.4 percent, to $29 at 4:01 p.m. in New York Stock Exchange composite trading. The shares are down 21 percent this year.

--With assistance from David Welch and Keith Naughton in Detroit and Mark Clothier in Atlanta. Editors: Niamh Ring, Cecile Daurat

To contact the reporter on this story: Craig Trudell in Detroit at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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