GM Pauses Full-Size Truck Production to Keep Market Hungry
With production pauses becoming commonplace during the pandemic, automakers realized they could effectively starve the market while demand reached dizzying highs that allowed the industry to trim overhead and forego factory incentives. Unfortunately, this also meant consumers were given less choice and often had to pay more – whether or not they found what they wanted on dealer lots.
Many automakers have stated that they won’t be going back to robust vehicle inventories and would instead continue attempting to run lean in order to maximize profitability. With exactly that in mind, General Motors has opted to suspend production at its Fort Wayne, Indiana truck assembly facility. The pause will last two weeks (impacting the Chevrolet Silverado and GMC Sierra) and help the company “maintain optimal inventory levels.”
The shutdown is scheduled to commence on Monday, March 27, and is reported by Autoweek to be in accordance with provisions of both national and local UAW bargaining agreements. Though the outlet noted that some of those updated provisions weren’t particularly well-liked by union members – as they effectively encouraged more downtime.
"That [jobs banks] program had required automakers put employees who would have been laid off into a program where they still got full pay," Cox Automotive Executive Analyst Michelle Krebs said. "Eliminating that program gave the domestic automakers more flexibility to idle plants when inventory was high or for whatever reason."
While those changes made life harder for people working the assembly line, it seems to have worked out well for automakers and arguments have been made that it’ll likewise help the industry avoid another crash like the one witnessed in 2008. But inventories that are considered high by modern standards are significantly smaller than what would have been considered normal just a few years ago. GM CFO Paul Jacobson, previously said the company would target 50 to 60 days' inventory through 2023 – roughly 30 days shy of what would have been normal in 2019.
For now, the automaker’s other full-size truck plants (located in Michigan, Canada, and Mexico) will continue operations while Indiana goes on hiatus. General Motors has said that it would constantly review and adjust production schedules to see if subsequent idling would be necessary. But has no plans beyond the two-week shutdown at present.
[Image: Jonathan Weiss/Shutterstock]
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A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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These are short sighted gains. Soon people will be upside down on car loans twice as long as they used to be due to the inflated prices. This will keep them out of the car buying market longer than in the past. Then automakers will cry bankruptcy again and try to get free loans from the taxpayer only we will say no. The failure of GM is on the horizon and they are hastening it.
Chevrolet had the perennial 1/2 sales leader for decades. Ford always beat them in HD sales. I see mostly Ram's and Fords now. Make a truck people want to buy and you won't have a 100 day inventory.
The new Colorado/Canyon saw a huge jump in price and crewcab shortbox is the only trim.
Smart.. real smart.