In a Friday afternoon meeting between employees and management at the General Motors Lordstown plant workers say that they learned that production will be cut to just a single shift.
According to several sources inside the meeting, employees were told that General Motors would be eliminating one of the two remaining shifts, starting on June 18th.
Employees say they have also been told that the company will offer a $60,000 buyout for anyone who is nearing retirement, however, a source with the company says smaller buyouts are also available to employees with less seniority.
An official with the company says approximately 1,500 positions will be lost. The company website says that the plant currently employs 2,700 full-time workers and an additional 300 salaried employees.
There are informational meetings scheduled for next week to notify employees of the buyout possibilities.
A statement from General Motors Lordstown spokesperson Thomas Mock attributed the cut to the improving economy and lower gas prices.
Last year GM operated the Lordstown, Ohio assembly plant on two shifts. As the market continued to undergo historic changes, it required us to reduce production rates and take numerous down weeks to match production with lower customer demand for compact cars. As we look at the market for compact cars in 2018 and beyond, we believe a more stable operating approach is to match market demand on a one-shift schedule. Consequently, we will suspend the second shift of production at Lordstown late in the second quarter of 2018.
Industry-wide, the U.S. small car market has been on a steady decline since 2014 due in large part to a shift in consumer demand for crossovers, trucks and SUVs. Lower fuel prices and an improving economy are both contributing to this trend.
The car market remains important to GM and Chevrolet since it represents 36% of industry retail sales. The small car segment also brings new and conquest customers to Chevrolet.
Late Friday afternoon the UAW 1112, the union representing the majority of Lordstown GM workers, issued a letter to union members about the shift cut.
In the text of that letter, union officials say the shift cancellation was not expected and will be difficult for the members of the union, and their families, to overcome.
"We have been through these times in the past and together we will get through this too," the letter reads. "Your leadership remains dedicated to retaining and acquiring new and future products in our facility."
The letter to the union members continues, saying,"This loss of shift in no way reflects the hard work of our membership. Please know that you are doing a fantastic job and this is nobody's fault, just a shift in customer preference."
Last January, GM eliminated the third shift at the Lordstown Complex due to what the company says was a change in buyer preference from small cars to trucks and crossover vehicles.
1,200 UAW members lost their jobs when that shift came to an end.
According to General Motors, the Lordstown plant is responsible for more than $181 million in wages and pays more than $35 million in salary taxes.
In addition, the plant is responsible for millions of dollars in donations and charitable giving throughout the years.
Lordstown Mayor Arno Hill says that he is still hopeful that the situation can turn around.
"You know for the last 30 years we've had our ups and downs," said Mayor Hill "At one point in the 90's they were talking about shutting the plant down."
But Mayor Hill said that as gas prices fluctuate and the market continues to change, there is always a possibility that Lordstown can return to its full three shifts.
NBC Auto Analyst Phil LeBeau tells 21 News that there have been persistent rumors about the Lordstown plant every six weeks or so.
Appearing by phone on 21 New at Midday, LeBeau told anchor Jennifer Brindisi that he believed it would be an "interesting afternoon" and one that he believed "the people who work at Lordstown will not be crazy about".
According to LeBeau, he anticipated any announcement would reflect the current state of the auto industry, in which consumers have switched to purchasing more SUVs and crossovers.
LeBeau said that the current sales and demand for the Cruze models are down. Sales of the Cruze fell 2.2% in 2017 compared to the previous year.
"We're already seeing that sales and the demand for the Cruze- if it stays at its current pace where it is for this year, it'll be down about 30 percent in the United States in terms of sales," said LeBeau. "And relative to 2015 sales will be down more than 55 percent."
"That's a reflection that cars and sedans are just not a favorite. People want utility, people want space and that's why SUVs and crossovers are as popular as they are," LeBeau explained. "And that means that fewer people are buying the Chevy Cruze, and ultimately that's what hurts the Lordstown plant."
LeBeau mentioned that even though overall Cruze sales are only a short ways off from previous years, most of the market for the Cruze has been dominated by sales of the Mexican made hatchback model.
General Motors announced in 2015 a $350 million investment at the production facility in Ramos Arzipe, Mexico so that the plant could begin producing the Chevy Cruze.
Just one year later, GM announced that Mexican made models of the new Chevy Cruze would be shipped to car dealers in the United States, but said that the Mexican production would not impact Lordstown.
Despite the sales numbers continuing to drop for models like the Lordstown built Chevy Cruze, GM unveiled the newly redesigned 2019, Cruze this week.
Just moments after the announcement, Valley Congressman Tim Ryan issued a statement saying:
“I am deeply disappointed by today’s GM Lordstown announcement,” said Congressman Ryan. “While low gas prices encourages the decline of compact car like the Chevy Cruze, President Trump’s intention to weaken fuel economy standards is putting his thumb on the scale in favor of the larger cars and SUV’s made elsewhere. He claimed he was against the government picking winners and losers, and yet he goes against the very region and state that helped put him in office. As these layoffs are implemented, I will do everything in our power to assist the affected employees and their families get through this difficult time.”
Congressman Ryan pointed directly to an announcement in April that incentivized the sale of larger cars and S-U-V's and rolled back laws regarding the Environmental Protection Agency's rules covering emissions.
Just days ago, Ryan said the Administration is setting Ohio back and putting GM Lordstown at risk. "The current vehicle standards save consumers money, create thousands of manufacturing jobs, and reduce our dependence on foreign oil that is wrecking our public health and environment."
" A recent report shows that $76 billion in new and promised investment in our auto plants since 2008, including over $10 billion in new and promised investment in Ohio." Congressman Ryan said. "By encouraging automakers to invest more in large trucks and SUVs, President Trump is putting the Mahoning Valley's economy at risk. Trump is putting ideology ahead of jobs and Ohio jobs."
Meanwhile, Senator Sherrod Brown issued a release saying that it was his belief that General Motors need to use their tax windfalls to save jobs.
“GM cannot pocket billions of dollars in tax cuts and turn around and fire Ohio workers whose livelihoods depend on these jobs. I expect GM to tell Ohioans immediately how they plan to use their tax windfall to keep Ohioans in their jobs.”
Republican Senator Rob Portman also reacted to the news, saying that he will everything in his power to help the workers of GM during the uncertain future.
His full statement reads:
“This is bad news for the Lordstown plant and the great workforce I’ve had the chance to meet during my visits there. I’ve seen firsthand the world-class cars these workers produce, and if there is not a strong market for the Chevy Cruze right now, I want to be sure General Motors looks to this plant for production of other vehicles. I called senior executives at General Motors today to express this, and I will continue to do what I can to help bring new work to the plant. We will also do everything we can to help workers who are laid off with the appropriate resources during this transition. GM has a great resource in this plant and these workers, and I hope the company will reinvest in the plant and in the workforce.”
The Lordstown School District says they will do all they can to adjust and stand behind the families of GM Lordstown.
A statement issued by Superintendent Terry Armstrong reads:
"First and foremost this is terrible news for Lordstown and the entire Mahoning Valley. Our focus will remain on our students and their families. The board will likely be extending the suspension of classroom fees and pay to participation fees to lessen this burden on our school families. The district will also make any necessary adjustments to our budget as we continue to plan our five year forecast. Our thoughts are with the families of all the workers impacted by the loss of jobs"
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