GM Production Cut Puts 1,000 Jobs at Risk

General Motors Co. (NYSE: GM) said it would end the third shift at its Spring Hill, Tennessee, plant. As many as 1,000 jobs may be affected. GM said not all these people will be fired, as it looks for alternative employment for some of them. The news represents another example of how U.S. car manufacturers have struggled in their home market.

The Spring Hill plant makes the Cadillac XT5 and GMC Acadia. Both are midsized sport utility vehicles. This type of vehicle has generally sold well. Even so, obviously supply and demand have not been equal.

Wall Street has been skeptical about any turnaround in the flagging fortunes of the two big American car companies. However, GM has more believers than does Ford Motor Co. (NYSE: F). GM’s shares are up 12% this year to $39, far shy of the broader markets. Ford’s shares are off 6% to $12.

It is ironic that the Spring Hill jobs are not related to the sales of GM’s sedans and two-door cars. Some of these have had double-digit drops in deliveries over the first eight months of the year. Buick LaCrosse sales were off 19% to 14,534. Sales of the Chevy Malibu were down 21% to 117,173 over the same period.

[nativounit]

GM’s comments about its August sales told the story of the entire year. Kurt McNeil, U.S. Vice President of Sales Operations, said:

We had a very strong month, and grew our retail and commercial fleet business on the strength of robust crossover sales at all four of our brands.

Analysts are not sanguine about cars sales over the balance of this year. And 2018 may turn into a real problem.

The Spring Hill plant decision is likely to become the first of many that affect U.S. car company workers. U.S. car sales probably peaked last year, and they may never hit that level again as more people give up car ownership for alternative means of travel.

[wallst_email_signup]