General Motors has finally decided to close down one of its oldest assembly plants in the United States. The company's assembly plant in Lordstown, Ohio officially shut down this week after it rolled out the last Chevy Cruze from its assembly line. The plant has been in operation for over 52 years, producing more than 16 million new vehicles for GM. The shutdown has left thousands of workers without jobs, with some choosing to retire while others are now in the process of looking for new jobs.
The decision to shut down the plant has been seen by some analysts as a renewed strategy to cut down on cost and to prevent the company from going bankrupt once again. GM previously filed for bankruptcy around a decade ago. One of the main reasons for its previous bankruptcy filing was the company's unwillingness to cut its losses. This included not immediately reacting to the market's needs by shutting down plants that were producing less in-demand vehicles.
GM's CEO Mary Barra is reportedly simply reacting to the country's new appetite for larger trucks and SUVs. Sales of sedans, which is the only type of vehicle being produced at the Lordstown plant, is no longer as lucrative as they were before.
The closure of the plant is the company's way of reducing its footprint and shedding some of its unused capacity. GM had previously announced that it will be closing around five facilities across the United States and Canada. The company also stated that it is planning to cut more than 14,000 jobs under its new strategy. The Lordstown plant only produces GM's slowest-selling vehicle, the GM Cruze sedan. It, therefore, makes sense that the company would close this particular facility first.
The Lordstown plant is the first facility that was closed under the company's new plan. It is not yet clear which of their other facilities will be next, but the recent closure is a sure fire sign that the company is committed to its new strategy. Analysts believe that shutting down underutilized plants will definitely help GM's bottom line. Plants such as the one in Lordstown are considered to be low capacity facilities, which mean that they aren't as efficient as they could be. The plant only has one eight-hour shift per day, which means that it is sitting idle for the other 16 hours of the day. GM's capacity utilization is currently one of the worst in the industry, with most of its plants operating at 73 percent or lower. Other manufacturers such as Honda and Toyota have plants at 90 percent and above of their capacity utilization.
