For workers at the General Motors truck assembly plant in Janesville, a new line of full-size sport-utility vehicles can't get here soon enough.
The automaker said Tuesday that it will suspend production at the Janesville plant for an additional two weeks, bringing the total of 2005 downtime to nine weeks.
The plant's 3,600 hourly and 300 salaried workers learned Tuesday that production will be suspended for the weeks of June 27 and July 18. That's on top of three weeks in January and a four-week stretch that starts March 14.
And when they return to work on July 25, workers on both shifts at the Janesville plant will be building fewer SUVs, said plant spokeswoman Carolyn Markey. The production line rate will slow from 60 vehicles per hour to 55.
GM did not announce any further production cuts Tuesday for its SUV plants in Arlington, Texas, and Silao, Mexico.
Sluggish sales and high dealer inventories are forcing the automaker to cut production. GM said Tuesday that its overall car and truck sales were down 12 percent in February.
Workers at the Janesville plant build Chevrolet Suburbans and Tahoes and GMC Yukon XLs and Yukons. Sales of those vehicles were also off in February, with Suburban deliveries down 35 percent, Tahoe sales off 23 percent, Yukon XL sales down 21 percent and Yukon deliveries off 30 percent.
"There's a lot of concern about what the future will bring," said John Dohner Jr., United Auto Workers Local 95 shop committee chairman at GM in Janesville.
"We've told the membership to prepare for a tough year."
Next year, the local plant will hopefully reap the benefits of a $175 million investment by GM to retool the plant for the production of its next generation of full-size SUVs, which the automaker refers to as its GMT 900 series.
"We really wish we could pull the 900 ahead," Dohner said. "But because of the engineering and the suppliers who have to come up with the parts, there's just no way to do it.
"We're a little less than a year out on the new product, and we feel confident that it will be a good seller."
But it's the possibility of more downtime between now and then that's causing some concern in the local plant, he said.
Dohner said higher gas prices and interest rates are contributing to the drop in sales. So, too, is the fact that GM's current model is nearing the end of its life cycle.
"The thing is, this product isn't really that old, only five years," he said. "But a lot of people-unless they're going to drive a vehicle forever-don't want to buy this year's model when they know a new product is coming out next year."
For the year, GM's overall sales are now down 9.9 percent, giving the No. 1 automaker a diminished market share of 25.1 percent. At Ford, meanwhile, year-to-date sales are off 7.4 percent and market share declined to 19.6 percent.
That performance left GM and Ford with swelling inventories and a few choices. They could cut production, increase incentives or do a bit of both.
GM is already offering an incentive program through March 31 that includes cash-back rebates and bonuses of $4,000 or more on some models or 0 percent financing for up to 60 months. So it did not announce a new incentive program, even though dealers are feeling anxious.
"The new product can't come fast enough," said Jerry Seiner, who owns a variety of GM and other dealerships in Salt Lake City. "Business is tough."
Through the end of January, dealers had an average 165-day supply of Suburbans and a 147-day supply of Tahoes, according to Ward's Automotive, which has tracked the auto industry with news, statistics and analysis for more than 75 years.
Supplies of Yukon XL averaged 156 days, while Yukon inventories averaged 166 days, Ward's reported.
Dealers generally prefer a 63-day inventory, according to Ward's, which will report February dealer inventories Monday.
Under the UAW contract, GM workers who are temporarily laid off get 95 percent of their usual take-home pay once unemployment and supplemental pay are combined. That amount is then taxed, which means workers actually take home about 70 percent of their gross pay.
The production cuts at GM in Janesville also affect local suppliers, primarily Lear Corp. and LSI, both of which sequence parts and systems to the truck plant. When GM is down, most supplier employees are also laid off and collect state unemployment benefits.
After GM's announcement Tuesday, the Southfield, Mich.-based Lear, which makes interiors and employs about 900 people in Janesville, slashed its first-quarter earnings forecast "to about break-even, primarily reflecting additional industry production cuts."
