GM is rumored to lay off 100 workers at its Orion Assembly plant. The facility employs 1,600 hourly and 200 salaried workers, and produces the subcompact Chevy Sonic range and the compact Buick Verano luxury sedan. Since writing about the rumored layoffs earlier today, we have received various letters asking to shed light on why GM might be cutting the jobs.
Fist things first: GM has yet to announce or confirm the layoff officially, so everything we’re discussing here borders on speculation. For the sake of discussion and commentary, however, we’ll assume that the layoff rumors are true.
So, here’s the deal: demand for both the Gamma-platformed Chevy Sonic and Delta-platformed Buick Verano is down. During the first five months of 2015, Verano sales dropped 15.6 percent to 15,279 units, while Sonic sales decreased 28.5 percent to 29,082 units.
Chevy Sonic, Buick Verano Sales - January 2015 - May 2015
|MODEL||YTD 2015 / YTD 2014||YTD 2015||YTD 2014|
To match the lower demand for both vehicles, GM will scale back production at the plant by 21 percent, from 33 cars an hour down to 26. To note, the behavior to more closely match supply (production) with true market demand is a far cry from the practices of General Motors before its 2009 bankruptcy (Old GM), which was notorious for keeping plants humming along at full capacity despite sustained downward demand of certain vehicles or vehicle segments. The practice then resulted in hefty per-unit incentives, which maintained high sales volume and decreased per-unit profitability (and resale value).
So, the layoffs at Orion Assembly are a consequence of an industry-wide slump in the overall demand for small(er) cars thanks to low fuel prices that are encouraging consumers to buy more SUVs, pickup trucks and other larger vehicles. The layoffs are rumored to begin in July.