GM Can’t Keep Up With Demand, Puts Shuttered Plans On Standby

It goes without question that 2009 was the most difficult year ever for General Motors. However, there were some bright spots interspersed amidst the negative news, such as the success of GM’s newest models.

Back in December, GM announced a new plan where it will closely monitor demand for its vehicles and run its production operations accordingly. Following up on that plan, GM North America President Mark Reuss told reporters at the Detroit Auto Show that demand for the Chevrolet Equinox, Buick LaCrosse, and Cadillac SRX is outstripping supply and that the plants that build these vehicles are currently running at full capacity. Compared to GM’s situation one year ago, that’s a good problem to have. Reuss said that GM is working on a backup plan in case demand for its products overly exceeds current production capacity.

GM’s solution to meet increased demand is to reopen a plant it closed back in 2009. Reuss specifically mentioned GM’s Spring Hill facility in Tennessee as a potential candidate for a reopening. The General recently invested millions to upgrade the facility, where it built the Chevy Traverse up to November 2009 – only to move production of the full-size CUV to Lansing, Michigan. Moreover, Reuss told reporters that the plant is flexible enough to build several models (as it should be: the Traverse’s Lambda platform, Equinox’s Theta, LaCrosse’s Epsilon 2, and Theta Premium of the SRX are all very much related).

As such, GM officially put its Spring Hill and Janesville, Wisconsin plants on standby  just in case extra capacity in the U.S. is needed. That scenario is not difficult to imagine given the expected rebound of the U.S. auto industry in the foreseeable future. Since the cost of building a new plant can run well over a billion dollars, the idea to reopen shuttered plants seems a good move to us. Not only that, but it will also help boost the economy by bringing back laid-off workers (thereby decreasing unemployment and strengthening the economy). Most recently, GM announced it will run its Fairfax assembly plant around the clock to meet demand for the Chevy Malibu and Buick LaCrosse. I wonder what those Tea Party protesters have to say about that!