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 15 / YTD 14 | YTD 15 | YTD 14 |
|---|---|---|---|
| SONIC | -28.50% | 29,082 | 40,672 |
| VERANO | -15.61% | 15,279 | 18,106 |
| TOTAL | -24.53% | 44,361 | 58,778 |
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.
Comments
Oshawa Assembly is doing the same thing in the flex plant I heard they will be de-rating the line speed from 50 JPH to 30 JPH and approximately 300 job losses.
Funny. People buy larger, less fuel efficient vehicles when gas prices are low. What about when they go up?
They do the opposite. #Smart
When the plant begins producing the 2017 Chevy Bolt EV next year, the number of workers will grow again.
Till gas prices fall again and people start buying trucks and suv’s.
Then when prices climb again in the summer, they’re bitching about gas prices. THINK LONG TERM.
True, they should get the best vehicle in size and economy then they would have money to spend elsewhere not on gas for the gas hog.
I believe the many journalists miss what is really happening not only in the small car market but in all segments of the passenger car market .SUV’s/ CUVs or whatever they are called. With the entry of the chevy trax / buick encore and several competitor vehicles . consumers are opting to buy vehicles with higher ride heights , where you actually sit up , its a more comfortable driving position, and a better view of the road not only in front of the driver , but also to the sides. If one drives the Trax mainly in the city or suburban areas , there is little difference in fuel economy to a small car . For young couples or older empty nesters the Trax / Encore are compelling.
The sonic is an excellent small car the best GM has ever produced and equal to anything in the segment. We got 1 last fall in our family for mom in law , and its great. Quiet , short hood great visibility , excellent build quality especially considering the price range . yes the dash has some hard plastic , but show me a vehicle under 40k that doesn’t .Rented a Mazda CX9 a few weeks back and was shocked by the design of the dash , space and all of the hard plastic.
The comment about GM and the past with production is also misleading. While its true they kept the plants humming even if demand was not there , but that was as much to do with contracts from an earlier more prosperous time , that made it less expensive to keep the plants running than to send employees home and still pay them.
GM is a far different company than it was 5 years ago , building some great quality cars today that are competitive in the market and that consumers actually want to buy .Too many journalists , simply bash GM no matter what they do . Think back a few years when the Encore and Trax were introduced , lots of negatives from the media , they only came around when sales started to build. Same when GM announced the Colarado ., Now GM cannot build them fast enough. Just placed my order for 2016 Z71 crew cab , and can hardly wait!