General Motors currently runs all five of its passenger car plants at around 37 percent capacity, which costs the automaker money. Analysts expect GM will fix the situation in the near future—and it could mean plant closings.
The Detroit Free Press reported Friday that analysts believe the Lordstown, Ohio, plant is the most likely to close as it only builds the 2018 Chevrolet Cruze sedan. The hatchback is built in Mexico, and Lordstown now runs just a single shift to build the Cruze compact car. Cruze sedan production could join the hatchback in Mexico. GM CEO Mary Barra reportedly wouldn’t commit to the Lordstown plant’s future when questioned by lawmakers.
The move would certainly create a heated backlash from the Democratic-leaning United Auto Workers union (although many UAW members voted for President Trump), and President Trump himself. The president has threatened the possibility of levying a 25 percent tax on cars imported from Mexico and Canada in the past. Should tariffs be imposed, it would put GM in a tough spot.
A few other scenarios are possible, though. GM could face reduced profits and run the plants under capacity, close a U.S. plant and consolidate with another U.S. plant, or move production from another country to the U.S. Kristin Dziczek, a vice president at the Center for Automotive Research, believes the final option is the most likely.
Thus, we could see former car plants become truck and SUV plants as GM faces the possibility of tariffs and fiscal pressures weigh on it. Experts believe if enough vehicles returned to the U.S., GM could actually add new jobs.
Sam Abuelsamid, Navigant Research analyst, said even if GM does move some Mexican production to the U.S., it likely won’t be enough to fill the void. U.S. automakers have the ability to build 14 million vehicles yearly, but only produced 11 million. 1.3 million units come from GM’s underused car plants.
“In all likelihood, we’ll almost certainly see one, maybe two plants closing,” he said.
And if it comes to plant closures, things could get messy quickly. The current UAW contract expires next year and any whiff of a plant closure could force a strike.