The automotive industry is changing. We feel as though we’ve written that a dozen or more times in the last six months. General Motors is navigating a treacherous restructuring. Fiat Chrysler Automobiles is riding high thanks to robust crossover and SUV sales, and a portfolio filled with desirable products. Even Ford is trying to right the ship, one of the first automakers to ditch sedans for crossovers, SUVs, and pickup trucks. But it’s not all rosy. Overall new car sales are falling as automakers position themselves for the next decade of automotive innovation. Not even FCA can avoid the swings in consumer trends. The company has announced 1500 workers at its Windsor, Ontario plant will lose their jobs, according to The Detroit Free Press.
FCA builds the Chrysler Pacifica, Chrysler Pacifica Hybrid, and Dodge Grand Caravan in Windsor, which currently employs 6,104 people on three shifts. But minivan sales are falling, too. Not even their uncompromised familial utility could fend off the allure of a crossover — Pacifica sales are down 24 percent through February with Caravan sales down 27 percent. To compensate, FCA is eliminating a third shift and 1500 jobs. Even overall FCA sales are flat.
The latest layoffs in Windsor by FCA are just another blow to the Ontario manufacturing workforce. When General Motors announced its restructuring plan last November, part of the plan included proposing to indefinitely idle five North American factories, four in the U.S. and its Oshawa, Ontario facility. Unifor, the Canadian workers union, went to great lengths to try to keep the factory operating. “Constructive negotiations” between Unifor and General Motors has led the union to suspend its aggressive campaign against the automaker as the two work toward finding ways to preserve jobs at the factory.
These layoffs could be canaries in the coal mine. Automakers are expecting a market contraction as sales slow following the sales boom that happened after the 2008 financial crisis. A bustling economy can only last so long before it begins to correct itself, which it may already be doing, at least in the automotive sector, and that could spell disaster down the road. Auto-loan delinquencies are rising along with the cost of monthly payments, new-car prices, and loan terms. While automakers are raking in billions in profits, the gravy train could come to a stop sooner than expected.
Source: The Detroit Free Press
Comments
More to come though out the industry as auto sales stagnate. GM was just the first and far from the last.
It is not an economy thing as much as just market growth.
Also the prices are just too high for most people anymore.
Except GM under Machete Mary Barra has cut over 20,000 jobs just in the U.S. and Canada alone. Everyone knows the Canadian automotive manufacturing sector is almost dead given the current government’s bungling of it. Billions in taxpayer dollars and explains why it looks like we are headed to a new Conservative government in Canada this year.
Unlike GM, FCA just announced a $4.5 billion investment in Michigan with thousands of new jobs guaranteed.
The American economy is booming while GM and the auto industry is dying. GM is definitely the worse with the most cuts. FCA might cut a few jobs in Canada, but they are adding in the U.S. with Jeep expanding a very profitable.
America is 22.1 trillion in debt and the old golfer continues to spend uncontrollably.
That wasn’t my down vote.
But I wouldn’t be surprised if a potentially softening economy has more to do with it than we suspect.
We don’t know about the last, but GM is just the first and most flagrant American auto manufacturer to wholesale move production to China and Mexico to maximize profits over corporate citizenship. Management underestimates our collective memory of the hundreds of billions of dollars we as taxpayers gave to GM to bail out their incompetence. Though not announced yet, just wait until the the CT6 is imported from China, to make up for the “unallocated” American plant.
there are more autos sold in china than america. The chinese workers are keeping prices low on ‘american’ autos.
Was all set to buy a Terrain for my wife last fall after an overnight test drive until I learn it was made in Mexico. I’ve been a Chevy guy my whole life and that crushed me. Bought a Jeep instead, even though it is owned by Fiat, it is made in Illinois. I have never considered buying a foreign car, even if made here, so this purchase is questionable to my buy American philosophy. Probably go Tesla next as I consider that company to be an American success story with truly innovative products.
Pacifica is fantastic. I see them all over NY metro area, especially NJ. This segment has gone the way of the estate which is too bad.
Auto sales stagnation has much to do with student debt which has also lead to massive re-urbanization: Millennials and Gen Z either can’t afford or don’t need a car.
The politician who can solve student debt will be beloved in the auto industry.
The politicians who forced students into ridiculous expensive student education and loans just to push their political agendas and professor friend salaries through the roof need to solve the problem. Idiot Millennials who take out part loan money to the tune of $100K plus for “school” are just as liable for their stupidity. Millennials really are the idiot generation along with Baby Boomers.
Folks, beware that user “El Diablo” often posts under other user names. He has so far posted as steve (lower case s), El Diablo, Buick fan, and others. If it smells like a troll, then it is a troll – and this guy is the textbook definition. We’re working on removing access to the site altogether.
And here, I was happy that someone called themself “Buick Fan.”
( sigh )
He may be a troll but be is not 100% wrong.
We have an abundance of college grads with no job, no plan, and hundreds of thousands of dollars in debt. Meanwhile, there is a shortage of skilled labor. College WAS pushed by politicians, and the teachers unions, mainly due to some degree of job security. I’m not pointing fingers, but the education system as a whole is in need of some serious change.
Not only that, but more and more car companies are trying to appeal to a generation that will lease a car for the cheapest amount possible, or simply buy an import brand because they can get it dirt cheap.
Parents are also guilty of pushing their kids to college even when a trade would be better suited for them. I worked as a mentor for a high school FIRST Robotics team for 13 years and saw many students who were talented machinists, for example, and really loved the work only to get pushed into some liberal arts college where they were unlikely to come out with any job prospects. Very sad because in manufacturing, we have an extremely tough time finding candidates to fill the technical trade positions. This is a big factor dragging down the expansion of manufacturing in the US. It also affects construction and any other trades that we desperately need.
Agree for sure on the prices being too high..we again have artificial affordability with some of the crazy credit/lease terms offered by dealers. Remember when a 48 month loan was the high end and leases were maybe 24 to 36 months? My local dealer is offering 84 month leases and 96 month loans. That is beyond ridiculous but that’s how people “afford” new vehicles…..never understanding what upside-down means. But, how many dealers now offer to roll that into a new vehicle loan……it’s madness…..and will explode soon enough.
Automakers are well aware of the escalating cost. They are all in fear of it as they have to balance that vs profits.
Wages are high, the cost of raw materials is high and the development cost are off the charts.
I think that the push to EV is a move to lower the cost of cars in the long run. This is why the industry is embracing it as they go.
While development cost are high now they will come down as there are no regulations to meet like the ICE vehicles have to deal with. The electric motors can be shared over all vehicles not just a couple. Platforms would be more flexible.
The real need is to get the cost of better batteries down. That is coming but it will take time.
the Skateboard GM did was a real thing but it was just not something that was market ready. In time that is where we will be going. Just put a different body on the same platform and have different sizes of platforms for different needs.
Infrastructure also need to increase too.
GM’s development costs for the Chevrolet Bolt are not “off the charts”. The batteries, engine, engine controller are all sourced and imported from South Korea’s LG Chem. GM supplies a glorified golf cart to install the South Korean drive train. IF you want to see an American engineered, designed, and manufactured vehicle of the future, take a tour of the Tesla plant in Fremont, California. Every thing is made in house from the electric motors, batteries, aluminum frame and body stampings and even the touch screen panels. All of these components are assembled 100% by Americans.
Yes let’s look at Tesla the model for profitability.
– Every thing is made in house from the electric motors, batteries, aluminum frame and body stampings and even the touch screen panels
By National Panasonic.
Panasonic is a joint-venture partner in Tesla’s Gigafactory in Nevada. Together, the two firms produce around 60% of the global electric vehicle battery output. Tesla’s Gigafactory is the USA. Where is LG Chem?
And Tesla will openly share their technology which would bring down development costs to any company willing to use Tesla’s innovative designs!
Chevy Volt electricals/mechanicals into Buick Enspire platform, please. As scott3 says, other platforms would work too.