Cruze driven out: Lordstown on list of plants likely to close

Click this link to read "General Motors Accelerates Transformation"

The Cruze is dead.

The future of the General Motors plant in Lordstown is dependent on finding a new product.

And while the company isn't calling it a "closure" of the Lordstown assembly and stamping plant, or the Oshawa, Ontario, assembly plant or the Detroit-Hamtrack plant, being placed on "unallocated" status means no production, no employees and no income tax collections coming from the floor of one of Trumbull County's largest employers.

It means that unless a significant amount of money is invested in retooling the plant for a new product, General Motors may end its 52 years in the Mahoning Valley.

Lordstown expects to lose an additional $1 million per year in income tax generated at the plant, said village Mayor Arno Hill. The village already collected $1.5 million less in taxes in 2017, compared to 2016, after the loss of the third shift and multiple shutdowns last year. Lordstown Local School District expects to lose 10 percent of its budget -- $800,000 per year, said Superintendent Terry Armstrong. Warren and Trumbull County are expected to lose tax revenue, too.

The auto manufacturer saw a 6 percent stock price increase after the announcement Monday morning, which also included notices that propulsion plants in White Marsh, Maryland, and Warren, Michigan, also were placed on "unallocated" status.

The plants will be "unallocated" sometime in 2019, according to GM. Members of United Auto Workers Local 1112 were told to expect to end operations in March 2019.

"These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle," said Mary Barra, chairman and CEO of the company, in a news release titled "General Motors Accelerates Transformation.”

While the company argues the move is designed to maximize profits for the company, others wonder how the communities that support the plants will handle the loss of direct and indirect jobs as a result of the move.

"It's not about jobs to them; it's about profits," said U.S. Rep. Timothy J. Ryan, D-Howland. "It's an attitude of 'corporations can do no wrong and screw the worker.'"

The GM news release makes no mention of retooling any of the plants for a new product and, in fact, stresses the amount of money the move will save -- $6 billion per year by year-end 2020. Despite that, the mayor of Lordstown, UAW Local 1112 President David Green and Ryan say they are holding out "hope" a new product takes over the massive 6.2 million-square-foot facilities on 905 acres on Hallock Young Road.

The announcement comes just after GM in October reported a healthy $2.5 billion third-quarter profit. Revenue jumped 6.4 percent to $35.8 billion, also topping forecasts. And its pretax profit in North America -- its most lucrative market -- rose 33 percent to $2.8 billion with a profit margin of 10.2 percent.

While Hill and Green said the company may need to be incentivized with more tax breaks, Ryan said he was angry that GM benefited from the taxpayer funded bailout in 2008 that cost the federal government billions, the president's tax-break plan and local abatements, yet "screwed" workers in Lordstown and the other plants.

Ryan lamented the Trump administration's relaxation of fuel efficiency standards as a contributor to GM's focus on larger vehicles that consume more fuel than small cars like the Cruze. The company said it is looking to concentrate on mid-size vehicles and pick-ups.

The Cruze won't be manufactured at all, not in Lordstown, where it was launched in 2010, and not in any plants in Mexico, where GM said in June -- the day the second shift at the local plant was ended -- it would produce the Chevy Blazer. The company cut the Lordstown plant's third shift in January 2017.

Barra said the move leaves GM to focus on the future.

"We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success," Barra said.

In addition to cutting staff and unallocating plants, the company will also work on "engineering in advanced technologies," attempt to improve "quality and speed to market" and invest more in "next-generation battery-electric architectures," the GM news release states.

The company expects to gain 75 percent of its sales from only "five vehicle architectures" by "early the next decade," the news release states.

The plan is a continuation of a 2015 strategy the company laid out, the news release states.

It was a "shot in the gut," said Green of the announcement, which came to him after a 6:30 a.m. phone call requesting his presence for a 9 a.m. meeting Monday.

"We were concerned for some time, but we tried to make concessions. We combined the unions," Green said.

Moving forward, Green said the Lordstown plant will be in competition with other threatened plants and new plants in hopes of obtaining a new GM product to produce. But, Green said, so far, the company hasn't given any indication to what new thing the union can start vying for.

rfox@tribtoday.com