Wednesday, October 21, 2009

Restructured GM to Build a New Small Car in the United States

Photo of the Hummer H2, a large, rugged, boxy utility vehicle
General Motors Corporation (GM) declared bankruptcy on June 1, and as part of the company's restructuring, it plans to revive one of its idled U.S. factories for the production of a future small car. The new small car will add to a group of small and fuel-efficient vehicles that the company is planning to roll out in the near future, including the Chevrolet Cruze and GM's plug-in hybrid vehicle, the Chevy Volt. The retooled plant will be capable of building 160,000 cars annually, including both small and compact vehicles, but GM has not yet decided which of its manufacturing plants will be retooled.

The plans for reviving the plant were among the few positive outcomes included in the restructuring announcement, as the company plans to close assembly plants in Wilmington, Delaware, and Pontiac, Michigan, by the end of this year, while idling assembly plants in Orion, Michigan, and Spring Hill, Tennessee (the closure of two other manufacturing plants in Michigan and New York was previously announced). GM will also close three parts distribution centers, located in Florida, Massachusetts, and Ohio, by the end of this year. By the end of 2010, GM plans to close six additional manufacturing plants in Michigan, Ohio, and Virginia, and idle a stamping plant in Pontiac, Michigan, while a stamping plant in Indianapolis, Indiana, will be closed in late 2011.

GM will also focus primarily on its four core brands—Chevrolet, Cadillac, Buick, and GMC—while selling, discontinuing, or scaling back its other brands. On June 2, GM announced plans to sell its Hummer brand of premium off-road vehicles to a Chinese company, Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. The Sichuan-based company intends to expand the Hummer dealer network worldwide, particularly into China. The Hummer H2 led the 2009 list of "meanest vehicles for the environment," which is part of the annual "Green Book" produced by the American Council for an Energy Efficient Economy.

The White House characterized the GM restructuring as a shift toward a new leaner, greener GM, which will aim to break even with annual sales of 10 million cars. GM previously had to sell more than 16 million vehicles per year to break even. President Obama declared that the restructuring "will mark the end of an old GM, and the beginning of a new GM; a new GM that can produce the high-quality, safe, and fuel-efficient cars of tomorrow; that can lead America towards an energy independent future; and that is once more a symbol of America's success."

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