Mark Rechtin
Automotive News -- February 12, 2010 - 7:47 pm ET
GM wants to add capacity to replenish diminished inventories. Says GM Vice Chairman Bob Lutz: "We need the stuff now."
General Motors Co. is looking to add capacity by bringing shuttered plants back on line using labor-intensive tooling, Vice Chairman Bob Lutz said.
"We are looking at taking an unutilized plant and putting in less-automated systems that you can put in quickly and at low investment," Lutz said in an interview on Friday. "The downside is more labor cost. But we'll gladly pay that labor cost to get an additional high-margin unit."
Chrysler used this tactic in the 1990s when demand spiked unexpectedly. Using labor-intensive tooling may go against the grain of most manufacturers installing more-automated tooling. But GM does not want to spend "hundreds of millions of dollars for a new, highly automated body shop that comes on-stream 21/2 years from now. We need the stuff now."
Currently, GM is running third shifts at several plants. But, Lutz said, "We are going to need some capacity beyond third-shifting the hot products."
Mark Reuss, president of GM North America, and Diana Tremblay, vice president of manufacturing and labor relations, are investigating restarting shuttered plants. Off-line plants include Spring Hill, Tenn.; Janesville, Wis.; and Oshawa, Ontario.
Lutz, 78, declined to say which one would be a front-runner for reopening. Reuss said in January that Spring Hill was being studied.
"Here's the scary thing," Lutz said. "We are short of SRX, Equinox, Terrain, the big crossovers like Enclave, Traverse, Acadia. We're short of LaCrosse.
"This is in a relatively weak market. If the market goes to 13 or 14 million, then our share will go down because we can't supply."
Still, Lutz said GM did not overreact in shuttering so many plants during its bankruptcy last year.
"Given what we were staring at, we did the right thing," he said. "We cut to the bone because no one knew how bad it would get."
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