GM to Lay Off 2,190 Workers at Van Nuys : Move to Cut Bulging Inventories Also Hits 3 Other U.S. Plants

General Motors announced late Tuesday that it would indefinitely lay off 2,190 workers at its Van Nuys plant as part of a 4,700-worker cutback at four plants nationwide, designed to reduce bulging inventories of slow-selling cars.

In a terse statement, the nation’s largest auto maker said it will eliminate the entire second shift at Van Nuys, which makes slow-selling Chevrolet Camaros and Pontiac Firebirds. The move will be effective June 9, while layoffs at other plants in Michigan, Kentucky and Texas will begin as early as April 14.

GM spokesman John Mueller said the furloughs, which include hourly as well as salaried workers, were ordered as part of an “inventory adjustment.”

The move, one of the largest single indefinite job reductions among U.S. auto firms in the past two years, comes as industry sales are beginning to turn sluggish. Concern has been growing about how long the auto industry recovery can last amid increased imports.

Analysts have said that the U.S. auto makers would have to reduce their ambitious production schedules or offer more sales incentives such as discount financing rates or reduced prices to stimulate sales. However, GM last week announced that it would boost prices by 2.9%

2.9% Price Hikes

United Auto Workers union President Owen Bieber told reporters at an industry symposium at the University of Michigan that he found the layoffs troubling though not unprecedented in view of the slowing sales of some cars.

“It’s a mystery why GM would think it could sell more cars by raising prices,” Bieber told Reuters, in reference to the recent 2.9% price hike.

The move also is expected to raise new doubts about the future of the Van Nuys plant. The plant, the last auto plant in Southern California, is far from GM’s parts suppliers in the Midwest, adding hundreds of dollars in shipping fees to the cost of each car. Analysts have said that the plant, which ships about 75% of its cars back east of the Rockies, cannot survive as long as American cars sell slowly in the West.

Analysts and others have speculated that GM would phase out production of Camaros and Firebirds after 1988. The firm has not announced any cars to replace those models at Van Nuys after that, although it has maintained that it would not close the 38-year-old plant and would retool it for other models. GM Chairman Roger Smith said in February that falling oil prices could prolong the life of the plant.

GM had put some 4,100 of its 5,300 workers at the Van Nuys plant on a two-week furlough back in March in an effort to cut inventories.

The Van Nuys reduction means production would be reduced from two shifts of 54 cars per hour to one shift of 54 cars per hour, GM spokesman Mueller said. The June 9 date for the furloughs suggests that workers will finish work on the current model year.

Excess inventories of Camaros and Firebirds are among the highest in GM’s line, having recently run more than twice the normal inventory levels of 60 days worth of unsold cars. Analysts have estimated that GM and its dealers had an 80-day supply of unsold cars on hand in late March.

Ward’s Automotive Reports, an authoritative industry newsletter, reported Monday that GM had decided to cut second-quarter North American production by about 90,000 cars because previously scheduled output was higher than market demand.

GM spokesman Mueller declined comment on that figure. “We don’t talk about future production numbers,” he told Reuters.

Analysts estimated the cutback at about 7% of the production that was originally planned.

Tuesday’s announcement also will include:

- Layoffs of 1,710 of the current 4,400 workers at GM’s Arlington, Tex., assembly plant, effective April 14.

- Layoffs of 321 of 1,830 workers at GM’s Bowling Green, Ky., plant, also effective April 14.

- Layoffs of 515 of 2,500 workers at GM’s Pontiac, Mich., plant, effective April 28.