GM Plant Shutdown

[Lubener]

GM Shut Down of plant in Fort Wayne, IN

GM shutting down their plant in Fort Wayne for two weeks in order to "maintain optimal inventory levels". In other words, dealers and OEMs learned that folks are willing to pay way more for cars than they were pre-virus. Lower inventory levels and higher prices are potentially here to stay, unless the consumer can show restraint and refuse to pay higher prices.

Anyone who has line worked in the auto industry knows this is not unusual.. Makes no sense to overbuild and have excessive inventory, finding space to store all those cars and pay additional taxes on all those vehicles just sitting there.

 

[hrv]

Here in Louisville KY the Ford Fern Valley plant shut down for about 2 to 4 weeks because of quality issues with the Ford Escape...

 

[userfriendly]

Shut down for a few weeks in the winter in every plant on rotation. The employees cash in their vacation pay to make ends meet and temporary summer hiring is not required.

 

[64bawagon]

Since the HD demand is still crazy high and there are quite a few remaining 23 orders that will never get filled (Flint cease 23 production in 3 day) it makes me wonder if Fort Wayne has a few other factors that GM doesnt wish to reveal. They have been running near capacity for some time and the 2 weeks would give them a chance to do maintenance on some of the equipment. It would also allow them to divert some supplier capacity to the HD effort which by some accounts is their most profitable line. Flint has been 3 shifts for some time now and churning out over 1000 trucks per day and still cant keep up.

 

[97prizm]

From a business case, the tradition of overbuilding inventory and then having to discount prices was stupid, and the consumer became used to this pattern. The supply chain is not yet fixed, so the OEMs will go back to the 1950's practice of taking orders and then building to order, with far less speculation of what should sell quickly.

Ford wants to switch to a 70% order 30% built and shipped sales model in the coming years. Near Colorado springs theres a gigantic ford dealership that's 2 or 3 acres. Not sure how they will deal with the switch

 

[JeffKeryk]

Ford wants to switch to a 70% order 30% built and shipped sales model in the coming years. Near Colorado springs theres a gigantic ford dealership that's 2 or 3 acres. Not sure how they will deal with the switch

This sounds like a viable plan, as it allows for tuning the ratio up and down based on demand and plan success. Keeping a reasonable amount of inventory is good for customers that need a vehicle now while minimizing inventory carrying costs.
All or nothing changes can be disastrous.

 

[SC Maintenance]

I have held off buying another car, and one of the reasons being I want to see my exact car before I fork over a pile of cash. I guess I am different. I know younger people don't mind ordering online. Of course as the father of two Gen Z college kids, if Amazon is a day late the world has proverbially ended.

If they do have too many cars on the lot then good for GM for managing properly. If it is in fact to keep prices up, they will loose this game. Time place utility is real, and brand loyalty also went away with the internet. If I can have A GM in 4 months or a Ford later on today, Ford wins 9 times out of 10 is my bet.

 

[CKN]

The good thing is some of us will never buy a new vehicle again. Why? Not all of us are millionaires. Nor do all of us wish to deplete any savings for a bunch of cobbled together junk that will either end up a lemon after warranty, or a known problem child down the road like many high priced crap cars now. I don't see how anyone can afford a car payment on top of taxes on a home they own, or some crazy high rent for the abode. It makes no sense.

Couple of points- new vehicles are not "cobbled together junk." How many have you purchased- new? Second point- I just bought a 2020 Ford F150 Lariat, ever so slightly used- one thing we agree on- I'm not laying down $80,000.00 on a pickup.

 

[dnewton3]

Two week shutdown during production times are called TLOs (temporary layoffs) in UAW plants. (It can be up to two weeks, but not more). By contract, the union employees are paid 90% of their normal rate to go home; they don't even have to file for unemployement during that time as the company pays that 90%. They can also only do so many TLOs in any given period. It's been 20 years since I worked at Ford, but IIRC, it's a max of 2 weeks in any three month period. It could be slightly different now, but I doubt it's changed much; the Union will NEVER give up a benefit once it's been achieved.

There is some company savings to be had ... 10% labor savings for those TLO'd, and of course all the operational costs (mostly the massive electric bill is reduced) as the plant goes dormant. Sometimes the production folks are "laid off" and the maintenance crews work on major projects.

If the company needs to reduce costs past that, what they will do is a workforce rebalance; they will adjust the line speed to run slower, reduce headcount on the line, and each person has a larger piece of the pie to build during their alloted line time. It's basic industrial engineering math. Slowing the line increases the TAKT time, and allows more work per work station, albiet producing less vehicles per hour with less heads on the line.

 

[4WD]

Or they wise up and not buy a GM.

Childish

 

[4WD]

Here are offerings from a high volume dealer in serious truck country - I could keep going with all the colors - but just look how perfectly they can park them on a Dell

 

[JeffKeryk]

Two week shutdown during production times are called TLOs (temporary layoffs) in UAW plants. (It can be up to two weeks, but not more). By contract, the union employees are paid 90% of their normal rate to go home; they don't even have to file for unemployement during that time as the company pays that 90%. They can also only do so many TLOs in any given period. It's been 20 years since I worked at Ford, but IIRC, it's a max of 2 weeks in any three month period. It could be slightly different now, but I doubt it's changed much; the Union will NEVER give up a benefit once it's been achieved.

There is some company savings to be had ... 10% labor savings for those TLO'd, and of course all the operational costs (mostly the massive electric bill is reduced) as the plant goes dormant. Sometimes the production folks are "laid off" and the maintenance crews work on major projects.

If the company needs to reduce costs past that, what they will do is a workforce rebalance; they will adjust the line speed to run slower, reduce headcount on the line, and each person has a larger piece of the pie to build during their alloted line time. It's basic industrial engineering math. Slowing the line increases the TAKT time, and allows more work per work station, albiet producing less vehicles per hour with less heads on the line.

One of the 1st big analytics forecast planning solutions I coded was "LPR", or Linear Production Rate. The goal was to smooth the Master Schedule to aid in procurement, labor and delivery issues (costs!). Not to mention allow for scheduled maintenance downtime... American manufacturing is the best in the world in making the quarter but doesn't have a clue when it comes to 5 year plans. LPR was a shot at improving that.

 

[wareze]

It's almost as if they big corporations want a crash

 

[64bawagon]

How do people think they are paying for all that EV development ? The ICE vehicles are literally subsidizing the EV. Its almost like training someone for a job your about to get fired at.

 

[99Saturn]

I have held off buying another car, and one of the reasons being I want to see my exact car before I fork over a pile of cash. I guess I am different. I know younger people don't mind ordering online. Of course as the father of two Gen Z college kids, if Amazon is a day late the world has proverbially ended.

I get it. I have one eye on new car shopping (maybe less, we don't need a new car but our two economy sedans are small for our family). As much as I would prefer to go sit in the car I'm going to drive home, I also don't want something that is over-optioned just sitting on the dealer lot (and given the supply chain, probably forcing the bulk of the cost of the options onto me).

Going to be interesting how stuff evolves going forward. I can live with test driving a comparable model and then ordering and waiting, assuming I don't suddenly need something "tomorrow".

 

[PoorMans180SX]

What they want and what they will get are two different things.

demand is falling and the reason they “overproduce “ is to minimize production costs.

If any manufacturer decides to fill the unmet demand the strategy will fail, as has happened in the past when businesses try to manipulate supply to rig the market.

Let's hope so. Let's also hope there's not another bailout or clash for clunkers event for these manufacturers to fall back on.

 

[JeffKeryk]

How do people think they are paying for all that EV development ? The ICE vehicles are literally subsidizing the EV. Its almost like training someone for a job your about to get fired at.

Not only that, but most companies lose money on each EV sale. So are the ICE customers are subsidizing the EV customers?

 

[0W-16]

I wonder if it’s still the chip shortage that finally caught up to them. They have way too many trucks sitting around that are 99.9% done.

Ford still has thousands of Super Duties stored at Kentucky Speedway.

 

[hrv]

Here in Louisville KY the Ford Fern Valley plant shut down for about 2 to 4 weeks because of quality issues with the Ford Escape...

and it is still shut down as of today....

 

[0W-16]

Couple of points- new vehicles are not "cobbled together junk." How many have you purchased- new? Second point- I just bought a 2020 Ford F150 Lariat, ever so slightly used- one thing we agree on- I'm not laying down $80,000.00 on a pickup.

Laughs in new Ford Bronco...