Slow sales of sport utility vehicles will result in big job cuts in Janesville. General Motors said Monday that it will eliminate one of its two shifts at the Janesville assembly plant, resulting in the loss of an estimated 756 hourly jobs.
The facility, which employs 2,600 hourly and 195 salaried workers, is one of four plants affected by the move to make 88,000 fewer full-size pickup trucks and 50,000 fewer full-size sport utility vehicles from GM's North American production plants for the rest of 2008. The job losses, which will begin next month, didn't surprise community leaders, who have been working to diversify the city's economy. But while there wasn't shock in the city of more than 62,000 people, the loss of jobs still stings. The community once was home to more than 5,000 jobs in the automotive industry.
"It's not a good thing for the city in the short run, but I think Janesville has worked hard to diversify its business away from automotive," said Steve Scaccia, president and part owner of Freedom Plastics in Janesville and a member of the board of directors of Forward Janesville. "I'm glad we still have a plant, (considering) the size of the vehicle (made in Janesville) and the gas issues right now."
Steve Sheiffer, Janesville's city manager, had a mix of emotions about the announcement. He was disappointed, not surprised with the job cuts. He's also hopeful for better days ahead. "It's going to be tough," Sheiffer said. "But I'm optimistic that the economy will pick up and that GM will move other production to Janesville."
'Market demand'The second shift will be eliminated beginning June 26, just before the summer shutdown period. Beginning July 14, the assembly plant will go from making 48 vehicles per hour with two shifts to making 58 vehicles per hour on one shift. The plant makes the Chevrolet Tahoe and Suburban, GMC Yukon and the Yukon XL.
"Our production schedule is determined by market demand," said Mary Fanning, a spokeswoman for the Janesville plant. "This announcement is due to the soft and declining SUV market. We aren't necessarily referring to this as a temporary situation. This is essentially the elimination of a shift."
Repeated attempts to reach Mike Sheridan, president of United Auto Workers Local 95, were unsuccessful late Monday. Sheridan has worked at the plant for about 30 years and also is a state representative in the Assembly, representing the Janesville area. The decisions, according to a press release from the Detroit-based automaker, were made to bring production capacity more in line with market demand.
Shift reductions will also occur at the Flint, Mich., assembly plant, which makes the heavy duty Chevrolet Silverado and GMC Sierra; the Pontiac, Mich., assembly plant, maker of Chevrolet Silverado and GMC Sierra; and the Oshawa truck plant in Ontario, Canada, which makes the Chevrolet Silverado and the GMC Sierra.
GM said in its announcement that the full-size pickup truck and full-size SUV segments have softened for the entire industry and are down 15 and 26 percent, respectively, through the first quarter of 2008.
'Rising fuel prices'"With rising fuel prices, a softening economy, and a downward trend on current and future market demand for full-size trucks, a significant adjustment was needed to align our production with market realities," said Troy Clarke, president of GM North America. "This is a difficult move, but we remain committed to retaining and growing our leadership position in the full-size truck market."
For the workers at the Janesville plant, Monday's announcement was another blast of bad news.
Earlier this month, GM laid off about 200 workers with the lowest seniority at its Janesville plant as production cuts translated into fewer jobs. In March, about 2,200 hourly workers at the plant started working shorter shifts because of a strike by American Axle and Manufacturing Holdings, which supplies parts to dozens of factories in the U.S. and Canada. That strike remains unsettled.
GM said late last year that it would trim production in Janesville from 52 full-size sport utility vehicles per hour to 44 as a result of slowing sales of the vehicles built at the facility. GM employees in Janesville and at other plants around the country are also weighing early retirement and buyout offers from GM. That deadline is May 22 and, depending on how many workers take the buyout, it could soften the job losses announced Monday, officials said.
A letter delivered Monday to Sheiffer from Tom Hogan, the Janesville assembly plant's personnel director, gave details of the layoffs. It includes 131 skilled jobs (including 51 electricians) and 625 production jobs.
State helpGov. Jim Doyle promised to help the affected workers by sending a rapid response team to expedite unemployment claims and give workers access to job training and placement services. The state will also work to get an extension for unemployment benefits for two years and up to $15,000 for additional education and retraining for eligible workers.
"While we are working hard to protect basic values, continue vital services, and maintain our financial integrity, we understand Wisconsin is not immune from the rising gas prices and economic downturn facing our nation. These are good jobs that are important to this community and our entire state," Doyle said.
Sen. Judy Robson, D-Beloit, said she had spoken with the state Department of Workforce Development and was assured that the downsizing of the plant was a top priority. "DWD will work with the company and the union to determine the needs as far as unemployment insurance and worker retraining," Robson said. "The economy will rebound at some point, and I hope that the second shift, the wages, and the benefits at the Janesville plant rebound as well."
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