GM to close 4 factories, may drop Hummer

GM President and Chief Operating Officer Fritz Henderson said the new small car to be built in Lordstown would get 9 miles per gallon better fuel economy than the company’s current small cars, the Chevrolet Cobalt and Pontiac G5 when equipped with a manual transmission. The most efficient Cobalt now gets 36 miles per gallon on the highway, although Henderson would not give a total mileage number.

It would be powered by a 1- to 1.4-liter four-cylinder gasoline engine that could be turbocharged for additional power, GM said. The new engine would be built in Flint.

Henderson said the plant closure measures would reduce the company’s capacity to produce pickups and large SUVs by 700,000 per year, about 35 percent.

He also said GM is planning for gasoline prices to stay around $4 per gallon for the foreseeable future, “with a bias upwards.”

When asked if GM should have moved more quickly to smaller vehicles, Henderson said he doesn’t spend time looking in the rearview mirror.

“There’s not much I can do about what I didn’t do in the past,” he said.

Pete Hastings, senior analyst with Memphis, Tenn.-based Morgan Keegan & Co., said GM’s moves are painful yet prudent.

“It’s a permanent shift, and they’re right to recognize it,” he said. “But is it enough? It’s a bit early to tell. ... That’s the hard part of gauging where we are in the economy — and how deep or strong the shift in demand is for more fuel-efficient vehicles.”

Analyst Kevin Tynan of New York-based Argus Research Corp. said the Detroit Three automakers have been “caught with the market running away from them.” While he recognizes GM’s plight and efforts to overcome it, he still questions the aggressive push to market with the Volt, which is demanding heavy investment at a time when money is tight.

“It’s very bad timing, very late in the game to be making big bets,” he said. “At the same time, you don’t have a choice.”

The announcement is an economic blow to Janesville, which long has been entwined with automaking. The sprawling GM plant has survived the Depression, a world war and GM’s major layoffs in the 1980s, but it will not escape the latest round of corporate belt-tightening.

“There were some tears and a lot of people were kind of ticked off, but it’s part of the business,” said Scott Lambert, 39, who has worked at the plant for 13 years.

He said he was headed to buy an atlas to figure where other GM plants were that might be hiring.

The plant, GM’s oldest, opened in 1919 and long was the largest employer in Janesville, a city of 60,000 about 100 miles northwest of Chicago. But cutbacks have shrunk the work force to about 2,600, so it’s no longer the city’s biggest employer.

Detroit-based GM also has just emerged from a spate of labor problems, with two local union strikes at key factories and a nearly three-month strike at key parts maker American Axle and Manufacturing Holdings Inc.

GM said in a recent regulatory filing the strikes will cost it a total of $2 billion before taxes in the second quarter.

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