General Motors Co. on Monday is halting some production and temporarily laying off workers at a Buffalo, N.Y., engine plant, another sign that Japan’s disaster is affecting automakers around the globe.
GM is suspending production of engines built at its Tonawanda plant for the Chevrolet Colorado and GMC Canyon compact pickups, which are assembled at a GM factory in Shreveport, La. GM shut down its Shreveport operation this week because of a shortage of parts from Japan.
GM doesn’t know when production will resume at either plant.
This latest shutdown at GM shows how interdependent the world’s car makers have become. GM last week became the first U.S.-based car company to say it would suspend production because of Japanese parts shortages. Toyota and Subaru are scaling back production at U.S. plants because they depend on imports from Japan, whose car industry was hobbled March 11 after that nation’s largest known earthquake and tsunami.
Even though damage at Japanese auto plants was limited, uncertainty lingers. Factories are unlikely to return to full production for months, hindered by unreliable power supplies and extensive damage to some parts suppliers.
GM spokeswoman Kim Carpenter said Tonawanda has the parts it needs to make the engines, but it’s not producing them because Shreveport doesn’t need them.
Carpenter said 59 of the 623 workers at the engine plant will be affected. Workers will get around 75 percent of their pay while they’re laid off.
GM hasn’t said which parts are affected in Louisiana. Automakers tend to withhold such information for competitive reasons.
GM uses a five-speed manual transmission made by Japanese supplier Aisin Seiki Co. in the Canyon and Colorado, but Aisin said last week that it has enough transmissions and parts to continue supplying GM and hasn’t shut down any of its plants in North America.
Jim Gillette, a supplier analyst with IHS Automotive, said GM may have enough parts but is choosing to use them for vehicles that are more popular and more profitable.
The Colorado, for example, starts at $17,000. GM sold 2,600 of them in February. But the Chevrolet Silverado fullsize pickup’s starting price is nearly $4,000 more, and GM sold 31,728 of them.
If the part is used on multiple vehicles, it would make sense to send it where the need — and profits — are greatest.
Gillette said one reason that scenario is likely is that GM shut its facilities so soon. Unless it was flying the Japanese parts into its Shreveport factory, it should have had several weeks’ worth of supplies on hand or en route to the factory by ship. GM’s U.S. rivals, Ford Motor Co. and Chrysler Group LLC, have yet to shut down any production even though they also use Japanese parts.
“When this will really hit North America is three or four weeks from now, when those ships have come to port and all the parts are on the vehicles but no more ships are on the way,” Gillette said.
GM also has more than two months’ supply of the Colorado and Canyon in inventory, enough to meet buyer demand in the near term.
Carpenter wouldn’t comment on that speculation. But in a statement last week, GM said it planned to “supply the most critical operations.”
Also Monday, GM slowed production of the Opel Corsa subcompact car in Europe because of a shortage of parts, cancelling two of the three shifts at its Eisenach, Germany, plant and closing another plant in Zaragoza, Spain. The Corsa is one of the smallest cars in Opel’s lineup.
GM said last week it was cutting unnecessary spending companywide as it assesses the impact of production disruptions from the earthquake and tsunami.
Source: The Associated Press.