We’ll Always Have Hamtramck
On the recent GM plant closures
While Ford CEO Jim Hackett waffles on his “mysterious ‘fitness’ plan”, GM CEO Mary Barra showed him how to do layoffs: with no prologue, 15,000 jobs gone, six models axed, and five factories closed.
These closures may seem odd given GM’s recent financial successes — strong sales of crossovers have helped the company report profits and beat Wall Street expectations for several of the past quarters. Why would GM close plants now?
Because the writing is on the wall. Many are forecasting an imminent downturn in passenger car sales after a stellar eight years of sustained growth. Buyers are taking out bigger loans for longer terms, with some repayment schedules lasting for 72 or even 84 months. Meanwhile, Millennials seem poised to ruin private car ownership just like they ruined paper napkins and golf. A surprising percentage of Millennials don’t have a driver’s license, many can’t afford the average $8,500 per year cost of owning a vehicle, and besides, we like walking, biking, and scooting more. Millennials also recognize that climate change spells certain doom for their generation, so they’re not too keen on internal combustion engines, either.
It all adds up to create a fierce urgency of now for GM and other major auto manufacturers. One could argue that GM isn’t the first to cut during the good times. Again, Jim Hackett said earlier this year that Ford will face “restructuring” at some date in the near future. Back in 2006, Ford also cut during the good times and essentially mortgaged their entire business, a decision that kept the business afloat while GM and Chrysler declared bankruptcy in 2009.
Nor is GM the first to aggressively cut sedans from its lineup. Once again, Jim Hackett beat Mary Barra to the punch, announcing that all sedans and coupes, save the legendary Mustang, would be removed from the North American market over the next few years. FCA has quietly pursued this strategy for years, plowing investment into Ram trucks, Jeeps, and minivans while allowing sedans and coupes sold by Chrysler and Dodge to age indefinitely.
Myself, I respect these aggressive manoeuvers to preserve GM’s business and allow them to focus on core products and new technologies. I also think its a shame to reach this point and for thousands of workers to lose their jobs. It’s important to take a retrospective moment to consider how GM got here and why they’ve thrown good money and good people at bad products. After all, the writing’s been on the wall for some time.
The Cars
In 2017, car sales were down 13% while SUVs were up 8%; trucks and SUVs now account for two-thirds of the entire US market for passenger vehicles. Cars — low-slung, three-box sedans and coupes — are old hat, a twentieth-century package growing ever-more irrelevant for twenty-first-century buyers. SUVs, or more accurately, crossovers (as many are much more like tall cars than trucks, like the Toyota RAV4), offer room, comfort, and an athletic, capable image that cars just can’t match. Plus, given radical powertrain and engineering advancements, these crossovers offer fuel economy numbers more similar to cars than the SUVs of yore.
Despite these trends, for some time, GM committed precious time and resources to designing and building more cars. Let’s take a moment to review the fallen.
Chevrolet Volt
I really couldn’t say it better than the Detroit Free Press: “Chevy Volt was going to save Detroit. Now its workers are losing jobs.”
The Chevy Volt debuted to great fanfare at the 2008 Detroit Auto Show: here was the first ever plug-in hybrid made by a major auto manufacturer and it was made by the hometown team, GM. GM even beat Toyota to the punch — the plug-in version of the Prius wasn’t released for another five years. As the Great Recession bore down on America, the Volt became GM’s Tesla Model 3, in a way — the standard bearer, the future of the company, the representation of the very best that GM could do.
Except it wasn’t, and no one really believed the story. Volt began as a concept in 2007. The car was bold, strong, with a low-slung greenhouse, see-through doors, and a style that at once avoided many electric-vehicle cliches while looking unmistakably American. The first-generation production car… lost the script, somewhere along the way.
The Volt was a competent car. It did deliver incredible fuel economy and it achieved feature parity, in many ways, with its closest competition, the Toyota Prius. Savior of the company, however, the Volt was not. From 2010 to 2015, GM produced just under 100,000 Volts (including its Opel-badged European cousin). Meanwhile, Toyota sold 140,000 Priuses in 2010 alone. Globally, Toyota moved just shy of two million Priuses between 2010 and 2015, almost 20x the Volt’s volume. The Volt was overshadowed by its counterparts at GM, too: in 2017, for example, GM sold around 800,000 full-size trucks.
You might argue that the Volt and the Prius weren’t competitors, but that’s ridiculous. Both were five-door hatchbacks with alternative, fuel-efficient, hybrid powertrains and in terms of size, both were within inches of each other. Simply put, the Prius was the better vehicle for conspicuous non-consumption, if you will. Sadly, I see GM facing a similar situation with today’s confusingly-named Bolt and the Tesla Model 3.
The Bolt has amazing range, it beat the Tesla Model 3 to market, it actually costs $35,000 (unlike the Model 3), and I wouldn’t be surprised if it’s more reliable over the coming years. Yet the Bolt can’t hold a candle to the Model’s 3 styling, user interface, and especially, the hype. GM knows how to make great-looking sedans. The Volt didn’t deserve this fate.
Cadillac CT6
Cadillac CT6, 2016–2018. We hardly knew ye.
No car on this list better demonstrates a misdirected commitment to the twentieth century better than the CT6. When you look at this car, you can almost hear someone on the board of directors cheering, “Hey team, let’s build a big, real-wheel drive Caddy like we used to! Let’s make Cadillac great again!” No one was listening.
It’s too bad. The CT6 is, mostly, a great car. It’s very handsome with long, elegant lines and beautiful little details. The interior’s pleasant too, serene and calm unlike the interiors from BMW, Audi, or even Lexus.
Unfortunately, on closer look, some compromises appear. Note the extensive use of dark-grey-GM-plastic inside. Note the design of the headlamps and tail lamps: are they horizontal or vertical? Why can’t they make up their minds? For all the marketing of a “new” Cadillac, the CT6 remains, resolutely, a classic three-box sedan (hood, cabin, and trunk) when the market cries for crossovers and utility. Take a look at how Cadillac’s sales switched from a focus on cars in 2007 to a focus on SUVs and Crossovers in 2017 — and note what a small share of sales the CT6 contributed.
Cadillac’s confusion is even more tragic when you consider that the brand already has an iconic SUV by the name of Escalade, favorite of rappers and wealthy suburbanites alike. This is the iconic Cadillac of the past twenty years. Just like the Range Rover Evoque, Cadillac could build a small crossover on a car platform and call it the Escalade S. Offer an all-electric version and minds would melt.
One last thought here: Cadillac could look to its past to develop the future for its cars. I’m talking about the series of stunning concept cars penned by Simon Cox in the 2000s, culminating in the Cadillac Sixteen. Yes, it is giant, rear-wheel-drive Cadillac powered by a sixteen cylinder engine — that’s regressive for sure — but the way it look is absolutely fantastic. How this design philosophy mutated into the first-generation Cadillac CTS… we’ll never know.
Chevrolet Cruze
They say that it’s easier to engineer a Ferrari than an economy car. With an economy car, there’s no room for error when balancing quality and affordability, attractiveness and price. Every ounce of steel impacts the reliability and the bottom line. Civic, 3, Golf, Focus, Cruze — this is where the true mettle of an auto manufacturer is tested.
The Cruze is a fine looking car. It was offered as both a sedan and as a five-door hatchback which is, fine. That’s really all I have to say about the Cruze; it’s totally unremarkable.
The Cruze finished dead last in a four-way comparison with the Honda Civic, the Mazda 3, and the Volkswagen Golf. Sales of the Cruze were down 27% in 2017. It won’t be missed.
Chevrolet Impala, Buick LaCrosse, Cadillac XTS
No one will mourn the loss of these dinosaurs. Big sedans have been on the outs for years — the segment has shrunk by double-digit percentages for over a decade. You can trace the lineage of these large, front-wheel-drive sedans way to back to the 1980s, almost forty years, a lifetime ago. Impala sales were down 13% in 2017. LaCrosse sales were down 14%. XTS sales were down 22%. There’s no denying that these are cars from another time, cars irrelevant to today’s drivers.
The Impact
These six cars are gone because the factories that make them are closing. These closures have a real human impact: of the 14,700 layoffs, 6,600 are jobs in these factories.
Lordstown Assembly opened in 1966 and currently produces the Cruze. Previously, it was the home of the Vega, the Van, and the Cavalier. Lordstown was a popular stop on the 2008 Presidental campaign trail: Hillary Clinton, John McCain, and Barack Obama all visited the plant. In 1972, workers went on strike at Lordstown, frustrated with the assembly line layout and design implemented by white-collar GM industrial engineers. GM was not interested in this feedback, which is a shame — worker participation in assembly line design and improvement is the cornerstone of the lauded Toyota Production System that led Toyota to success.
Jalopnik wrote a great post about the origin of the Hamtramck plant in the 1980s when a city desperate for jobs made a deal with a company desperate to cut costs. Together, Detroit and GM relocated 4,200 people and demolished 1,400 homes, 140 businesses, and several churches. The massive, new Hamtramck plant was, by all accounts, an unmitigated disaster; an excess of automation that led to increased costs and lowered quality, a toxic combination that ultimately cost CEO Roger Smith his job. In 2018, the Hamtramck plant produced the Volt, CT6, Impala, and LaCrosse.
Oshawa Car Assembly, at one time one of the largest automotive factories in the world, is closing after 111 years. In the past two decades, the factory has won more quality and productivity awards than any other GM plant. In 2017 it was ranked by Indeed among the best places in Canada to work. Oshawa was building the Impala and XTS, as well as some full-size trucks — given the plant’s high standards and flexible tooling, it’s hard to believe that GM doesn’t have some future plans in store for Oshawa.
One hopes that these cuts are the right cuts, surgical and deep. At the time of writing, GM stock was at $36.86, up only a few percentage points from the day before the announcement. As Tom McParland writes:
The question now is: What can GM really do in this new era it’s entering to become more than just a maker of also-ran cars? GM has had a unique track record of EV innovation, having both given America its first great modern EV and also killing it. It’s also claiming to be taking the shift to autonomous transportation rather seriously — although as Lawrence Ulrich at The Drive pointed out, it’s curious that the powerful Super Cruise semi-autonomous system is only on the CT6 for now, and it’s optional, and GM is killing the CT6 within a few months as part of this pro-innovation push.
Simply, GM is an old company with old brands that have less and less appeal to consumers. Cutting a few models may not be enough: cutting a few brands while adding something new might be the harder, better path forward for the future health of the company. It worked for Saturn, after all. Only time will tell if GM’s drastic actions were enough, too much, too little, or right at all.
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Thanks for reading!
