GM is eliminating about 700 factory jobs in Tennessee because of a drop in sales it is blaming on the Covid-19 pandemic.
The company is eliminating the third shift of workers at a plant as of July 31 in Spring Hill, Tennessee, about 40 miles south of Nashville. The layoffs will leave 3,000 workers still employed at the plant, which makes the Cadillac XT5 and XT6 SUVs as well as the GMC Acadia.
For GM and other US automakers, which report second-quarter sales next week, this is apparently another sign of weakness in demand for new cars.
Beyond the question of potential car buyers, who are victims of record job losses, there are also millions of additional workers who are now working from home and no longer need a car to commute. Americans are also saving more and might not be willing to make a big ticket purchase like a car right now.
“Today’s market conditions continue to evolve as we see the impact of Covid-19,” said GM spokesperson David Barnas. “We believe the best way to react to this unforeseen change in our market is to reduce output and operate on two shifts effective immediately. This adjustment allows the plant to maintain stable production, protect the value of our brands in any sales environment, and to provide the smallest impact to plant employment going forward.”
GM’s Spring Hill location also includes a plant that builds engines for trucks and SUVs, for which it announced a $40 million investment in January just before the crisis hit. But the engine plant has been running on only two shifts, not three, so it has not been hurt by the layoff.
At the company’s annual meeting two weeks ago, GM CEO Mary Barra said US sales of pickups and SUVs had “remained resilient throughout the Covid-19 crisis.” Automakers were forced to close plants for two months because of health concerns related to the pandemic, so the dealership inventory of some popular models remains low.
But clearly some parts of its lineup were not doing as well as others.