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GM's Plan to Drop Chevy Cruze Hits Ohio Town Hard

The Wall Street Journal. 11/27/2018

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The Wall Street Journal.

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Word that General Motors Co. will stop making the Chevrolet Cruze next spring and likely lay off 1,600 workers at its Lordstown plant traveled quickly from the factory floor across northeastern Ohio Monday, as workers, elected officials and other businesses assessed the decision’s impact.

Sylvester Townsend, chief executive of Jamestown Industries Inc., which makes front and rear bumper covers for the Cruze compact car in nearby Youngstown, didn’t know if he should believe the news at first.

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“It blew me away,” said Mr. Townsend, who is now anticipating he may have to lay off all 32 of his production workers when the Lordstown plant stops production on March 1. “It’s going to be devastating.”

Arno Hill, the mayor of Lordstown, which has 3,200 residents, expects it to lose $1 million in annual tax revenue from the plant and its workers. That is close to a quarter of the village’s total budget of between $4 million and $5 million.

“They didn’t say they were permanently shuttering the plant,” said Mr. Hill, referring to the hope that the company could build another vehicle in Lordstown in the future. “So we figure that we still have a heartbeat.”

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The Lordstown shutdown is a part of a broader effort by GM to shed slow-selling, low-margin U.S. car lines. GM plans to end production at large assembly plants in Michigan and Canada as well as at a few smaller facilities, which could result in up to 6,700 factory workers being let go. The company plans to cut another 8,100 salaried workers in North America, many in its product-development ranks.

The expected $4.5 billion in annual cost savings by the end of 2020 will allow GM to steer more money into electric and autonomous vehicles. As sales of small cars have shrunk, the company is also betting on trucks, crossovers and SUVs. It will also stop producing the Chevrolet Volt hybrid, the Cadillac CT6 and the Buick LaCrosse.

“We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success,” said GM Chairman and CEO Mary Barra.

a car parked on a city street © Jeff Swensen/Getty Images GM’s announcement drew bipartisan criticism from Ohio politicians as well as President Trump, who said he spoke with Ms. Barra Sunday night about the need for a better-selling car at the Ohio plant. “Put a car that is selling well in there, but get it open fast,” Mr. Trump said in an interview with The Wall Street Journal on Monday.

GM’s workers in Lordstown fear they are being left behind. GM cut the Lordstown plant from three shifts to two last year, and in June down to one. Many workers, including some whose parents spent their careers at the plant, worried in recent months that the ax would fall again.

Christina Defelice, a 42-year-old production worker who was laid off in June, texted her husband Robert, 47, who was working inside the plant when the news broke Monday. After being told the plant would close next March, he and other workers returned to work, some in tears.

Ms. Defelice, who had earned $30 an hour at GM, said her husband called her back on his lunch break, still shocked by the news. If they don’t find work, they will have to consider moving away, as Ms. Defelice’s two sisters had done, she said.

“I’m crushed, and I’m foreseeing a bunch of hardship in the next couple of weeks with the rest of my co-workers,” said Ms. Defelice, whose father worked at the Lordstown plant for 46 years.

The closure of the plant would mark another painful step in the deindustrialization of the Mahoning Valley, a once staunchly Democratic Rust Belt region between Pittsburgh and Cleveland. The area lost thousands of manufacturing jobs in a wave of steel bankruptcies in the 1980s.

The auto sector has had a storied history in the area. Packard automobiles were produced at the turn of the 20th century at a factory in Warren. The Lordstown plant opened in 1966. By the early 1980s, the Lordstown plant employed 20,000 workers.

“GM used to be huge across the state,” said James Dignan, president and CEO of the Youngstown/Warren Regional Chamber. “It’s been a big scale-down over the last 30 years.”

Mr. Dignan and others said they would continue to pursue a campaign called Drive It Home, a collaboration between the UAW and local business leaders aimed at persuading GM to invest in Lordstown. The campaign was launched last week, amid deepening worries about the plant’s future.

“No one is asking for any handouts,” said Ms. Defelice, who has worked for GM for a total of 12 years. “Just bring us work. We’ll work.”

Write to Kris Maher at kris.maher@wsj.com

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