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Lutz: GM may reopen plants

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Lutz: GM may reopen plants

Less automation would allow fast, cheaper startup

Mark Rechtin

Automotive News -- February 15, 2010 - 12:01 am ET

ORLANDO -- General Motors Co. is looking to add capacity by bringing shuttered plants back on line using labor-intensive tooling, Vice Chairman Bob Lutz said.

"We are looking at taking an unutilized plant and putting in less-automated systems that you can put in quickly and at low investment," Lutz said in an interview here. "The downside is more labor cost. But we'll gladly pay that labor cost to get an additional high-margin unit."

Chrysler used this tactic in the 1990s when demand spiked unexpectedly. Using labor-intensive tooling may go against the grain of most manufacturers installing more-automated tooling. But GM does not want to spend "hundreds of millions of dollars for a new, highly automated body shop which comes on-stream 21/2 years from now. We need the stuff now."

The plan, Lutz said, is to have something "ready in a matter of months instead of years."

Currently, GM is running third shifts at several plants. But, Lutz said, "We are going to need some capacity beyond third-shifting the hot products."

Mark Reuss, president of GM North America, and Diana Tremblay, vice president of manufacturing and labor relations, are investigating restarting shuttered plants. Off-line plants include Spring Hill, Tenn.; Janesville, Wis.; and Oshawa, Ontario.

Lutz, 78, declined to say which one would be a front-runner for reopening. In January, Reuss mentioned the Spring Hill plant in a discussion about reopening factories.

"Here's the scary thing," Lutz said. "We are short of SRX, Equinox, Terrain, the big crossovers like Enclave, Traverse, Acadia. We're short of LaCrosse.

"This is in a relatively weak market. If the market goes to 13 or 14 million, then our share will go down because we can't supply."

Still, Lutz said GM did not overreact in shuttering so many plants during its bankruptcy last year.

"Given what we were staring at, we did the right thing, given the circumstances," he said. "We cut to the bone because no one knew how bad it would get."

No matter how quickly GM ramps up, Lutz added, "the precision still needs to be there. We will not compromise quality to get the volume. That is no longer part of the GM ethic."

Read more: http://www.autonews.com/article/20100215/OEM01/302159904/1128#ixzz0fcBzy9OM

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Labor intensive factories are fine in Mexico, but we'll see how much GM is willing to overpay for American workers.

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