General Motors Announces Phase-Out of Oldsmobile; Initiates Restructuring Plan
December 13, 2000
General Motors Corporation, Detroit, MI, announced the Oldsmobile Division will be phased out over the next few years. In making the announcement, company officials said despite major investments over the past few years that resulted in critically acclaimed new Oldsmobile products, the division was still unprofitable and its sales volume continued to erode. In addition, General Motors Europe announced a major restructuring plan to improve its market position and return its business to profitability. This year's downturn of the Western European vehicle market and GM's market share performance in many of the individual countries, combined with shifting consumers' preference to smaller vehicles, and intensified downward pressure on vehicle prices, led to a 3rd quarter loss of $181 million. With industry conditions continuing to deteriorate, a much larger loss is expected for the 4th quarter. In the manufacturing area, Vauxhall intends to undertake a major restructuring of its manufacturing operations. It is proposed that in Luton, production of the Vectra would move to one shift early in 2001, and would cease at the end of the life of the current Vectra model, which will be by the end of the first quarter of 2002. From this point forward, the remaining Luton facilities would concentrate on commercial and offroad vehicles, while passenger car production would be concentrated at Ellesmere Port. This means that the new medium-duty van, the Vivaro, and the Frontera would be produced at Luton. Ellesmere Port will continue to produce the Astra and a study is being made to possibly incorporate the next-generation Vectra and turn the facility into a two-model flex plant. In total, these specific actions in the UK, and those previously announced, including the ¿leanfield¿ conversion of Opel¿s Rüsselsheim manufacturing site, will reduce GM Europe's installed capacity by more than 400,000 units between now and 2004. Going forward, capacity utilization across GM¿s European operations will continue to be evaluated. In addition, lean manufacturing implementation will be accelerated across all European plants, to obtain the productivity levels currently demonstrated at Opel¿s benchmark Eisenach facility. Taken together, these various restructuring activities, as well as a number of other actions, are expected to reduce overall employment levels in Europe by more than 5,000 people within the next 18 months, consistent with the objective of reducing salaried headcount by 10 percent by the end of 2001.