The latest victims of big oil

General Motors, struggling in a market where rising oil prices have clobbered retail sales of pickups and SUV's, announced today that they will close four plants:

The automaker said it would idle pickup and SUV factories in Janesville, Wis.; Oshawa, Ontario; Moraine, Ohio; and Toluca, Mexico, as it tries to deal with a shift to smaller vehicles brought on by $4 per gallon gasoline. GM also took aim at the Hummer, one off the largest vehicles on U.S. highways, saying it would either be sold or get a remake.

The move cuts about 2,900 jobs in Oshawa, about 2,800 in Janesville, about 2,400 in Moraine and about 250 in Toluca, said GM spokesman Tom Wilkinson.

The Janesville plant is near and dear to me. My wife's family moved here when she was a teenager due to the threat of that plant being closed. Her Dad accepted a transfer to our new GM facility here in Roanoke. Several family members still work at the Janesville location. The vehicle I drove when we first dated, a 1988 Cavalier Z-24, was made at that plant.


Ironically enough, GM had switched many plants over to production of trucks and SUV's as foreign competitors took over the smaller vehicle market. The more expensive vehicles had a larger profit margin than the entry-level vehicles, and kept the automaker afloat for a long time. One needs only to look around over the last several years to see how many of these trucks were being sold in the United States. However, the explosion in gas prices has finally caused Americans to take a second look at what they're driving:

GM's moves, which come after a series of restructuring measures since 2005, are the result of a huge shift in U.S. consumer preferences for small cars and crossovers during the past two months.

"We at GM don't think this is a spike or temporary shift," Chief Executive Rick Wagoner said. "We believe that it is, by and large, permanent."

The automaker now will have to parlay its strong overseas sales and the lower North American costs into a profit by selling cars in the $15,000 to $20,000 range, half the price of its high-profit SUVs and pickup trucks.

The impact of these closings will be devastating in the communities which have long been tied to them:

The Oshawa truck plant, which builds the Chevrolet Silverado and GMC Sierra pickups, likely will be shuttered next year. The Moraine plant near Dayton will stop making Chevy TrailBlazer and other midsize SUVs in 2010 "or sooner if demand dictates," Wagoner said.

In Janesville, the plant that builds medium-duty trucks and big SUVs like the Chevrolet Tahoe, will cease production starting at the end of 2009, finishing in 2010 or sooner if demand stays weak. In Toluca, production of medium-duty trucks will end by the end of 2008, Wagoner said.

The announcement was an economic blow to Janesville, which has long been entwined with auto making.

"There were some tears and a lot of people were kind of ticked off, but it's part of the business," said Scott Lambert, 39, who has worked at the plant for 13 years.