Business

Automakers canceling summer production stops to feed truck boom

tens of thousands of U.S. autoworkers will continue working instead of taking their usual summer vacations as demand for pickups, large SUVs and crossovers shows little sign of abating.
tens of thousands of U.S. autoworkers will continue working instead of taking their usual summer vacations as demand for pickups, large SUVs and crossovers shows little sign of abating. TNS

Next month, tens of thousands of U.S. autoworkers will continue working instead of taking their usual summer vacations as demand for pickups, large SUVs and crossovers shows little sign of abating.

“We are working straight through the month of July and currently we have five Saturdays scheduled through the summer,” said Brian Hartman, president of Local 2209 of the United Auto Workers, which represents about 4,000 workers at the GM truck plant in Fort Wayne, Ind. “We have the capacity to produce 505 trucks per day, and we’re right at the brink of that most days.”

For years, General Motors, Ford and Fiat Chrysler pushed and eventually convinced the UAW to have its members all take vacation during the first two weeks of July. The companies could save on utilities, shrink inventories and employ a small crew of skilled trades workers to install new tooling for the next model year during the stretch.

That was back when GM and Ford each had four or more U.S. assembly plants churning out large pickups. They have fewer such plants today.

Tim Shoup, a worker in the paint shop at GM’s Flint, Mich., truck plant, said he’s going to be off the first week of July but will be back when production resumes with the third shift on July 10.

“They’ve also added a Saturday in July, but they’ve said we may be working 42 Saturdays over the next year,” Shoup said.

Some of the high-demand SUVs are made at GM’s Arlington plant, including Chevrolet Tahoes and Suburbans, GMC Yukons and Yukon XLs, and Cadillac Escalades. The plant employs about 4,200 workers.

In the big picture, this is good news. Both management and the UAW benefit because bonuses and profit-sharing are tied to profitability in North America. The bonuses and profit-sharing for this summer won’t be paid out until next summer, however.

So in the near-term, there’s not a big income gain. The UAW has agreed to more flexible work schedules. Three shifts, which most of the pickup plants and SUV plants are running, enable around-the-clock production. That also minimizes overtime for individual workers, although Saturday work can earn the overtime premium in some cases.

Under UAW contracts, workers can take their vacation weeks at other times of the year and those who can take one or two weeks in July will be paid.

Full-size pickups are selling for an average of more than $40,000 and large SUVs for about $60,000 each.

In a world where GM is promising Wall Street it will have a pretax profit margin of 10 percent or better, these vehicles are the all-stars of the Detroit Three’s lineups. The three automakers are much more dependent on those segments than their Asian and European competitors, and they don’t want their hot streak of sales to end.

GM sold about 62,700 Chevrolet Silverados and GMC Sierras in May. Not bad, but when compared with year-earlier numbers, those sales represent a 13 percent decline for the Silverado and a 7 percent slide for Sierra. The combined total fell short of the 67,412 F-Series pickups Ford sold.

So this month, Chevrolet began offering up to $8,250 in rebates, or discounted financing, on Silverados. It also unleashed an aggressive ad campaign attacking the durability of Ford’s aluminum-body F-150.

This report includes material from the Star-Telegram archives.

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