It's all about controlling inventory levels.
General Motors has confirmed it will stop production at its Fort Wayne, Indiana, manufacturing facility for two weeks this spring to better control full-size pickup truck inventory levels. A memo sent to factory employees has been obtained by the Detroit News confirming the shutdown. A GM spokesperson said the shutdown will begin on March 27.
"The plant constantly reviews and adjusts production schedules according to customers' needs," said the spokesperson. "All actions taken are in accordance with provisions of the UAW-GM National Bargaining Agreement and the local agreement."
GM has three other full-size truck plants in Canada, Mexico, and Flint, Michigan. None of them will be affected by the shutdown and will continue normal production operations.
The factories build the Chevrolet Silverado 1500 and GMC Sierra 1500. The HD versions are manufactured in Flint.
GM decided it had to better control the flow of its full-size trucks due to maintaining inventory levels that correlate with demand. Automakers do not want to build more vehicles that they can sell, and GM said earlier this year that inventory levels are something it needs to manage better.
"Production is up over the past month while demand remains fairly consistent, leading to an increase in inventory. Therefore, as we stated on our earnings call, we are going to proactively manage inventory levels, including plant downtime. These kinds of actions were assumed in our 2023 financial guidance," the spokesperson said.
Following the global pandemic and subsequent semiconductor chip crisis, the auto industry as a whole has been forced to recalculate inventory levels so they properly align with dealership needs. During the pandemic, dealers lacked new vehicle inventory which often resulted in heavy markups for what little they did have in stock. With a possible recession on the way, automakers need to be careful not to build too much. It's a challenging balancing act.
For GM, it ended 2022 with about a 50-day supply of new vehicles on dealer lots and in transit. GM's CFO, Paul Jacobson, wants to continue a 50-60-day supply through the end of this year. Those in the market for a new Silverado or Sierra should not be too concerned by this news as GM is heavily reliant on those sales to help fund its transition to all-electric vehicles.
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