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Fighting Growing Inventories, GM to Lay Off 2,000 Workers, Cut Production

January 13, 1987

DETROIT (AP) _ General Motors Corp. will lay off 2,000 workers and slow production at a Kansas City, Mo., assembly plant to counter slow sales of three of its cars and avoid incentives, the automaker said.

The reduction and layoffs at the Leeds assembly plant in Missouri, effective Feb. 16, will cut production from two shifts making 56 cars an hour to one at the same rate. The plant employs more than 3,700 workers.

The Leeds plant produces the Buick Skyhawk, Chevrolet Cavalier and Oldsmobile Firenza, three cars whose sales fell substantially at the end of 1986.

″This decision was made following careful consideration and, although unfortunate, the reduction is necessary to balance our production schedules with inventories,″ Donald Hackworth, GM vice president, said Monday.

The Leeds decision is the latest in a series of production cutbacks GM has announced in recent months as it deals with its slipping market share.

In 1986 GM tried to solve its bulging inventory problem by offering deep- discount interest rate sales incentives. The incentives cleared out the inventory backup but were blamed for a $338 million third-quarter 1986 operating loss.

Since then, the nation’s largest automaker has stuck to a policy of reducing production and laying off workers to let normal sales reduce inventory.

GM previously announced layoffs and production cutbacks for early 1987 at Buick-Oldsmobile-Cadillac plants in the Detroit enclave of Hamtramck, in Wentzville, Mo. and in Oakland County’s Lake Orion.

All three are GM’s most high-tech plants and produce GM’s most profitable cars.

Slowdowns and layoffs also have been scheduled at GM’s Pontiac Fiero plant in Pontiac.

Michael Spitzley, Leeds plant manager, said, ″It’s (the layoff) strictly triggered by matching our production capacity to our marketing needs. We’re able to build more cars than we sell.″

GM also has extended the normal Dec. 24-Jan. 5 holiday shutdowns at eight plants early this year to reduce inventories, putting 24,300 workers on temporary layoff for one to three extra weeks.

Those workers remained on layoff this week, and most were scheduled to return to work Jan. 19. Among them were 3,700 Leeds workers, who returned to work Monday.

The survival of the Leeds plant has been in question for some time and it is considered one of several possible targets for GM’s next round of plant closings.

GM in late 1986 announced coming closings of nine plants and parts of two others by 1989, eliminating 29,000 jobs, but also warned of further closings. A GM executive recently indicated the automaker still is deciding which plants will be closed next.

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