Slumping sales of the Chevrolet Malibu have led General Motors to eliminate a production shift at its Fairfax Assembly Plant in Kansas City, Kan., which will mean layoffs of about 1,000 workers.
GM will reduce the number of production shifts from three to two beginning in late September, said Mary Padilla, a spokeswoman with GM at the Fairfax plant.
The plant now employs more than 3,000 people to produce the Chevrolet Malibu.
“We believe the steps we are taking will provide the smallest impact on employment at the plant going forward,” Padilla said.
Sign Up and Save
Get six months of free digital access to The Kansas City Star
The decision was spurred by declining demand for midsize cars across the market.
“People are choosing crossovers and trucks over passenger cars,” Padilla said, adding that the market share for midsize cars was 16 percent in 2013 but declined to 11.6 percent through May. “People are changing the kind of car they want to drive.”
Mark Holland, mayor of the Unified Government of Wyandotte County and Kansas City, Kan., said he reached out to union workers to let them know the local government would help minimize the impact to workers and their families.
“No community likes to receive news of a major employer laying off employees,” Holland said in a written statement. “We are fortunate in Kansas City, Kansas, to have a strong partnership with GM. That partnership has helped GM invest $800 million in its Fairfax plant since 2009. I am hopeful that GM will remain strong and that the Fairfax plant will grow back to its full employment capacity very soon.”
Chevrolet is by far the largest brand under General Motors, making up 799,040 vehicle deliveries in the United States so far in 2017. That’s down slightly more than 3 percent from year-to-date Chevrolet sales in 2016.
The three other GM brands — GMC, Cadillac and Buick — have all posted modest delivery increases so far in 2017 compared to a year ago.
A sales slump for the Malibu has lead to an increase in its inventory. The model had generated the second-highest total vehicle deliveries among Chevrolet models from January to May in 2016 with 104,187. That number slumped to 73,087 over the same period this year, constituting a nearly 30 percent drop.
Only the Impala, with a 35 percent drop in deliveries through May, suffered a larger percentage decline at Chevrolet.
General Motors isn’t alone in its difficulty with sales of certain models.
Ford’s car models, which include the Fusion, Focus and Taurus, suffered a 21 percent decline in sales through May compared with the same period a year ago. Meanwhile, Ford’s truck and SUV brands posted low single-digit sales increases through May.
“The consumer shift away from cars and into SUVs and trucks continued,” said Mark LaNeve, Ford’s vice president of marketing during a June 1 conference call with analysts. “However, our car incentive spending was down $300 compared to a year ago due to continued discipline, overall discipline, and the continued trimming of our lease portfolio. Industry incentives were up $400 in passenger cars year-on-year versus our $300 decline.”
Ford produces its F-150 pickup truck, among other models, at the Ford Kansas City Assembly Plant in Claycomo. Sales for Ford’s F-Series pickup trucks have increased 8.5 percent through May compared to last year. A Ford spokeswoman said there have been no changes at Claycomo, where three shifts continue to run.
GM has been producing vehicles in the Kansas City area since 1945.
The company had stopped making the Buick LaCrosse at Fairfax in May 2016. It is now made at the Detroit-Hamtramck facility.
Though that work moved away from Fairfax, the plant continued to run three shifts. Padilla said some employees took retirement then, but there were no layoffs.
Reports at the time had speculated that a small luxury SUV by Cadillac would replace the LaCrosse at Fairfax. Padilla said there have been no announcements on that front.
News of the shift elimination comes two days after a report that the plant would extend its summer shutdown from two weeks to four this summer in part because of decreased sales of the Chevrolet Malibu, built at the plant.
Fairfax will be idle during the weeks of June 26, July 3, July 31 and Aug. 7. All shifts will resume during the intervening weeks, with the third shift ending on a September date not yet set.
A reduction in the plant’s output would be expected to impact local vendors and suppliers that work with the Fairfax facility. Padilla could not provide information other than to say that those companies would be notified as needed.
Vicki Hale, president of the United Auto Workers Local 31, could not be reached Friday. Previously, she had echoed Padilla’s comments, telling The Star the Malibu sales slump is reflective of the rest of the auto industry.
Greg Kindle, president of the Wyandotte Economic Development Council, said he was waiting to assess the impact of the layoffs.
“We’re looking at this as a market correction and hoping this is a short layoff,” Kindle said.
About 91,000 people work in Kansas City, Kan., according to Kindle, and General Motors makes up about 4 percent of the workforce. Health care, with 15,000 local employees, is the city’s largest employment sector.
“The ripple effect that an auto manufacturer has on suppliers throughout the metro area and the region is far greater than the 4 percent impact on our workforce,” Kindle said.