Jacob Southers sells General Motors cars for a living, but he wasn’t rattled much by GM’s Monday announcement that it would close plants that make some of its smaller cars.
“Not as much as people would think,” Southers, a salesman at Clay Chevrolet in Lineville, said in a telephone interview Tuesday. “People don’t come in looking for the sedans very often anyway, and the other sales are good.”
Southers and his colleagues were among thousands of people across the country who had reason to watch closely Monday, as GM announced plant closures that would affect 15 percent of its workforce. The company announced that it would close auto plants in Ohio, Michigan and Canada and end domestic production of some of its sedans, including the Chevrolet Impala and the Chevrolet Cruze. The closures are expected to cost 14,000 workers their jobs.
According to the company’s announcements, GM plans to instead pour resources into development of electric and self-driving cars.
The size of the layoffs might be enough to trigger flashbacks among those who remember the auto industry collapse of the 2008 recession, but one industry analyst says Alabama’s automakers have little to fear from the GM restructuring.
“I’m not particularly concerned about anyone beyond the Detroit Three,” said Jon Gabrielson, an economic consultant who has worked for automakers — and who had predicted the GM layoffs before they were announced.
Gabrielson said American automakers such as GM have failed to match their production to the demands of the market, making sedans that consumers aren’t buying. Honda, Hyundai and Kia haven’t made the same mistake, he said.
Honda employs thousands at a plant in Lincoln, where the company makes the Odyssey minivan and the Pilot and Ridgeline SUVs. Hyundai has a plant in Montgomery and Kia builds cars in a western Georgia plant.
“We have a philosophy of building close to our customers,” said Honda spokesman Chris Abbruzzese. “Our plants are running at full production.”
Asked if the GM cuts signaled a decline in the overall market for cars, Abbruzzese said he couldn’t speculate about GM’s decisions.
On Monday, the markets didn’t seem to take GM’s restructuring as a sign of weakness in demand for new cars. The Dow rose more than 300 points on the day of GM’s announcement. GM’s stock was also up Monday.
Still, GM’s stock price took a dip Tuesday after President Donald Trump took to Twitter to say he’d end any federal subsidies for the company, “including ... for electric cars.”
“The U.S. saved General Motors, and this is the THANKS we get!” the president tweeted.
Honda and GM earlier this year announced partnerships to build self-driving cars and electric-car batteries. It’s unclear whether either of those efforts actually gets a federal subsidy, though there are federal income tax credits of up to $7,500 for consumers who buy electric cars, according to the U.S. Department of Energy.
“I can’t comment on GM’s operations, but we continue to work well with them in strategic partnerships on advanced technologies,” Abbruzzese said when asked about the subsidy threat.
Local car salesmen say the changes at GM actually made them feel more optimistic about the company.
“I hate to see anybody lose their job,” said Chad Pearson, general manager at Cooper Chevrolet in Anniston. “But now we’ll have the opportunity to have a better-selling product.”
Pearson said demand for SUVs was high, and would continue to be as long as gas prices are low. Pearson also sells Buicks, another GM brand, and he said that between Buick and Chevy the company had too many sedan choices that were similar.
Southers, the Lineville car salesman, said sales of SUVs are up, enough to make up for any sales he’d likely lose with the discontinuation of the Cruze or the Impala.
“People just want larger vehicles,” he said. He said family sizes seem to be growing, and people with growing families want a car with more room.
Most of his sedan sales are to customers who come in looking for something bigger, then adjust down to a sedan because of the cost. The Trax — essentially a larger version of the Cruze — sells well, he said.
Gabrielson, the industry analyst, said there are really two big stories in the auto industry now. One is the restructuring of American car companies like GM, which doesn’t affect Alabama’s automakers much.
The other, he said, is the growing sense among economists that the economy could slow in the next couple of years. The auto industry is cyclical, he said, and carmakers may already be bracing for a slump.
“I’m 61 years old, and this is my seventh cycle,” he said. “It sucks, but you live through it.”