Ohio GM plant cutting 1,500 jobs amid falling demand for small cars

A General Motors plant in Lordstown, Ohio is scaling down operations — cutting as many as 1,500 jobs and reducing operations to just one shift per day. The move means half the employees at the factory will lose their positions.

The plant is dedicated to making the Chevrolet Cruze, but falling demand for smaller vehicles is forcing the manufacturer to adjust operations.

GM spokeswoman Dayna Hart did insist that the plant would remain open, saying in a statement that "Lordstown is among the few remaining builders of small cars in the US, and it is our plan to keep it that way. GM recently stated our commitment to sedans and the role Cruze plays in that commitment."

In a statement, GM added: "As we look at the market for compact cars in 2018 and beyond, we believe a more stable operating approach to match market demand is a one-shift schedule."

Between 2014 and 2017, sales of the Cruze dropped 30 percent. In the first three months of 2018, sales of the model dropped another 26 percent.

Layoffs at the plant won't occur until June, giving time for senior workers to consider buyout packages. Other employees may be able to take open positions at other GM locations.

The action is unsurprising given recent trends in the preference of consumers. Sales of sedans have been down in the US dramatically, but purchases of SUV's, trucks and crossovers are up seven percent.

Detroit executives have long been reducing their manufacturing of sedans to focus on the production of the more profitable (and more in demand) larger vehicles.

Stephanie Brinley, an analyst with the IHS Markit research firm, says sedans are a dying breed in general. She told Bloomberg, "In another couple of years, you just won't see these cars being developed for another generation. There's a good chance that in eight years, this segment of the market doesn't even exist."

The head of Ford's North American Operations echoed the same sentiments. Raj Nair said, "The fuel economy trade-off is not nearly as much of a trade-off as it used to be. We anticipate SUVs becoming more and more popular, which is why we are focusing a lot of our investment in that segment."