Last week General Motors hit a band of one of its biggest problems: it has too many factories in the…
Last week General Motors hit a band of one of its biggest problems: it has too many factories in the United States and Canada to build unpopular cars when consumers want SUVs – so the auto giant announced that it would lead to four facilities in Ohio and Michigan and one north of the border.
These factories fade into the air. GM has, in its business model, “deallocated” them. It can not say if it will shut them up too well as it has to negotiate such big moves with United Auto Workers as part of a new contract to be voted on next year.
The situation has been drawn by President Trump, who told residents in Ohio that the factory in Lordstown – would be idle in March of March when Chevy Cruze’s production then dropped ̵
1; that manufacturing jobs would remain in the state. Ohio was obviously a critical swing permit in the 2016 election and will be back in 2020. So Trump took some shots on GM, and GM made a peace offer at the end of last week.
But the writing is on the wall, and it does not read well for Lordstown, which has been a challenge for GM, as the plant has driven just one shift. About 1600 workers could be resigned, and although GM has said they could be offered the opportunity to move to other factories – and UAW has said it will fight against closure – maybe they want some other options.
Enter Tesla and CEO Elon Musk. Certainly, the carmaker has been a crazy 2018. But it seems to have gotten his troubled model 3 on track and could easily close the year by delivering 200,000-300,000 vehicles, more than twice as much as 2017.
Tesla has a only factory located in Fremont, CA. It is located outside the automaking heartland area of the United States Midwest, and far from “Detroit South”, the southern states where many foreign “transplant” automakers have been doing business for decades.
The factory is quite well maxed out, at this time. Tesla has another plant in Nevada, where it does the battery pack. But it is even further away from the network supply chain. The company plans to build another factory, in China, but it will take years.
In the meantime, some idle capacity could be opened in Ohio. Musk may want to take a look at it. here’s why: