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GM Says Valley Plant May Be Retooled; Analysts Skeptical

December 10, 1985|ALAN GOLDSTEIN | Times Staff Writer

Recent speculation that General Motors plans to phase out its Chevrolet Camaro and Pontiac Firebird models by 1988 is once again clouding the future of the Van Nuys assembly plant where those cars are made.

Officials for the nation's largest auto maker say that GM has not decided how long to continue making the sporty cars in their current form but that a change will be in the works soon.

"You can't wait for sales to drop to redesign or phase out a car," said Harry Kelly, GM's chief spokesman in Los Angeles. "If you do, you get burned."

GM executives say the Van Nuys plant can be retooled to give the Camaro and Firebird models a face lift or to bring in new product lines. They say GM will continue to modernize its plants--as long as the company is introducing new cars every autumn.

Plant Doomed, Some Say

Nevertheless, some industry observers are already writing the obituary for the 38-year-old plant. They say the Van Nuys facility, the only remaining auto plant in Southern California, can't survive as long as American cars sell slowly in Western states.

The main problem, everyone agrees, is the same one that has led to the closings of most car plants in the West. The Van Nuys facility is about 2,000 miles from its Midwestern suppliers, adding hundreds of dollars in shipping fess to the production cost of each car.

Moreover, concedes Ernest D. Schaefer, manager of the Van Nuys plant, 75% of the cars his workers produce are sent east of the Rockies--right back to where the components come from.

The discussion arises amid recent reports in industry trade journals that GM plans to introduce front-wheel-drive Camaro and Firebird models in the 1988 or 1989 model years. Those cars would have plastic skins, like those on the Pontiac Fiero.

According to the reports, the Van Nuys plant is not in the running to build the redesigned cars. Alan Wrigley, the Detroit-based automotive editor for Metalworking News, said suppliers have been notified that the new Camaros and Firebirds will be built in Pontiac, Mich.

Near Suppliers

GM would use that plant, Wrigley said, because it is closer to plastic suppliers who are sending materials to the Fiero plant in Pontiac.

But, Wrigley said, the Van Nuys plant might begin making the new models in 1990 if there is a demand for the cars in the West. "GM has shut down and reopened plants before," he said.

Many analysts are gloomier. "I don't see anything there," said Arthur Davis, who follows the automotive industry for Prescott, Ball & Turben, a Cleveland brokerage firm. "The plant is geared for rear-wheel-drive gas guzzlers, and those aren't the cars that are in line with West Coast people."

Davis said he thinks the plant will close permanently when the design changes are implemented. He warned that, if Camaro and Firebird sales--which are running ahead of last year's record levels--should falter, the plant might be closed sooner.

Deciding which plants will retool is like a "chess match," GM's Schaefer said. He said his staff regularly submits proposals for new product lines and responds to requests from Detroit to study which models might be built in Van Nuys.

Could Make Cadillacs

For example, Schaefer said, the Van Nuys plant could be equipped to make full-size Cadillacs or intermediate-size A cars, which include the Chevrolet Celebrity and Pontiac 6000.

GM apparently wants to use plastic on its sports cars, and possibly on a new van, because design changes are less expensive with plastic bodies than with traditional steel-frame cars, Wrigley said. Plastic-bodied cars also are lighter and more fuel-efficient, he said.

GM may want to continue to produce sporty cars in Van Nuys because they sell better in the West than more conservative models, said John Hemphill, a senior vice president for J. D. Power & Associates, an auto market researcher based in Westlake Village. But, he said, the expensive conversion of the plant to make front-wheel-drive cars might not be cost-effective. Such a conversion would cost $200 million to $300 million, GM's Kelly said.

Schaefer, however, said he thinks GM would convert the plant.

Working in the facility's favor, Schaefer said, is that it is rated third for productivity and quality control among 34 plants in the Chevrolet-Pontiac-Canada Group. The company recently invested $35 million in a new paint shop at the plant. Schaefer said union relations are good, although some resentment remains from sizable layoffs between 1981 and 1983.

The Van Nuys plant employs 4,300 hourly and 500 salaried workers on two shifts. There has been much speculation about it closing, mainly because of other West Coast auto plant shutdowns in recent years.

Government Action Possible

Schaefer has raised the specter of a shutdown himself. In a letter sent last month to suppliers, he warned that public hearings by the South Coast Air Quality Management District into odor problems from a new painting process could lead to government action that could close the plant.

The United Chambers of Commerce of the San Fernando Valley adopted a resolution for the hearings, outlining what it sees as the potential impact if the plant is closed.

According to the resolution, a shutdown would result in the loss of nearly 35,000 non-manufacturing jobs in the area, the closing of 500 retail establishments and the relocation of 50,000 families.

The only other auto plant in the West is a GM-Toyota joint venture in Fremont. Japanese-designed cars are built there in a plant that GM closed in 1982. GM closed its South Gate plant that same year.

Ford has closed both of its California plants. The Pico Rivera facility was shut down in 1980, and one in Milpitas ceased operation in 1983.

Camaros and Firebirds are also built at GM's Norwood, Ohio, plant. According to an article in the trade journal Automotive News, GM's plans for that facility are also unclear.

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