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GM Will Spare Van Nuys Factory in New Round of Plant Closings, Sources Say

November 06, 1986|ALAN GOLDSTEIN and JAMES RISEN | Times Staff Writers

The long-endangered General Motors assembly plant in Van Nuys has been spared from a sweeping round of plant closings that the nation's biggest auto maker plans to announce today, industry sources said Wednesday.

GM President F. James McDonald said the company will hold a press conference at 11 a.m. in Detroit today to disclose a long list of permanent closings of assembly and components plants around the country. He declined to elaborate.

But the sprawling Van Nuys plant, the last auto factory in Southern California, will not be among them, knowledgeable sources said. The plant, which had a payroll of $157 million last year, has more than 2,500 hourly workers, 350 salaried personnel and another 2,190 production employees on indefinite layoff.

The plant has been threatened with closure for years, but sources said Wednesday that it will continue to produce Chevrolet Camaro and Pontiac Firebird models.

"This is obviously good news, but I'm not surprised," said Peter Z. Beltran, president of United Auto Workers Local 645, which represents the workers. "I think the market in California will protect the plant. The Japanese know this is the best car market around, and GM does likewise."

One GM source in Van Nuys, who asked not to be identified, said the plant will be shut for four months, beginning in December, for retooling.

Some union leaders remained skeptical, however. "We're not sure we have that long-term commitment yet," said Jessie Dominguez Jr., unit recording secretary for the UAW local.

GM's move to shut plants elsewhere and dismiss thousands of workers is part of a corporatewide cost-cutting drive. Sources said that at least some of the plants may shut down as early as next year.

The company's employees around the country will be told of the plans this morning, just before the press conference. But top officials at the Detroit headquarters of the UAW already have been given at least the broad outlines of the company's widely anticipated announcement.

GM executives have said previously that the prime candidates for closure are Midwestern assembly plants and related stamping and body operations that make aging, rear-wheel-drive passenger cars gradually being phased out in favor of newer, front-wheel-drive models.

A number of those plants, such as Cadillac's assembly and body plants in Detroit, were originally scheduled to be shut years ago, when replacement plants opened. They have so far been spared by the collapse in fuel prices, which has generated unexpectedly strong consumer demand for large, rear-drive cars.

But the rapid erosion in GM's share of the car market and the growing competition from imports has made it clear to company executives that GM no longer has enough sales volume to operate all 30 of its U.S. assembly plants. The fact that GM posted an operating loss of $338.5 million in the third quarter--its largest operating deficit since the recession in 1981--also has made GM more determined to reduce excess capacity to cut costs.

Last spring, UAW Local 645 agreed to institute a GM-backed, Japanese-style system of organization called the team concept whereby old job categories would be eliminated. Instead, employees work together in small groups and, in theory, have increased say in the way cars are made.

The only other factory using team concept--and the only other California auto plant--is the GM-Toyota joint venture in Fremont, but GM has said it wants the approach to become more widespread.

"Maybe they're trying to give the team concept experiment a chance to work, so it could have an effect on other plants," said J. David Power III, who heads J. D. Power & Associates, an auto market research firm. "If they'd closed this one, they would've had to begin a pioneering effort all over again."

Plant Opened in 1947

The Van Nuys facility opened in 1947 with 1,108 workers making Chevrolet trucks and shells for GM's Fisher Body division. By 1977, GM had begun making Camaros and Firebirds at the plant and last year made more than 186,700 autos there. These models are better known for looks and speed than fuel economy, and their popularity has waxed and waned with gasoline prices and consumer moods.

But the plant's main problem is the same one that has killed most Western auto plants--a location 2,000 miles from its Midwestern suppliers. Although such parts as batteries and seat foam come from Southern California, engines are shipped from New York and Michigan, axles and sheet metal from Michigan and carpets from North Carolina. On top of that, differing regional tastes mean that 75% of the plant's output is sold east of the Rockies.

The result is that Camaros and Firebirds from Van Nuys cost GM about $400 more by the time they reach dealers than the same models from a sister plant in Norwood, Ohio, a blue-collar town surrounded by Cincinnati. That plant employs 4,300.

"We're on pins and needles," said Charles Geraci, executive director of Norwood's Chamber of Commerce. "If that plant closes, it's going to be a disastrous thing for this city."

Workers in Van Nuys were told in 1982 that their plant was on the "endangered list," and GM has threatened repeatedly to close it over issues of work rules, environmental regulation and the economy.

The GM complex includes 2.5 million square feet of assembly floor on a 101-acre site at 8000 Van Nuys Blvd., several blocks south of Roscoe Boulevard.

Alan Goldstein reported from Van Nuys, and James Risen reported from Detroit. Times staff writer Daniel Akst also contributed to the story. GM'S VAN NUYS PLANT The Assembly plant, which began production in 1947, made more than 186,700 cars last year, all Pontiac Firebirds and Chevrolet Camaros. Employment

Hourly workers: 2,500

Salaried workers: 350

Workers on layoff: 2,190 1985 Payroll: $157 million Size: 2.5 million sq. ft.

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