Hurricane Rally Stalls: GM Forced To Idle Detroit Plant Amid "Slow Demand" | WHAT REALLY HAPPENED

Hurricane Rally Stalls: GM Forced To Idle Detroit Plant Amid "Slow Demand"

General Motors' stock has experienced an unprecedented rally over the past six weeks as wall street has increasingly bought into the thesis that a one-time, short-lived, pull forward of demand from folks needing to purchase replacement cars following Hurricane Harvey in Texas and Hurricane Irma in Florida suddenly means that the company is worth about 30% more than it was the day before Hurricane Harvey struck.

General Motors Co. plans to close a Detroit factory through the end of the year and deepen production cuts to slow-selling cars the plant manufactures, idling some workers and letting go others around the holiday season in response to weak sales.

GM will temporarily close its Detroit-Hamtramck assembly plant for about six weeks starting in mid-November, said people familiar with the plan. The move will lay off roughly 1,500 workers who help build four low-demand models at the plant.

The nation’s largest auto maker also plans to scale back the factory’s assembly line to produce roughly 20% fewer vehicles once the plant resumes operations, costing about 200 workers their jobs, the people said.

The expected move comes after GM already laid off several hundred employees at the Detroit-Hamtramck factory earlier this year by eliminating the evening work shift.

The problem, as we've noted all along, is that while a one-time pull forward in demand could marginally help GM with its inventory crisis it will by no means solve it. As GM seems to be finally admitting, only a protracted, deep production cut well below current sales run rates, particularly in small cars, will be sufficient to solve GM's inventory glut which includes nearly 1 million unsold cars sitting on dealer lots.