LORDSTOWN, Ohio (WKBN) – The last work day for the third shift at General Motors wrapped up Friday morning at 7 a.m.
General Motors announced in November that it was eliminating the third shift at the Lordstown facility because the Chevy Cruze is not in high demand.
The work stoppage impacts 1,202 hourly and 43 salaried employees. It’s the biggest layoff since 1980.
GM revamped the Chevy Cruze in 2016, making its small car a little bit bigger and giving it a new design. But those changes have not been enough to stop the trend – people are buying bigger cars. The Cruze is having a hard time keeping up.
Friday at the West Plant in Lordstown, the shift change happened at 2:30 p.m. Workers who make the Cruze left for the day and many of them may not be back for a while.
Compare that with the scene this afternoon at Morgan Oil in Struthers. Gas prices were pretty low there at just $2.16 per gallon.
Gas prices across the country are still relatively low as well, at just under $2.50 a gallon in many places. That’s a lot lower than when prices hovered between $3 and $4 per gallon between 2011 and 2014.
“Definitely more spending money,” said Frederick Smith, of Struthers, who’s driven his pickup truck for 12 years.
He said he would look into buying another one if gas continues to be cheap.
“It’s convenient to have them. They’re very versatile.”
For Morgan Oil customers, the equation is pretty simple – lower gas prices means more money in their pockets. But does it also mean they’re less likely to buy fuel-efficient vehicles like the Cruze?
“Lordstown is in a situation where it’s producing the product for which demand is falling,” said Dr. Tod Porter, Economics Chair at Youngstown State.
It’s falling fast. Sales dropped 31 percent in just two years from the height of 273,000 in 2014.
“I do expect to see that continued trend – the movement toward crossover and lighter truck as opposed to the compact car,” said Mekael Teshome, an economist for PNC Financial Services.
He said gas prices are just part of the Cruze’s problem.
“The low gas prices accelerated a trend. Youngstown has been, unfortunately, one of the casualties of this move away [from compact cars].”
Teshome expects gas prices to increase slightly in 2017.
“We expect them to crawl up. We don’t expect them to get significantly more expensive,” he said.
Teshome said there is some good news for the Valley, though. He expects the economy to get stronger for steel and healthcare – two industries that could help bolster the economy in the Youngstown area while fewer people are employed at GM Lordstown.
Just days ago, GM CEO Mary Barra announced a $1 billion dollar investment next year in U.S. manufacturing. Barra did not say where the money will go but claims the move is part of GM’s four-year-old effort to streamline its operations.
The new investments cover multiple new vehicles, advanced technology, and component projects. A combination of 1,500 new and retained jobs are tied to the new investments. Details of individual projects will be announced throughout the year.
The company also announced it will begin work on insourcing axle production for its next-generation full-size pickup trucks, including work previously done in Mexico, to operations in Michigan, creating 450 U.S. jobs.