Special Report

UAW logo2007 UAW
Labor Talks

General Motors Corp. has no plans for domestic compact pickup production beyond 2011, according to a detailed product plan contained in a United Auto Workers union contract summary.

The document, intended for distribution to local union presidents but leaked via the Internet by a dissident UAW faction, shows GM’s plant in Shreveport, LA, is scheduled to build Chevrolet Colorado and GMC Canyon, as well as the Hummer H3 SUV and H3T sport/utility-pickup, until 2011.

However, only the two Hummers are tentatively to get replacements at Shreveport, slated to launch the new models in 2011.

Morgan Johnson, president of UAW Local 2166, which represents Shreveport workers, declines comment, noting ratification of the 4-year deal is in progress.

For many brands selling in the U.S., compact pickup trucks have become losing propositions, as consumers increasingly are being drawn toward roomier, more powerful fullsize pickups thanks in part to generous retail incentives.

At one time accounting for 1.46 million units annually, the small pickup sector currently commands a 3.3% share of the U.S. market, according to Ward’s data. That compares with nearly 7% for fullsize pickups. Through September, small pickup sales are tracking 14.7% below year-ago, with 408,488 units moved in the period.

Colorado and Canyon sales are off 18.3% and 10.5%, respectively, in the year's first nine months vs. like-2006.

GM could discontinue selling one or both of the trucks in the U.S. altogether. But if either stays in the lineup, future versions are likely to come from overseas plants. One sourcing possibility is Brazil, which is taking the lead on development of the next-generation compact trucks. Thailand, the world’s biggest pickup market outside the U.S., also is a candidate to supply the U.S.

However, in order for this to occur, the “chicken tax,” a 25% tariff levied by the U.S. on imported trucks, would have to be lifted.

The cancellation of the tax has been a point of discussion in many ongoing free-trade talks between the U.S. and various nations, including Thailand.

“The chicken tax days are numbered, it’s just a question of (when it will be dropped or reduced),” says Michael Robinet, vice president-global vehicle forecasts for CSM Worldwide. It now benefits GM, as well as Ford Motor Co., to support quashing the tax in favor of sourcing the vehicles from lower-cost plants overseas, he adds.

“It gets more and more difficult for the Detroit Three to back a chicken tax, because the volumes have slipped so far in that segment” Robinet says. “It actually makes more sense for some of the Detroit Three to produce outside and import those products and use the capacity (here) for something else.”

GM is not the only manufacturer that may look to import small trucks.

In January, a Mazda Motor Corp. official told Ward’s the auto maker would consider bringing its BT-50 model from Thailand to the U.S. if the tax were eliminated.

Mazda currently sells the B-Series truck in the U.S., but parent Ford next year will be shuttering the Twin Cities, MN, plant, where it and the Ford Ranger are produced. Ford has not disclosed a future U.S. production site for the small pickups.

Mitsubishi Motors Corp., which sells the Dodge Dakota-based Raider in the U.S., also has hinted overseas production sourcing is a possibility.

Kevin Casteleyn, sales manager for Bob Sellers Pontiac GMC in Farmington Hills, MI, says sales trends suggest an imported GMC Canyon would not be a deterrent to American buyers.

“(The U.S. auto industry) is selling more and more imports,” he says, adding that a lower-priced compact pickup would help widen the currently narrow price differential between the Canyon and GMC Sierra fullsize pickup.

“Ultimately, when a person comes in to look at a Canyon and sees he can get a fullsize (Sierra) for not much more, it’s almost a no-brainer.”

One analyst says Mexico is a potential location for GM’s small-pickup production should the tariff on imports remain in effect.

As for the Shreveport plant, Robinet contends its future is secure. The plant is one of GM’s newer facilities, boasts on-site stamping and is in the South, which is the primary location of foreign OEM assembly plants, he points out.

“I think it is a strategic facility for General Motors, so I’d be hard-pressed to think they’re going to abandon it,” Robinet says. “I think they’ll find a product for it.”

cschweinsberg@wardsauto.com