After more than a year of failing to close a tentative sales deal on its medium-duty truck operations,Corp. says it will exit the business sector over the next several weeks.
In a terse, 2-line statement, the auto maker says: “After four years of working with multiple potential buyers,has decided to wind-down its medium-duty truck operations. Production of the Chevy Kodiak and GMC Topkick medium duty trucks will cease by July 31, 2009.”
In December 2007, GM announced a deal to sell its medium-duty business to International Truck and Engine Corp., a subsidiary of Navistar International Corp. Under the memorandum of understanding, Navistar was to take over all assets and intellectual property rights of GM’s Class 4-7 GMC and Chevrolet-branded trucks, including the TopKick and Kodiak models built in Flint, MI.
Production of the trucks was to move to a Navistar plant, and the deal was expected to close last year, but GM spokesman Jim Hopson says the auto maker “was never able to come up with a viable agreement” with Navistar or a number of other suitors.
He declines to speculate on the sticking points, but does note the U.S. recession has had a severe effect on medium-duty sales overall.
Through May, GM sold 3,881 Topkick and Kodiak trucks, down 60% from like-2008. Industry-wide, the medium-duty market is down 45.6% through the year’s first five months.
GM CEO Fritz Henderson says the auto maker simply didn’t have the product depth needed to make the operation competitive.
“It’s been a business we’ve not been successful in, certainly financially over time,” he tells reporters in Warren, MI, where GM christens a new high-tech battery lab. “We’ve tried over the last four years to find a partner for the business unsuccessfully. Finally, we reached the conclusion we just need to wind it down.
“Great people, done a great job,” he adds. “(But) we have one truck and we compete with companies that have a full portfolio of them on a global basis. And in the end, we just couldn’t make it work.”
GM says the move to shut down the Kodiak/Topkick line in Flint will affect 398 hourly and salaried positions at the facility, which employs 2,161 workers in total. Hopson says the auto maker is working with the United Auto Workers union to determine the fate of those employees.
“It’s our expectation, people at those facilities would be deployed across our other facilities,” Henderson tells Ward’s.
A number of white collar workers at GM’s headquarters also could be affected, but Hopson says the auto maker will determine their futures as part of its broader restructuring now in the hands of a U.S. bankruptcy court.
GM currently has 400-plus medium-duty truck dealers in the U.S. that will lose their franchises as a result of the decision to exit the sector.
Navistar did not return calls seeking comment.