Cutting capacity when demand slows

June 24, 2008: GM Offers Incentives to Clear Backlog

It is no surprise that GM has too many large vehicles that are far less popular than they use to be given the current situation with fuel prices. Unfortunately, capacity is not very flexible in the auto industry. Nevertheless, they need to find ways to cut back on production.  This article suggests GM will  “…reduce shifts, reduce assembly line speeds and temporarily idle seven factories.”  Reducing assembly line speed will reduce capacity in smaller increments than reducing an entire shift, but it is an odd option because it introduces a change to the production process.  An alternative would be to operate at the same speed but only for a portion of a shift.

http://www.nytimes.com/2008/06/24/business/24auto.html?ref=business

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: