GM starts to ramp up production

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The cash for clunkers program continues to have positive effects, as GM is now increasing production to meet the new demand.

With its Chevrolet Cobalt in demand because of the federal “cash for clunkers” rebate program, General Motors said today it would restart the second shift at its Lordstown plant early next month.

More than 1,000 people will return to work, bringing employment at the plant to about 3,300. The news comes just in time for some laid-off workers who were about to see their benefits reduced.

“It’s a huge relief,” United Auto Workers Local 1112 President Jim Graham said. “We’ve know for some time that this would happen. We just didn’t know when it was coming back.”

GM executives said they had to restart the shift at Lordstown, where the Cobalt is assembled, and add production at other plants because the automaker was running out of cars. The clunkers program, which offers up to $4,500 to people who trade older gas-guzzlers for new, more fuel-efficient models, had left some dealers short of cars. The program is expected to end around Labor Day.

The increased production is not limited to Lordstown.

In addition to the new shift at Lordstown, GM is restarting a shift at the Canadian plant that builds the Chevrolet Equinox, a five-passenger crossover that can get 32 miles per gallon on the highway, said Tim Lee, GM’s vice president for manufacturing.

He added that demand for GM’s small pickups and its HHR wagon are also up, so GM could add shifts to plants in Louisiana and Mexico, too.

In addition, GM plans to keep open its Lake Orion, Mich., plant until November to build the Chevrolet Malibu. That plant had been scheduled to close next month. It was set to reopen in 2011 to make small cars.

Needless to say, this is excellent news for the auto industry and for the overall economy. Areas like Northeast Ohio have been suffering from growing unemployment, and every little bit helps. This also bodes well for auto suppliers.

  

Cash for Clunkers wildly successful

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We know that thousands of Americans are taking advantage of the Cash for Clunkers program, so the program is helping to drive auto sales and stimulate the economy. In case you haven’t noticed, we can use some stimulation.

Beyond that, however, it turns out that the program is even more successful than originally thought when it comes to replacing gas guzzlers with fuel efficient cars.

And the Transportation Department reported that the average gas mileage of the vehicles being bought was significantly higher than required to qualify for a rebate of $3,500 to $4,500. Of 120,000 rebate applications processed so far, the department said the average gas mileage of cars being bought was 28.3 miles per gallon, for S.U.V.’s, 21.9 miles per gallon, and for trucks, 16.3 miles per gallon.

“The statistics are much better than anybody dreamed they would be,” said Senator Dianne Feinstein, Democrat of California. The actual mileage gain so far, she said, was not due to the details of the law but “the good judgment of the American people.”

Senator Feinstein, along with Senator Susan M. Collins, Republican of Maine, was the author of an early version of a “cash for clunkers” bill that would have required bigger improvements in mileage. Their decision to express support for extending the current version of the program, at a news conference late Monday afternoon, was an important signal to other senators concerned about whether the program was doing enough for the environment.

Senator Charles E. Schumer of New York, an early backer of the Feinstein-Collins approach, also voiced support for an extension. “If it ain’t broke, don’t fix it,” he said. “It’s working in every way. It’s working as stimulus, it’s working to help families, it’s working to improve mileage.”

The chances are pretty good that Senate will vote this week to extend the program so that it can be signed by President Obama.

Some opponents of the program have expressed concern that auto sales will stall after the program ends, whether it ends now or in the fall after an extension. This concern is unfounded. Many people taking advantage of this program have older cars that they’ve driven for years, and many of them keep older cars for the simple reason that they are thrifty. Without this program, many of them would likely keep their old cars. With the program, they have a huge financial incentive to junk the old car and pick up a new one at a great price. Along those lines, Ford announced today that they see car sales rebounding through 2010, as pent-up demand starts to drive the market.

  

Clunker mania

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The cash for clunkers program is off to a roaring start, as Americans seem ready to purchase new cars when presented with a great deal. This is a very encouraging sign for the economy, as a boost in auto sales would go a long way towards getting us out of this recession.

The program is so popular that it’s running out of money after just one week. The House has passed a bill to add $2 billion to the original $1 billion program. The Senate will take it up next week. Senator Diane Feinstein won’t support the bill without tougher fuel standards, and John McCain might filibuster the bill in the Senate. It’s not a done deal yet.

  

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