Workers assemble a Chevrolet Silverado 2500 HD at a General Motors factory in Flint, Mich. GM this week announced $877 million worth of upgrade plans for the Flint factory. Source: General Motors Co.
General Motors said this week that it will spend $877 million on major upgrades to a factory in Michigan that makes its hot-selling Chevrolet Silverado and GMC Sierra pickup trucks.
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It's unusual for an automaker to make major investments in a factory when it isn't gearing up to launch an all-new model. The Silverado and Sierra were all-new for 2014, and their replacements aren't expected until 2019.
But this $877 million announcement follows an earlier $600 million commitment by GM to upgrade the factory in Flint, Mich.
What's this all about? I think it's about taking a page from Ford and its all-new F-150.
GM has been watching Ford's F-150 launch very carefullyYou've probably heard by now that the all-new 2015 F-150 has aluminum body panels. That's a new and different thing: Until now, aluminum body panels were mostly limited to luxury cars that sell in small numbers. That's because building an aluminum-bodied vehicle requires very different tooling and processes than building one with a steel body.
In order to build the new F-150, Ford needed to make big and expensive changes to the two factories that build its top-selling pickup. Each of those factories was closed for about 12 weeks in order to make the changes. That was expensive in more ways than one: Not only was the tooling expensive, but both of those factories run nearly around the clock. Ford said up front that the shutdowns would cost it about 90,000 units of production.
Ford has been scrambling to make up the shortfall. So far, its launch of the new F-150 has gone quite well -- but one of the downsides of Ford's strategy is that sales of the F-Series were down for months because of short supplies.
That gave General Motors a big opportunity to steal some business from its old rival. GM didn't waste it: Sales of the Silverado are up over 17% this year, while F-Series sales are still down slightly.
So what does this have to do with GM's investments in its Flint factory? I think GM is going to follow in Ford's footsteps by making its trucks lighter. But I also think that GM is determined to do things differently when it comes time to make those big changes to the Silverado and Sierra.
GM's factory upgrades could be about building an aluminum truckGM said this new $877 million investment would go toward, among other things, a new body-assembly facility at the plant in Flint, Mich. The earlier $600 million investment is funding a new paint facility, currently under construction.
Those are the kinds of changes you might make to a factory if you were expecting to build the bodies of your future trucks out of something other than the steel used on the current Silverado and Sierra. The new trucks probably won't go into production for another three years or so, but making those factory changes now might help GM avoid the big stretches of downtime that Ford experienced.
What's clear is that GM doesn't want to be in the situation that Ford is in now: Year-to-date sales of the F-Series are down, and Ford is going to have to fight hard to win back the market share that it ceded to GM in recent months.
But GM may be planning to one-up Ford with steel and aluminumI don't know for sure that GM is going to build its next-generation pickups with aluminum body panels. In fact, if I had to bet, I'd say that it probably won't -- or at least it won't do it the way Ford did.
Rather than switching over to all-aluminum body panels like the F-150, it's a better bet that GM will use a mix of lightweight high-strength steel, aluminum, and maybe even carbon fiber in its new pickups. That "mixed-materials" approach, as GM engineers call it, is what the company is using in its new Cadillac CT6 luxury sedan. That approach could make GM's trucks a lot lighter while still allowing them to advertise that the trucks' bodies are mostly steel -- unlike Ford's.
But it's an even safer bet that GM is watching Ford's experience with its new F-150 closely -- and that one way or another, it's already aiming to one-up its old rival with its next generation of big pickups.
The article Is General Motors About to Copy Ford's Aluminum F-150? originally appeared on Fool.com.
John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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