GM to Add Third Shift in Texas Plant

General Motors Company’s (GM - Analyst Report) plans to add a third shift at its sports utility vehicle (SUV) assembly plant in Arlington, Texas in the first quarter of 2013 in order to boost production for large vehicles and roll out redesigned lineups of truck and SUV.

Currently, the Arlington facility produces Cadillac Escalade, GMC Yukon, Chevrolet Tahoe and Chevrolet Suburban. The company will upgrade the plant with new tooling and equipment for manufacturing the revamped lineups, including the 2014 model year, based on the new K2XX platform.

The new shift will add 800 jobs at the plant to its existing 2,500 hourly and salaried workforce. It will relieve existing plant workers from working overtime for a long time. The company will begin adding new workers at the plant from the fourth quarter of this year.

GM along with the other Big Three member automakers, Ford Motor Co. (F - Analyst Report) and Chrysler, had started scaling back production and sought plant closures in order to stay afloat in the midst of a global financial crisis.

However, strong pent-up demand and higher consumer confidence led by improving macroeconomic conditions in the U.S. led many automakers to add back shifts and boost output at their plants. Lower gas prices, improved access to credit and strong used car prices continue to spur sales.

Last month, GM reported an 11% rise in sales to 245,256 units of cars and trucks, which is the company’s highest monthly total since the "Cash for Clunkers" program in August 2009. Sales of small cars went up 16% due to the strong demand for the Sonic subcompact while pickup sales improved due to increased construction activity during the month.

Currently, GM’s other three truck assembly plants in North America are operating with three shifts. According to GM spokesman James Cain, all the operations in the region are, in fact, operating at more than full capacity due to extensive use of overtime and additional shifts.

GM, a Zacks #3 Rank (Hold) company, reported a $100 million fall in profits to $1.6 billion in the first quarter of 2012 from $1.7 billion in the same quarter of 2011, before special items, due to lower profits from its European operations.

On per share basis, adjusted profits were 93 cents during the quarter, down 2 cents from the first quarter of 2011. However, it exceeded the Zacks Consensus Estimate of 84 cents. Adjusted earnings before interest and taxes (EBIT) dipped to $2.2 billion in the quarter from $2.0 billion in the year-ago quarter.

Revenues in the quarter went up 4% to $37.8 billion on a 3% rise in unit sales to 2.3 million vehicles globally. It was higher than the Zacks Consensus Estimate of $36.4 billion. The automaker occupied a worldwide market share of 11.3% during the quarter, compared with 11.4% a year ago.