Abstracts Economics

General Motors Lordstown: A Simulation Impact Study on the Youngstown-Warren Economy

by Joseph Bartholomew

General Motors' "acceptance" of its recent decline in market shares has prompted the company to make drastic changes in its production methods. These improvements will begin with a change from on-site assembly to modular assembly of certain car components. Along with a new production technique, General Motor's will also build new plants to accomodate modular assembly. These announced plans threaten existing plants, many of which desperately need capital improvements. Ultimately, those locations that are not selected for the new plants will probably witness the closing of their assembly plants. The General Motors plant in Lordstown, in particular, falls in this category. Built in 1966, the plant houses General Motors' small car operations, and, at that time, was the largest and most automated assembly plant. The plant has also become an important manufacturing firm for Mahoning, Trumbull and Columbiana counties. General Motors has not yet confirmed any plans to reinvest in Lordstown; therefore, if a shutdown occurs, the region may suffer serious economic consequences. This paper studies the possible ramifications of both a decision to build and a decision to shut down the plant on the Youngstown-Warren economy. Specifically, a regional econometric model is used in four different scenarios that reflect the two possible decisions. Scenario 1 and 2 focus on the selection of Lordstown for the new plant while scenario 3 and scenario 4 take the alternative view. Regional multipliers and time series graphs then are used to study these effects and draw conclusions for the scenarios.