GM to close plants for up to 9 weeks this summer

Wednesday, April 22, 2009

GM to close plants for up to 9 weeks this summer

David Shepardson and Rob Snell / The Detroit News

General Motors Corp. is expected to announce Friday it’s cutting about 170,000 vehicles from its planned production this year, closing factories for as long as nine weeks this summer as the automaker works to dramatically toughen its restructuring plan before a June 1 government deadline.

At the same time, the White House is continuing to keep up the pressure on Chrysler and Fiat SpA to win concessions and make a deal before an April 30 deadline or face a likely bankruptcy filing.

On Tuesday, President Barack Obama was briefed on the status of the auto industry talks by Steve Rattner, the Treasury Department’s top auto adviser, and others on the intense negotiations between Chrysler and its stakeholders.

But the fallout is continuing from low auto sales. GM is likely to announce more bad news Monday when it lays out more details of its restructuring plan as part of its bond exchange offer.

Mark LaNeve, GM’s North America vice president of vehicle sales, service and marketing, declined to confirm the report that GM would sharply cut production.

"I can say that since October of last year when the market collapsed all (manufacturers) have been slashing production to align inventory with the weaker market," LaNeve said on Wednesday.

Auto sales — down 38 percent in the first three months of the year — remain down in April. AutoNation, the nation’s biggest auto dealer group, cut new car orders by 60 percent in the first three months.

Separately, GM’s chief financial officer Ray Young told reporters in Detroit that a GM bankruptcy filing was "probable" and that the automaker was unlikely to make a $1 billion debt payment due June 1.

"A successful bond exchange is an essential element of our out-of-court restructuring efforts, and we are working aggressively to launch an exchange," GM said in a statement. "That exchange could still be in process on June 1."

GM plans to unveil a much tougher restructuring plan as early as Monday when it details its bond exchange offer to wipe out its $28 billion in unsecured debt. That plan could include speeding up the company’s planned cuts in dealerships, plants and personnel.

GM, which has received $13.4 billion in government loans, said in its Feb. 17 viability plan that it would close 14 of its 47 powertrain, stamping and North American assembly plants by 2012 — five more than what it had said in December. GM also said it would cut 47,000 more of its 244,000 employees worldwide. GM CEO Fritz Henderson said last Friday additional plants would be closed, but he declined to say how many. A report Tuesday that GM would get up to $5 billion in additional government short-term aid.

At the same time GM completed most of its layoff of 1,600 salaried workers this week as part of its cut of 3,400 salaried workers. Some departments and plants lost 20 to 30 percent of their salaried workforce. GM’s worldwide communications department lost about 20 percent — or 40 people — officials said.

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