13 GM factories set for temporary shutdown

4/24/2009

DETROIT - General Motors Corp. said yesterday it will temporarily close 13 assembly plants in the United States and Mexico - some for more than two months - laying off nearly 24,000 workers to trim a bloated inventory.

The closures, which will start next month, vary by factory from as short as 3 weeks to a long as 11, including the normal two-week July shutdown to change from one model year to the next.

GM said the shutdowns will help control high dealer inventories and bring manufacturing in line with sales. The firm plans to cut production by 190,000 vehicles and reduce inventory from 767,000 to 525,000 by the end of July.

About 24,000 hourly and salaried employees will be laid off at these plants, but there will be thousands more layoffs and temporary factory closures when GM works out its schedules for engine, transmission, and parts stamping factories.

The troubled automaker has 22 assembly plants in North America plus dozens of other parts and powertrain factories.

The shutdowns will affect northwest Ohio factories. Workers at GM transmission plants in Toledo and Defiance will face extended furloughs.

Production schedules are tentative, but the two factories likely will be shut for six to eight weeks, including the usual summer shutdown set for June 29 to July 10, company spokesman Wanda Wellman said.

The Toledo Powertrain plant, on Alexis Road, likely will close in late May, and the Defiance foundry will probably shut down in early May, she said. She emphasized that plans are fluid and could change as the nation's No. 1 automobile manufacturer responds to fast-changing circumstances.

The Toledo operation, which had been scheduled to be shut next week, will remain open, Ms. Wellman added. It employs 1,300 people who produce six-speed transmissions for trucks and sport utility vehicles.

The Defiance plant, with 1,500 workers, makes engine and transmission parts.

As in other automotive areas, other car suppliers and businesses will be affected. Suppliers to GM will face curbed production and likely will lay off workers. In turn, the factory shutdowns will hurt restaurants and other retailers.

Laid-off hourly workers will get unemployment benefits and supplemental pay from the firm that amounts to most of their base wages. Salaried workers also will get some type of income, GM North America President Troy Clarke said.

Mr. Clarke said the shutdowns are not a sign that GM is headed into bankruptcy protection.

GM is living on $13.4 billion in government loans and faces a June 1 deadline to cut its debt and labor costs and take other restructuring steps. If it doesn't meet the deadline, the firm has said it will enter Chapter 11 bankruptcy protection.

The Treasury Department declined to comment on any effect the plant shutdowns might have on GM's restructuring plans.

Mr. Clarke would not say exactly how many workers would be laid off, nor would he say if any of the factories would be closed for good. GM has told the government it plans to close five more factories, and Fritz Henderson, GM's CEO, said more closures are possible.

Mr. Clarke also said the firm isn't making the cuts because it sees sales worsening beyond current projections.

"Instead of spending the whole year to get the inventory in line, we really needed to get it in line much quicker," he said.

The longest shutdown is 11 weeks at Fort Wayne, Ind., where about 2,600 people make Chevrolet Silverado and GMC Sierra pickups.

Mr. Clarke said President Obama's auto task force was aware of the shutdowns, but GM management made the decisions.

GM's move is a result of slumping sales, but some analysts and dealers fear the plant closings could scare already nervous car buyers.

GM also said yesterday that it has been negotiating with its former parts arm, Delphi Corp., to make sure the supply of parts continues during Delphi's bankruptcy case. GM said it has proposed "fair and reasonable" terms that Delphi and its lenders rejected.

General Motors ' decision could also hurt local and state economies.

In Lordstown, Ohio, GM operates side-by-side assembly and stamping plants, which account for about 70 percent of the village's annual $4 million municipal budget, Mayor Michael Chaffee said. Suppliers and spin-off businesses add another 5 percent in the community of 3,800. The Lordstown assembly plant will close for five weeks starting June 1.