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General Motors announced Thursday that they will be temporarily closing assembly plants this summer for one to nine additional weeks, on top of the company's usual two-week summer closing.

General Motors routinely closes for two weeks in July each year. This year will bring with it extended closings, ranging anywhere from one extra week to nine additional weeks, depending on the assembly plant.

GM announced Thursday that this summer 13 plants are set to temporarily shut down in the U.S. and Mexico, affecting around 24,000 workers, according to the Associated Press. The shutdown, which will enable GM to cut their production output by 190,000 vehicles, will occur as GM attempts to allow its dealers to sell down overstuffed inventories.

Although GM’s inventory is only 12 percent less than it was last year (currently at 767,000 vehicles in U.S. dealer stock), its sales have decreased by close to 50 percent since then.

In a company statement, GM North America President Troy Clarke explained: “While sales have been performing at or close to our plan estimates, and dealer inventories have been reduced accordingly, we want to more closely align inventories with even more conservative market assumptions.”

GM also said that it has been working with auto parts supplier Delphi, to ensure that Delphi’s bankruptcy case does not result in a stalled supply of parts. Although GM offered solutions to Delphi which would “ensure GM’s source of supply under fair and reasonable term,” Delphi and its lenders have declined these terms. Therefore, the shutdown will also give GM time to plan for any problems that may arise from the Delphi case.

The Associated Press offered a statement from GM, explaining the possible consequences of the case; “Without successful resolution of this dispute, it is General Motors’ view that Delphi or its lenders could force GM into an uncontrolled shutdown with severe negative consequences for the U.S. automotive industry.”

Plants will be closed in Texas, Kentucky, Michigan, Indiana, Ohio, Louisiana, Tennessee, Delaware, Missouri and Mexico. The longest shutdown will occur for 11 weeks in Fort Wayne, Indiana and affect approximately 2,600 workers. 

The Associated Press also reported that laid-off hourly workers will be given unemployment benefits along with supplemental pay from GM, which will supply a total around most of their base wages. According to Clarke, salaried workers will also receive a certain amount of income.

The shutdowns will not result in a complete lack of production; certain GM plants will remain active, such as Michigan’s Lansing Delta Township plant, which will carry on with operations during the two-week shutdown.                                                                    

Hosting a total of $13.4 billion in government loans, GM must undergo a difficult restructuring process by June 1, or the company will enter Chapter 11 bankruptcy protection, according to its CEO.



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Pathetic
By FITCamaro on 4/24/2009 9:37:52 AM , Rating: 4
quote:
The Associated Press also reported that laid-off hourly workers will be given unemployment benefits along with supplemental pay from GM, which will supply a total around most of their base wages. According to Clarke, salaried workers will also receive a certain amount of income.


Union workers will basically be unaffected while salaried people who probably have an education and don't resort to mob-style tactics will likely get the shaft.




RE: Pathetic
By weskurtz0081 on 4/24/2009 9:45:49 AM , Rating: 3
Well as long as the current administration continues propping up the company with tax payer cash, that isn't likely to change. It's almost as if someone else is pulling the strings, someone that is powerful and wouldn't want to see the unions loose power.... maybe the unions?


RE: Pathetic
By Hiawa23 on 4/24/2009 10:35:55 AM , Rating: 1
Well as long as the current administration continues propping up the company with tax payer cash, that isn't likely to change. It's almost as if someone else is pulling the strings, someone that is powerful and wouldn't want to see the unions loose power.... maybe the unions?

LOL, wait, didn't George Bush leave office, LOL....

I admire what Pres Obama accomplished especially for giving many minorities & African Americans something to believe in, but he is going to have to cut the strings, & make a difficult decision. I feel this propping up is not going to solve their ills.


RE: Pathetic
By rcc on 4/24/2009 5:13:04 PM , Rating: 2
quote:
LOL, wait, didn't George Bush leave office, LOL....


Double LOL?? You can accuse Republicans of many things. In general, supporting or propping up unions is not one of them. Follow the votes if you want to find the sugar daddy.


RE: Pathetic
By FITCamaro on 4/24/09, Rating: 0
RE: Pathetic
By Samus on 4/25/2009 3:53:23 PM , Rating: 2
It's pretty simple. The past eight years of this country is 100$ George W Bush's responsibility. In those eight years, the world has come to hate us, we've spent trillions killing innocent people, our economy has been demolished, we've pimped China for cheap labor and destroyed their environment, we've turned out backs on ourselves (New Orleans) and if that weren't enough, we failed to protect our citizens from terrorists when it was 100% possible. His administration just didn't care.

So before you bash Obama for spending trillions to FIX the economy, don't forget who spent trillions DESTROYING it.


RE: Pathetic
By TomZ on 4/24/2009 10:50:32 AM , Rating: 5
quote:
Well as long as the current administration continues propping up the company with tax payer cash
You people don't get it, do you?

Let me explain the situation again. Car manufacturing is very, very capital (money) intensive. And in that industry you have a lot of costs that don't change along with sales fluctuations.

Starting about 6 months ago, because of the recession that was started due to problems in the banking sector, people started to reduced/delay car purchases, to the tune of 30-50% decrease year-to-year.

Now, considering you have huge companies with relatively fixed cost, all of a sudden you have companies like GM, Chrysler, Ford, Toyota, Honda, etc. all seeing nearly half the revenue as they had last year. And you're talking in about costs in the hundreds of billions of dollars.

And on top of that, because of the banking meltdown, there is basically no source of private equity/loans available.

So you have this large industry in jeopardy because of short-term cash flow problems. With millions of jobs at stake, what do you think the goverment should do? What do you think it must do?

If you want to be angry at an industry, you should take aim at the banking sector. Not only did the banking sector "cause" the recession due to very irresonsible practices, but they were also responsible for subsequently swallowing hundreds of billions of taxpayer dollars - with NO STRINGS ATTACHED!

By contrast, the "bailouts" to the automakers were all loans, with interest, in tiny amounts compared to what was handed away for free to the banking sector.


RE: Pathetic
By FITCamaro on 4/24/2009 8:51:40 PM , Rating: 3
I think the government should do nothing.


RE: Pathetic
By IvanAndreevich on 4/24/2009 9:06:24 PM , Rating: 3
No, we get it. I want the government to let failing businesses FAIL. You know, let capitalism do its thing.

Don't worry about Honda and Toyota, they'll make it through just fine. It's pieces of crap like Chrysler and GM which have been on the decline with loans up their bum for the last decade, not just recently, which are in serious shit now.


RE: Pathetic
By Jaybus on 4/24/2009 11:55:01 AM , Rating: 2
For engineers and other low level salaried workers, that's likely an accurate statement. However, top level executives at those plants will most likely get a bonus.


RE: Pathetic
By Smartless on 4/24/2009 3:33:10 PM , Rating: 3
Lol and doesn't the picture at the top look like someone flipping the bird?

That's funny about the unions. I wonder if Fiat said the same the same to Chrysler?


RE: Pathetic
By yacoub on 4/24/2009 4:30:30 PM , Rating: 2
Not only that, but this is going to have a ripple effect throughout the parts supply chain due to the just-in-time nature of supply chains these days. Could knock a bunch of companies out of business that are just hanging on at the moment.


RE: Pathetic
By blueboy09 on 4/26/2009 2:38:47 AM , Rating: 1
You know what would really open their eyes? The union workers get terminated due to their competance, and not talking about their so-called negotiations either. Their jobs get axed, and the salaried workers get to keep their jobs. Won't happen, but it does make you wonder how bad do things have to get before the power-money hungry UAW will something instead of arguing about their over-the-top salary for their union workers. Maybe Obama will teach them a thing or two about life, especially if he restructures these companies. What goes up must come down, methinks. :) - BLUEBOY


By Beenthere on 4/24/2009 10:26:26 AM , Rating: 2
Most people have little clue about business and even less about the U.S. auto industry. That and blind faith in the criminals on Capitol Hill who have even less knowledge and couldn't run a lemonade stand, will result in the destruction of the entire U.S. auto industry, 6,000 vendor supplier companies and 20 million U.S. jobs.

Then people will ask: How could this happen?

America is the only country that does everything it can to eliminate U.S. jobs and punish the auto industry for the crimes on Capitol Hill. I've seen the enemy and it is us!




By Hiawa23 on 4/24/2009 10:41:11 AM , Rating: 2
Then people will ask: How could this happen?

seems clear how this happened, & many are at fault but GM can't keep going the way they have been going for years & years. You guys can keep blaming who you want but I am interested in how to fix the problem. Since many don't have a clue as you stated, then what is the solution?


By TomZ on 4/24/2009 10:52:47 AM , Rating: 2
Completely wrong. Five years ago GM was profitable. It is IMPOSSIBLE for car companies to predict or otherwise avoid the effects of a recession - especially one that causes their sales to plunge 30-50% across the board for all manufacturers. Heck, there are few large industries that could handle that.


By SignoR on 4/24/2009 11:38:02 AM , Rating: 3
Whether they saw it coming or not is irrelevant. What is relevant is that their cost structure is as elastic as their revenue. If revenue falls so must costs. Unfortunately for the big 3 they have the massive dead weight that is the UAW on their back. The UAW itself is uncompetitive and needs to be broken by antitrust laws. They have an official monopoly(beware the dreaded M word when it doesn't stand for Microsoft) on labor. Because the lack of 'Right To Work' laws all workers must belong to the union.

To compare, this is just the same as if there was only 1 steel company to buy from and they refuse to sell the steel below an arbitrarily high price. You only have 1 option pay the high prices or stop production. Similarly these companies have only 1 labor pool to pull from. If the companies could choose non union workers it would happen in a heart beat.


By TomZ on 4/24/2009 1:55:23 PM , Rating: 2
quote:
What is relevant is that their cost structure is as elastic as their revenue.
That would be nice, but it is also impossible. Car sales go up and down a lot - do you think car companies can just quickly hire when sales are going up and fire when they are going down? Or should employee salaries just go up and down instead? What employees or union would accept that?

Not to mention the billions of dollars it takes to build and operate a car plant, and most of those expenses are fixed regardless of changes in product volumes due to sales fluctuations.

The auto industry has to deal with some real hard realities that a lot of people don't even begin to fathom. It is real easy to blame management or the UAW, but the the reality is that it is a very tough business.


By Hiawa23 on 4/24/2009 12:03:04 PM , Rating: 2
Completely wrong. Five years ago GM was profitable.

should have been more clear but the last time they turned a profit was 2004, which is years in my book, so this didn't just start in 08 or 07 like some are saying. Based on what I have read their issues go back years maybe decades, & many things can be the cause, all I want to know is how do you save the industry.


By TomZ on 4/24/2009 2:00:08 PM , Rating: 2
I don't know how to save the industry. After all, if I did, I'd be earning millions of dollars per year working on that instead of wasting my time here. :o)

And yes, GM has had issues through the years, just like any other big company in any industry. Companies are just organizations of people, and people don't always do things in the "best" way - mistakes are made. But that is really different than what these companies face today with their large sales drop in the midst of this recession.

The good news, at least what I would predict, is that during the second half of the year, auto sales will pick up and that will take a lot of pressure off the car companies. People can only delay their car purchases for so long in general. In addition, if they shutter some plants this summer, they can work off their inventory and be in a real good position financially towards the end of the year.


Normal
By TomZ on 4/24/2009 8:56:19 AM , Rating: 2
Actually, temporary summer shutdowns are pretty normal in the auto industry. This is only "news" because of recession and goverment loans.




RE: Normal
By depravedone on 4/24/2009 9:13:54 AM , Rating: 2
These shutdowns, normally only a couple weeks, are definitely news. Several companies in my area that support the auto industry have either gone out of business or made massive reductions in workforce and production hours.


RE: Normal
By mjcutri on 4/24/2009 9:15:40 AM , Rating: 2
Uh, yeah, one week shutdowns are normal in industry, especially steel and automotive, usually around the 4th of July and Christmas, but ELEVEN WEEK shutdowns are definitely NOT normal and are definitely newsworthy. I had heard about the extended shutdowns, but I hadn't heard the final extent of them until now. This would be newsworthy regardless of the gov't loans or the recession...

Come on TomZ, I usually agree with you, but I think you're a bit off on this one.


RE: Normal
By TomZ on 4/24/2009 9:30:28 AM , Rating: 2
There's only one plant that is closing for that long; the others are all much shorter.


RE: Normal
By retrospooty on 4/24/09, Rating: 0
RE: Normal
By Hiawa23 on 4/24/2009 10:17:49 AM , Rating: 1
this news only becaause of GM's economic condition which it has been bleeding for years, probably needed since inventories are just mounting on car lots across America. I hope this helps them reduce their debt load, but they may infact may be months away from some sort of assisted bankruptcy. Give em credit for trying erverything possible to comply with the govt, but somehow I don't see the auto industry turning around in the next couple of months so what happens then? Do they have a realistic longterm plan to fix their company or is this just piece meal, do whatever will keep uncle Sam at bay in the shorterm, meanwhile the same problems are still there that may have lead to the situation they are in now.


Where is the list?
By RjBass on 4/24/2009 9:37:49 AM , Rating: 2
So where is the list of plants that will be closed? We have been listening to the news here in Kansas City waiting to see if our Fairfax plant will be on the list, and as of 8:00am this morning it was still unsure.




RE: Where is the list?
By FITCamaro on 4/24/2009 9:38:29 AM , Rating: 1
I have an ex-gf in Fort Wayne. She doesn't work at GM but it'll definitely affect things up there.


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