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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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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.


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