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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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RE: Pathetic
By TomZ on 4/24/2009 10:50:32 AM , Rating: 5
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.

“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads

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