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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 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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