GM to extend shutdown at 5 factories
Posted on Saturday, November 22, 2008
General Motors Corp. will extend its Christmas shutdown or make other production cuts at five factories as it deals with a continued U. S. auto sales slump and fights to stay solvent.
Also Friday, the company announced changes at five other factories that could increase production of some models, all based on a volatile U. S. auto market that has slumped to a 25-year low.
The changes won’t be the last, as cash-starved GM tries to conserve as much money as possible while awaiting congressional action on a bailout loan package for Detroit’s three automakers.
“Market demand is usually the prevailing criteria,” said spokesman Chris Lee. “We’re looking at this much more frequently than I’ve ever seen us as far as making minor adjustments. And I suspect that will be the norm going forward.”
The automakers — General Motors Corp., Ford Motor Co. and Chrysler LLC — have two weeks to show Congress how a multibillion-dollar lifeline will help them keep the industry from imploding.
Congress punted on a $ 25 billion auto industry rescue Thursday, as Democratic leaders said they wouldn’t help the Big Three until the companies presented them with a plan showing how the federal funding would stabilize their faltering industry.
“The executives of the auto companies have not been able to convince Congress or the American people that this government bailout will be its last,” said Senate Majority Leader Harry Reid, D-Nev. He said GM, Ford and Chrysler will need to submit their plan to Congress by Dec. 2.
Hearings are expected and lawmakers could consider legislation during the week of Dec. 8, but only if the industry shows that taxpayers and auto workers would be protected, congressional leaders said.
GM said it will cancel a down week starting Dec. 8 at its Wentzville, Mo., factory that makes full-size vans and will keep or restore overtime at factories in Delta Township, Mich., near Lansing; Spring Hill, Tenn.; Arlington, Texas; and Fort Wayne, Ind.
But factories facing cuts include a plant in Lordstown, Ohio, where workers were told that the normal two-week Christmas shutdown will be extended until Jan. 20. The sprawling factory complex stamps parts for and assembles the Chevrolet Cobalt and Pontiac G 5 small cars.
Also affected is a car plant in Oshawa, Ontario, which will see an additional week of closure starting Jan. 12. The shutdown also will be extended until Jan. 12 at a car-making plant in Orion Township, Mich., near Pontiac, and until Jan. 20 at a car assembly plant in Kansas City, Kan., GM said.
GM also plans to close a second plant in Oshawa, Ontario, a truck plant, sooner than planned. The company had said in June that it would close the pickup plant by 2010; the new closure date was not available. In addition, GM will slow assembly line speeds at two of the factories.
The automaker normally shutters its plants for two weeks around Christmas and New Year’s, reopening them the first week in January. But with U. S. auto sales down 15 percent and GM sales off 20 percent for the first nine months of the year, the closings were extended.
Workers will get Christmas pay for the first two weeks, then go on layoff and get unemployment benefits and supplemental pay from the company.
At Lordstown, the last scheduled workday will be Dec. 23, although production will start to wind down before that, said Dave Green, president of a United Auto Workers local at the complex.
Green said that after Jan. 20, the Lordstown complex will keep operating around the clock, but assembly-line speed will be reduced from the current 62 vehicles per hour to 46. 5 vehicles. The Lordstown complex, about 50 miles southeast of Cleveland, employs about 4, 200 production workers.
Earlier this year, the company added workers to the plant as demand for its small, fuel-efficient cars increased. But since then the bottom has fallen out of sales industrywide, and GM later announced it would lay off up to 1, 100 of the plant’s workers starting Jan. 20.
U. S. automakers are struggling to stay afloat heading into 2009 amid an economic meltdown, precipitous drop in sales and a tight credit market. The three companies burned through nearly $ 18 billion in cash reserves during the last quarter and GM and Chrysler have said they could collapse in weeks.
Detroit’s carmakers employ nearly a quarter-million workers, and more than 730, 000 other workers produce materials and parts that go into cars. If just one of the automakers declared bankruptcy, some estimates put U. S. job losses next year as high as 2. 5 million.
Congress, meanwhile, is weighing a tricky political question: Should it spend billions more on government bailouts or run the risk of bearing the blame of a U. S. auto industry meltdown ?
The outgoing Bush administration criticized the congressional delay, saying lawmakers should consider a plan to let the automakers tap a separate $ 25 billion loan program for fuel-efficient cars for their short-term cash needs.
“Why are they going to kick the can down the road ?” asked Dana Perino, the White House press secretary.
Supporters of the bipartisan agreement to temporarily divert an already approved $ 25 billion in fuel-efficiency funds to cover the auto companies’ operations said they were hopeful to win support in December. “We need speed. This is a very, very important moment,” said Sen. Carl Levin, D-Mich.
Reid and House Speaker Nancy Pelosi, D-Calif., said a new $ 25 billion bailout proposal that would have tapped loan money from the $ 700 billion bailout plan lacked enough support in Congress.
Pelosi said she and Reid are trying to get the reassurances lawmakers need before handing over the money. The two lawmakers were drafting a letter Friday to the U. S. auto executives requesting specific information on how federal loans would help them survive.
The chief executives of the Big Three urged lawmakers to sign off on the loans this week, saying the economic meltdown had staggered their industry after they had taken steps to restructure and produce more fuel-efficient cars.
Billionaire investor Warren Buffett said Friday that U. S. automakers need a new business model to better compete, whether it takes bankruptcy or a government bailout to achieve.
The Berkshire Hathaway Inc. CEO said any automaker bailout package should include a business solution and be negotiated by the president, not Congress.
Buffett said the government should insist top executives at Ford GM and Chrysler invest a significant percentage of their own net worths in the Detroitbased companies, ensuring both executives and taxpayers would share in any profits or losses.
A Chrysler spokesman said the company had no comment because it hadn’t heard Buffett’s interview. Ford and GM representatives were not immediately available for comment. Information for this article was contributed by Tom Krisher, Ken Thomas, Julie Hirschfeld Davis, David Espo, Andrew Taylor and Jennifer Loven of The Associated Press.
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