GM unveils plan to idle 13 plants
DETROIT - General Motors Corp. said yesterday it will temporarily close 13 assembly plants in the United States and Mexico - some for more than two months - laying off more than 26,000 workers to pare back a bloated inventory.
The closures, which will start in May, vary by factory from as short as three weeks to a long as 11, including the normal two-week July shutdown to change from one model year to the next.
GM said the shutdowns will help control dealer inventories and bring manufacturing in line with sales. The company plans to cut production by 190,000 vehicles and reduce inventory from the current 767,000 to 525,000 by the end of July.
More than 26,000 hourly and salaried employees will be laid off at the affected assembly plants, but there will be thousands more layoffs and temporary closures when GM works out its schedules for engine, transmission, and parts stamping factories.
The troubled automaker has 22 assembly plants in North America as well as dozens of parts and powertrain factories.
Laid-off hourly workers will get unemployment benefits and supplemental pay from the company that amounts to most of their base wages. Salaried workers also will get some income, GM North America president Troy Clarke said.
In a conference call with reporters, Clarke said the shutdowns are not a sign that GM is headed into bankruptcy protection.
Clarke said he can't remember the company ever having as many layoffs and plant shutdowns. He said President Obama's auto task force was aware of the shutdowns.
Obama said through a spokeswoman that GM will have to make difficult decisions during its restructuring. "He is committed to standing behind GM during this process to achieve a strong, viable auto industry in the long-term," the spokeswoman said.
GM's move is a result of slumping sales, but some analysts and dealers fear the plant closings could further scare car buyers already made nervous by talk of a GM bankruptcy.
GM also said yesterday that it has been negotiating with its former parts arm, Delphi Corp., to make sure the supply of parts continues during Delphi's bankruptcy case.
The shutdown could be catastrophic to many auto parts suppliers that already are near bankruptcy due to previous production cuts. During the shutdown, suppliers couldn't ship parts to GM and would lose critical revenue.