GM will idle plants for weeks
DETROIT - Thousands of GM workers could learn as early as today they will be idle for up to nine weeks this summer as the automaker's plants stop making all but its most popular cars and trucks.
The move is a result of slumping sales and growing inventories of unsold vehicles, but some analysts and dealers fear the plant closings could further scare car buyers already made nervous by talk of a GM bankruptcy.
General Motors is planning to temporarily close most of its U.S. factories for up to nine weeks, three people briefed on the plan said Wednesday. The exact dates of the closures are not known, but the people said they will occur around the normal two-week shutdown in July when changes are made from one model year to the next. None of the people wanted to be identified because workers have not yet been told of the shutdowns.
GM spokesman Chris Lee would not comment other than to say the company notifies employees before making any production cuts public. But UAW officials will likely raise questions about the move during meetings they scheduled at several factories today and Friday with plant managers and GM human resource officials to discuss production changes.
Thousands of workers could be laid off but would still get most of their pay because their United Auto Workers union contract requires the company to make up much of the difference between state unemployment benefits and their wages.
One of the people briefed on the plan said details are still being worked out. Some of the closings could be staggered between mid-May and the end of July, but the exact number of plants to be idled has not yet been determined. Another person said a few plants that make more popular models could remain open for part of the shutdown period, but at reduced assembly line speeds.
But 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.
GM is living on $13.4 billion in government loans and faces a June 1 deadline to cut its debt, reduce labor costs and take other restructuring steps. If it doesn't meet the deadline, the company's CEO said it will enter Chapter 11 bankruptcy protection.
The Treasury Department declined to comment on any effect the plant shutdowns might have on GM's restructuring plans.
Separately Wednesday, GM announced it might miss a $1 billion bond payment also due June 1 if its debt-for-equity exchange is still in progress by then. GM also could go into bankruptcy protection, which could make the company miss the payment as well. The company plans to make the exchange offer soon to bondholders, perhaps as early as next week.
