By — Admin Admin By — PBS News Hour PBS News Hour Leave your feedback Share Copy URL https://www.pbs.org/newshour/economy/business-jan-june09-gmidling_04-23 Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter General Motors to Idle Plants for up to 10 Weeks Economy Apr 23, 2009 1:50 PM EDT The closures will begin next month, the company said in a statement. Shutdowns will vary by factory, but some will be closed for nine or 10 weeks. The troubled automaker has 22 assembly plants in North America. Dozens of other factories stamp metal parts and build engines and transmissions, and they also will see temporary closures. GM normally shuts down its assembly plants for two weeks each summer to prepare for the new model year, but assembly plants that will see additional down weeks are in Arlington, Texas; Bowling Green, Ky.; Detroit-Hamtramck, Mich.; Flint, Mich.; Fort Wayne, Ind.; Lansing, Mich.; Lordstown, Ohio; Pontiac, Mich.; Shreveport, La.; Spring Hill, Tenn.; Wilmington, Del.; Wentzville, Mo.; and Silao, Mexico. The longest shutdown is 10 weeks at Fort Wayne, which makes the Chevrolet Silverado and GMC Sierra pickup trucks. Meanwhile, the New York Times reported Thursday afternoon that the Treasury Department working on a Chapter 11 bankruptcy filing for Chrysler that could happen as early as next week, according to sources people with direct knowledge. Italian automaker Fiat would reportedly still complete an alliance with Chrysler while the company is under bankruptcy protection. It’s unclear what would happen to Chrysler’s $6.9 billion in debt. A report by the Government Accountability Office said Thursday that the U.S Treasury would see a “small percentage” of recovery on the loans it has given to Chrysler in case the automaker liquidates its assets in bankruptcy, according to Reuters. “According to Treasury, in the case of Chrysler, the sale of the assets would result in cash equal to only a small percentage of the value of the loans,” the GAO, the investigative arm of Congress, said in the report. Meanwhile, the National Automobile Dealers Association said President Barack Obama’s auto task force might expand Small Business Administration loan requirements so dealers could more easily borrow money to stock their showrooms. NADA chairman John McEleney said the task force is working with other federal agencies to find alternatives to help dealers get loans to buy cars to stock their lots, as credit markets remain frozen. The NADA met with the task force Thursday, as General Motors and Chrysler race to make deep cuts to receive more federal aid. McEleney says the task force is also looking at how nearly 500,000 employees at GM and Chrysler dealerships in the U.S. would be affected should either company file for bankruptcy. Regarding GM’s plant shutdowns, North America President Troy Clarke said that the company has been controlling inventories since the first of the year, but it needs to do more. “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,” he said in a statement. The 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. The shutdown comes amid shrinking sales for GM and other automakers. GM’s sales were down 49 percent at the end of March compared to the same time last year. The industry as a whole has seen sales shrink by 38 percent. GM has lost about $70 billion in the last two years. The company has already taken $13.4 billion in government loans, and is racing to meet a June 1 deadline to come up with a turnaround plan. If its plan is not approved, GM’s CEO has said the company will file for Chapter 11 bankruptcy protection. The shutdown decision is a sign that the company doesn’t forecast sales figures improving any time soon, auto analyst Tom Libby told the AP. “They must be forecasting a sales level that is low enough between now and the summer that they see their inventories building,” he said. “It’s sort of an ominous comment on what they see for the industry.” Elbert Harvard IV, who works at GM’s Orion, Mich. plant attaching doors to sedans, told the Detroit Free Press that he understands the need for the shutdown. “If we’re making cars nobody is buying, then I think that’s more negative for the company than for us,” Harvard said. “I hate not to work. But it makes sense why they would have to do that.” Thousands of workers will be laid off during the shutdown, but many will still receive about 70 percent of their pay, because union contracts require GM to make up much of the difference between state unemployment benefits and full pay. Almost all automakers with U.S. factories have closed plants or cut production as a result of the sales slump. Earlier this year, GM temporarily closed 20 factories across North America due to weak sales, some for the entire month of January. Chrysler closed all 30 of its manufacturing plants for a month to counter the auto sales downturn. Ford Motor Co. also shut down 10 North American assembly plants for an extra week in January, and both Toyota Motor Corp. and Honda Motor Co. cut production. We're not going anywhere. Stand up for truly independent, trusted news that you can count on! Donate now By — Admin Admin By — PBS News Hour PBS News Hour
The closures will begin next month, the company said in a statement. Shutdowns will vary by factory, but some will be closed for nine or 10 weeks. The troubled automaker has 22 assembly plants in North America. Dozens of other factories stamp metal parts and build engines and transmissions, and they also will see temporary closures. GM normally shuts down its assembly plants for two weeks each summer to prepare for the new model year, but assembly plants that will see additional down weeks are in Arlington, Texas; Bowling Green, Ky.; Detroit-Hamtramck, Mich.; Flint, Mich.; Fort Wayne, Ind.; Lansing, Mich.; Lordstown, Ohio; Pontiac, Mich.; Shreveport, La.; Spring Hill, Tenn.; Wilmington, Del.; Wentzville, Mo.; and Silao, Mexico. The longest shutdown is 10 weeks at Fort Wayne, which makes the Chevrolet Silverado and GMC Sierra pickup trucks. Meanwhile, the New York Times reported Thursday afternoon that the Treasury Department working on a Chapter 11 bankruptcy filing for Chrysler that could happen as early as next week, according to sources people with direct knowledge. Italian automaker Fiat would reportedly still complete an alliance with Chrysler while the company is under bankruptcy protection. It’s unclear what would happen to Chrysler’s $6.9 billion in debt. A report by the Government Accountability Office said Thursday that the U.S Treasury would see a “small percentage” of recovery on the loans it has given to Chrysler in case the automaker liquidates its assets in bankruptcy, according to Reuters. “According to Treasury, in the case of Chrysler, the sale of the assets would result in cash equal to only a small percentage of the value of the loans,” the GAO, the investigative arm of Congress, said in the report. Meanwhile, the National Automobile Dealers Association said President Barack Obama’s auto task force might expand Small Business Administration loan requirements so dealers could more easily borrow money to stock their showrooms. NADA chairman John McEleney said the task force is working with other federal agencies to find alternatives to help dealers get loans to buy cars to stock their lots, as credit markets remain frozen. The NADA met with the task force Thursday, as General Motors and Chrysler race to make deep cuts to receive more federal aid. McEleney says the task force is also looking at how nearly 500,000 employees at GM and Chrysler dealerships in the U.S. would be affected should either company file for bankruptcy. Regarding GM’s plant shutdowns, North America President Troy Clarke said that the company has been controlling inventories since the first of the year, but it needs to do more. “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,” he said in a statement. The 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. The shutdown comes amid shrinking sales for GM and other automakers. GM’s sales were down 49 percent at the end of March compared to the same time last year. The industry as a whole has seen sales shrink by 38 percent. GM has lost about $70 billion in the last two years. The company has already taken $13.4 billion in government loans, and is racing to meet a June 1 deadline to come up with a turnaround plan. If its plan is not approved, GM’s CEO has said the company will file for Chapter 11 bankruptcy protection. The shutdown decision is a sign that the company doesn’t forecast sales figures improving any time soon, auto analyst Tom Libby told the AP. “They must be forecasting a sales level that is low enough between now and the summer that they see their inventories building,” he said. “It’s sort of an ominous comment on what they see for the industry.” Elbert Harvard IV, who works at GM’s Orion, Mich. plant attaching doors to sedans, told the Detroit Free Press that he understands the need for the shutdown. “If we’re making cars nobody is buying, then I think that’s more negative for the company than for us,” Harvard said. “I hate not to work. But it makes sense why they would have to do that.” Thousands of workers will be laid off during the shutdown, but many will still receive about 70 percent of their pay, because union contracts require GM to make up much of the difference between state unemployment benefits and full pay. Almost all automakers with U.S. factories have closed plants or cut production as a result of the sales slump. Earlier this year, GM temporarily closed 20 factories across North America due to weak sales, some for the entire month of January. Chrysler closed all 30 of its manufacturing plants for a month to counter the auto sales downturn. Ford Motor Co. also shut down 10 North American assembly plants for an extra week in January, and both Toyota Motor Corp. and Honda Motor Co. cut production. We're not going anywhere. Stand up for truly independent, trusted news that you can count on! Donate now