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GM to Idle Plants as Auto Industry Faces Tough Choices

GM will close several plants for up to 10 weeks to help clear its inventory backlog. Analysts and local leaders mull the impact of the move and the industry's path forward.

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  • JIM LEHRER:

    There was more bleak news on the American auto front today. General Motors confirmed plans to shut down plants and cut production by nearly 200,000 vehicles.

    NewsHour correspondent Kwame Holman has our lead story report.

  • KWAME HOLMAN:

    By summer, the hum of activity on assembly lines will cease at most, if not all, G.M. production plants in the U.S. and Mexico. Workers were being informed today that 13 plants will be idled for up to 10 weeks starting in May, well beyond the usual two-week summer shutdown.

    Workers still would receive most of their pay.

    The move is to gain control of growing inventories clogging dealer lots, as the sales decline continues unabated.

    The industry tracking group J.D. Power and Associates reported today industry-wide sales were down 33 percent in the first 16 days of April compared to one year ago. It's the lowest level in nearly three decades.

    The sales slump and the threat of bankruptcy were at the heart of a meeting here at the Treasury Department next door to the White House today. Members of a group representing nearly all the nation's car dealerships sat down with members of the Obama administration's auto task force.

    John McEleney heads the National Association of Automobile Dealers and first met with the task force last month.

  • JOHN MCELENEY, Chair, National Automobile Dealers Association:

    Today, it was an opportunity to follow up, to kind of get current on what's happening from their end, and also for us to express some thoughts on three areas, really, bankruptcy, the implications of that, also what would happen if there were a dramatic reduction in the number of dealers quickly, and also the — probably most importantly — the importance of credit to really solving this problem.

  • KWAME HOLMAN:

    McEleney said dealers want a fair hearing on the potential ripple effects from the industry's upheaval.

  • JOHN MCELENEY:

    From the dealers' perspective, no doubt there will be fewer dealers. There has been natural attrition, particularly during these last six months.

    But our concern is that it just happen in an orderly fashion so that particularly our employees in communities all over the country are not displaced.

    We have, in the case of General Motors, over 300,000 employees that work at dealerships, almost 200,000 in Chrysler dealerships. So we're doing everything we can to preserve those jobs so that we can take advantage of a stronger G.M. and Chrysler when this is all done.

  • KWAME HOLMAN:

    But first G.M. could face federal bankruptcy protection before June 1st.

    And Chrysler is nearing an April 30th deadline set by the government to ally itself with Fiat. This afternoon, the New York Times reported the Fiat alliance could go forward, even as the U.S. Treasury readies a bankruptcy filing for Chrysler within days. The administration said that's just speculation.

    And on Wednesday, Michigan Governor Jennifer Granholm had strong words for Chrysler's creditors.

    GOV. JENNIFER GRANHOLM (D), Michigan: These are banks that have gotten TARP finance. In fact, the taxpayers have bailed out these banks. They have just reported first-quarter profits. And now what they're doing is essentially saying you, Chrysler, should go into bankruptcy, like vultures that are swarming around.

  • KWAME HOLMAN:

    In the meantime, Washington's stake in the outcome is growing. A report to Congress today tallied federal aid to the auto industry in all its forms at $36 billion.

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