GM Names 13 Plants For Shutdowns; Cuts 190,000 Vehicles From Production ScheduleBy Michelle Krebs April 23, 2009
By Michelle Krebs
DETROIT - General Motors announced late Thursday it is scheduling multiple weeks of down time at 13 assembly plants in North America to reduce dealer inventories of unsold new vehicles, eliminating 190,000 vehicles from the production schedule for the second and early third quarters.
"We are pursuing an aggressive inventory strategy so we can get our dealers and ourselves ready for a clean and quick start to 2010 model year and capitalize on upturn when it occurs," Troy Clarke, GM's North America President, told reporters in a conference call Thursday afternoon.
Clarke said another reason for the production cuts was possible parts shortages caused by "the complicated and difficult negotiations" with auto supplier Delphi Corp., which has been in bankruptcy since October 2005, and "its debtor in possession lenders." He would not elaborate.
He said the launch of the Chevrolet Camaro, Buick LaCrosse, Cadillac SRX and GMC Terrain will go on as planned.
Clarke said at the peak of the shutdowns in early June, the number of closed plants would represent 40 percent of GM's North Assembly plants.
Clarke said salaried employees at those plants would go on layoff and would receive some income help from GM. Hourly workers would receive supplemental pay specified in the United Auto Workers union contract in addition to state unemployment benefits.
The down weeks are staggered and vary in duration, based on current inventory levels and expected demand for the products, Clarke said. Corresponding down weeks are also scheduled at GM's stamping and powertrain facilities.
Clarke said the launch of new models, including the Camaro built at Oshawa, Ontario, Canada and the Buick LaCrosse launching soon at the Fairfax, Kan. assembly plant will proceed as planned.
At the end of March, GM said it had approximately 767,000 vehicles unsold in U.S. dealer inventories, down about 108,000 vehicles (or 12 percent) compared with the same period last year, and down 105,000 vehicles from year-end 2008. GM's goal is to reduce that number to approximately 525,000 vehicles by the end of July.
Clarke said President Obama's automotive task force did not order the plant shutdowns but were apprised of them.
Foreshadowing of Delphi Shutdown?
Clarke's comments in the phone call and GM's press release sounded cryptic in regards to Delphi but signaled Delphi or some of its plants may face shutdown and GM's financial support throughout the partsmakers lengthy bankruptcy is done. GM's most recent proposal was rejected by Delphi's lenders.
In its statement, the automaker said: "More recently, in light of adverse developments in the industry, at GM and at Delphi, GM has been in negotiations with Delphi and its lenders to arrive at solutions that would ensure GM's source of supply under fair and reasonable terms. While GM has proposed a potential solution that would allow for the successful and rapid resolution of Delphi's bankruptcy case, its lenders have rejected this proposal.
"Without the successful resolution of this dispute," the press statement continued, "it is General Motors' view that Delphi or its lenders could force GM into an uncontrolled shutdown, with severe negative consequences for the U.S. automotive industry."
GM said in its press statement that the production actions run through July 13. Clarke would not comment on possible temporary or permanent plant shutdowns beyond that date.
GM's production changes run through the week of July 13. Instead of North American assembly plants being scheduled for the first two weeks of July as they usually are, the summer shutdown will be moved forward to the weeks of June 29 and July 6.
GM has made two exceptions for the traditional two-week shutdown: plants in Lansing, Mich., and Fairfax, Kan., that produce strong sellers.
The Fairfax, Kansas plant, which makes the Saturn Aura and still-in-low-supply Chevrolet Malibu, will be off the first week of for traditional shutdown only and be running the second week.
The Delta Township plant in Lansing, Mich., which makes GM's Lambda-based crossovers will operate both weeks of the traditional shutdown. The plant assembles the the Buick Enclave, the GMC Acadia and Saturn Outlook, which are in low supply and continue to sell well.
However, GM will close the Spring Hill, Tenn., plant that makes the Chevrolet Traverse for a total of five weeks despite the crossover, a cousin to the other three, being a good seller and in low supply. Traverse has a supply well below the industry average, according to Edmunds.com's calculations. Some have speculated that Traverse production could be moved to Michigan and the Spring Hill facility, once a Saturn-only plant, could be permanently shuttered. Tennessee Sen. Bob Corker, an outspoken critic of U.S. automakers, has been lobbying to keep the plant open and has been ironically accusing GM of playing politics with the plant. Corker was accused of playing politics during last fall's Congressional hearings by favoring Nissan and now Volkswagen in his state over U.S. automakers.
Not surprisingly, the longest shutdowns are at GM plants that make trucks and big SUVs. Truck sales have been particularly low despite the richest incentives the industry has ever offered on them.
The Flint, Mich., assembly plant that produces versions of the Chevrolet Silverado and GMC Sierra, will be closed for nine weeks. The Fort Wayne, Ind., plant that makes other versions of the Silverado and Sierra, will close for 11 weeks.The Pontiac, Mich., assembly plant that makes still-other iterations of the trucks, closes for seven weeks.
The full-size SUV plant in Arlington, Texas, will be down for eight weeks beginning the week of May 11 through the end of the week of July 6.
The Shreveport, La., plant that makes the Chevrolet Colorado and GMC Canyon pickups and the Hummer H3 and H3T SUVs, will be closed for three weeks.
In Mexico, GM will close its plants that makes the Silverado and Sierra pickups as well as the Chevrolet Avalanche and Cadillac EXT SUVs for eight weeks.
The Wentzville, Mo., plant, which assembles the GMC Savana and Chevrolet Express full-size vans, popular for commercial fleets including airport parking lots, will be down five weeks.
Car plants are by no means spared from lengthy closures:
The Bowling Green, Ky., plant that assembles the Cadillac XLR and Chevrolet Corvette will be down three weeks.
The Detroit Hamtramck, which produces the Buick Lucerne and Cadillac DTS, will be down a total of six weeks.
The Lansing, Mich., Grand River, plant that makes the Cadillac STS and CTS will be closed for six weeks beginning May 4.
The Lordstown, Ohio, plant, where GM builds the Chevrolet Cobalt and Pontiac G5, will shuttered for five weeks.
The Wilmington, Del., plant that makes the Pontiac Solstice, Saturn Sky and Opel GT roadsters will close for four weeks.