GM may put plants on ice for 9 weeks
General Motors may halt production at some U.S. factories for as long as nine weeks this summer to combat slumping auto sales, according to people familiar with the plan.
GM typically closes its facilities for two weeks in July to change production lines for new models. Much like over the winter holidays, the automaker may extend that scheduled shutdown at unproductive plants to help bring down the stockpile of unsold vehicles.
The automaker is considering extending this year’s summer shutdown if auto sales remain at their depressed levels. GM has yet to decide what factories it would close and for how long.
A shutdown over the Christmas holidays lasted through much of January.
“We continue to work with the U.S. Treasury to revise our business plan,” said Greg Martin, a GM spokesman.
“As part of the plan, we previously acknowledged we will idle several U.S. assembly, stamping and powertrain plants. We are currently finalizing our plans. It is our intent, as always, to tell our employees first.”
As GM and Chrysler near government deadlines to finalize their efforts to cut costs and reduce debt, the magnitude of the possible reductions is beginning to hit home. GM itself has said a bankruptcy filing is probable given the drastic changes it must make to reach its restructuring targets.
Chrysler has until the end of the month to broker stakeholder concessions, as well as finalize an alliance with Italy’s Fiat. GM must negotiate similar sacrifices by June 1.
Some industry players are growing increasingly concerned about the prospects of bankruptcy. The National Auto Dealers Assn. plans to meet with President Obama’s auto task force today to lobby against bankruptcy. Association Chairman John McEleney warned that consumer confidence would fall even lower if there was a bankruptcy filing.
“Bankruptcy would accelerate the problem and push the country deeper into recession,” he said.
The association is also concerned about the mass closure of dealerships. As part of the mandated cost-cutting, GM aims to accelerate its plans to trim its dealer network to 4,100 by 2014. Chrysler, which has far fewer dealers than GM, is making plans to consolidate dealers by moving all three of its brands -- Chrysler, Dodge and Jeep -- under one roof.
“Dealers buy the cars from the manufacturers,” said Andrew Koblenz, the association’s vice president of legal regulatory affairs. “We don’t see how this is part of a path to viability.”
