Wednesday, April 22, 2009
The first shoe drops: GM to shut most of its plants for 9 weeks this summer as inventories, debt build
The first of many cuts to come was leaked from General Motors this afternoon that the automaker would shut most of its plants for nine weeks this summer.
GM faces a June 1 deadline on debt payment that it does not expect to meet. The alternative is bankruptcy reorganization.
The economic ripple effect will undoubtedly be substantial, here in Middle Tennessee and in Michigan.
DETROIT (AP) -- General Motors Corp. is planning to temporarily close most of its U.S. factories for up to nine weeks this summer because of slumping sales and growing inventories of unsold vehicles, two people briefed on the plan said Wednesday.
The exact dates of the closures were not known, but both people said they will occur around the normal two-week shutdown in July to change from one model year to the next. Neither person wanted to be identified because workers have not 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.
The automaker 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 has said it will enter Chapter 11 bankruptcy protection.
United Auto Workers officials at several factories said they have meetings scheduled Thursday and Friday with plant managers and GM human resource officials to discuss production changes.
The automaker's sales were down 49 percent in the first quarter compared with the same period last year, and GM had a 123-day supply of cars and trucks at the end of March, according to Ward's AutoInfoBank. GM already has more than a six-month supply of several models.