GM to temporarily close 20 plants to slash output

[December 13, 2008]  NEW YORK (AP) -- General Motors Corp. said Friday it will temporarily close 20 factories across North America and make sweeping cuts to its vehicle production as it tries to adjust to dramatically weaker automobile demand.

GM said it will cut 250,000 vehicles from its production schedule for the first quarter of 2009, which includes a cut of 60,000 vehicles announced last week. Normal production would be around 750,000 cars and trucks for the quarter, spokesman Tony Sapienza said.

Many plants will be shut down for the whole month of January, he said, and all told, the factories will be closed for 30 percent of the quarter.

"We're adjusting pretty dramatically," spokesman Chris Lee said.

The move affects most of GM's plants in the U.S., Canada and Mexico. During the shutdowns, employees will be temporarily laid off and receive a portion of their normal pay from the company. They can also apply for state unemployment benefits, Lee said.

GM and nearly all automakers who sell in the U.S. are mired in the worst sales slump in 26 years. GM reported its sales in the U.S. plunged 41 percent in November and are down 22 percent for the first 11 months of the year compared with the same period last year.

Cash-strapped GM is seeking government loans to stay in operation beyond the end of the year. The White House said Friday it may tap into its $700 billion Wall Street bailout fund to help GM and Chrysler stay in business after the Senate blocked a measure to provide $14 billion in immediate loans.

The measure failed in dramatic fashion late Thursday after Senate Republicans balked at passing the bill without more wage and benefit concessions from autoworkers.

Lee said Friday's production cuts are unrelated to the rescue's failure and had already been planned.

The entire auto industry has been making massive production cuts recently as it adjusts to the reality of lower automobile demand. Earlier Friday, Honda Motor Co. said it was cutting production in North America by 119,000 vehicles for its fiscal year ending March 31.

That brings Honda's expected production for its fiscal year to 1.3 million units, a spokesman said.

Auto demand in the U.S., and increasingly around the world, has been hobbled due to the declining economy and the credit squeeze, which has made it more difficult and more costly for some buyers to obtain financing. Industrywide vehicle sales crumbled 37 percent in November, with every major automaker posting giant sales declines.

Lee said GM's production cuts will be achieved by adding "down weeks" to the schedules at the affected plants. During down weeks, which can be staggered during a given period of time or can come several at once, the plant will not produce anything and employees will be temporary laid off.

"We look at it on a plant-by-plant basis and make decisions regarding their production schedule in terms of market demand, so it's not a blanket ... we look at it plant by plant and make those decisions," Lee said.

GM shares fell 18 cents, or 4.4 percent, to $3.94 in late trading Friday.

[Associated Press; By DAN STRUMPF]

AP Auto Writer Tom Krisher in Detroit contributed to this report.

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