DETROIT -- Hopes that the U.S. automotive industry had hit bottom this spring were dashed Thursday when General Motors Corp. confirmed that it is planning extended shutdowns this summer at its North American assembly, stamping and powertrain factories.

GM wouldn't say how many of its 55,000 autoworkers would be affected. But Troy Clarke, GM North America president, estimated that 40% of GM's plants in the United States, Canada and Mexico would be offline at the peak of the shutdown in June.

The shutdown, which first leaked to the public late Wednesday, will cut about 190,000 vehicles from GM's North American production schedule in an effort to reduce swelling dealer inventories. Through March, GM's sales in the United States were down 48.8%.

Industry analysts predict that other automakers will also cut production.

"With industry inventory above the historical average, it appears that Honda, Chrysler and Ford could potentially also need production adjustments," Brian Johnson, industry analyst with Barclays Capital, said in a Thursday note to clients.

While 60 days of inventory or less is considered ideal, Johnson noted GM ended March with 122 days of supply.

GM said it would temporarily shut 13 assembly plants in the United States and Mexico and corresponding stamping and powertrain facilities.

Factories in the process of launching new vehicles will not be included in the extended plant shutdown.

"We're moving our restructuring deeper and faster in recognition of the importance of getting our business to a viable state as quickly as possible," Clarke said. "With this aggressive inventory strategy, we're positioning our dealers and ourselves for a clean, quick start to the 2010 model year while still being in a position to capitalize on any upturn." Union workers who are laid off receive a mix of state unemployment and company supplemental pay that equals about 70% of their gross pay.

Factories affected by the temporary shutdown will be idled for varying time periods, based on inventory levels and expected demand, the company said. Clarke declined to respond to questions about the possibility of the Orion plant being closed.

GM also said the decision was made as the company considers "the possible production implications of the complicated and difficult negotiations with Delphi and its debtor-in-possession lenders."

React to this story:

0
0
0
0
0

Recommended for you