GM Plans Major Summer Shutdown

NEW YORK — General Motors will shut down 13 of its 20 North American plants for several weeks this summer as the carmaker tries allow its dealers to sell down overstuffed inventories.

The shutdowns will reduce GM’s planned North American output by 190,000 units.

“While sales have been performing at or close to our plan estimates, and dealer inventories have been reduced accordingly, we want to more closely align inventories with even more conservative market assumptions,” said Troy Clarke, GM (GM, Fortune 500) North America president, in a company statement. “By reducing our inventories even more aggressively, we reduce pressure on GM and our dealers, and set ourselves up well for a clean 2010 model year start-up.”

Currently, GM has about 767,000 vehicles in U.S. dealer stock, the carmaker said. While that’s 12% lower than the inventory last year, GM sales are about half what they were last year at this time.

GM plants ordinarily close for two weeks in the early summer. These weeks will be added to that. The closures will be staggered and will vary in length.

GM’s Arlington, Texas, plant, which manufactures the Chevrolet Tahoe and GMC Yukon SUV, will be closed for eight additional weeks, as will the Flint, Mich., plant that makes GM’s full-size pickups. GM’s Fort Wayne, Ind., truck plant will close for nine additional weeks.

Other plants will be closed for one to four additional weeks.

The shutdown is also intended to help GM prepare for potential supply disruptions caused by problems at bankrupt auto parts supplier Delphi. GM said in the announcement that it has proposed solutions that would help Delphi “ensure GM’s source of supply under fair and reasonable terms.”

Delphi’s lenders have rejected those terms, GM said in its announcement. That sets the stage for potential supply disruptions.

During a conference call with reporters, Clarke declined to detail GM’s proposals for Delphi.

Clarke would also not say how many employees will be affected by the plant shutdowns. Union workers at these plants will continue to receive full pay through a combination of state unemployment benefits and support from GM.

Pay support is also available for salaried employees affected by the shutdowns, Clarke said.

Some plants will be adding production at the same time, however. GM’s Lansing Delta Township plant in Michigan will continue to operate during the usual two-week shutdown period. The Fairfax, Kan., plant, which builds the popular Chevrolet Malibu, will operate during the second week of the two-week shutdown period. (CNNMoney.com)

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