GM To Shutdown Plants

Rumors have been swirling about an extended summer plant shutdown for General Motors. The effort would be in a bid to cut costs further by conserving cash and aligning production with the significant declines being experienced in vehicle demand. Now that rumor was proven right, with GM announcing the news today.

Production will be cut by 190,000 vehicles and plant idlings will start as early as May 4th and range in length from one to nine weeks. Another factor in the decision is an ongoing dispute with former GM subsidiary and parts supplier Delphi. The automaker says it's concerned that there might be a disruption in the supply of parts and wants to avoid an unplanned shutdown.

GM's announcement includes the following plants:

Arlington, Texas (eight weeks beginning May 11); Bowling Green, Kentucky (one week beginning July 13); Detroit-Hamtramck (all of June); Fairfax, Kansas (one week beginning June 29); Flint, Michigan (eight weeks beginning May11); Ft. Wayne, Indiana (nine weeks beginning May 11); Lansing, Michigan (four weeks beginning May 4); Lordstown, Ohio (three weeks beginning June 1); Pontiac, Michigan (six weeks beginning June 1); Shreveport, Louisiana (three weeks beginning June 15); Spring Hill, Tennessee (three weeks beginning June 8); Wilmington, Delaware (two weeks beginning June 15); and Wentzville, Missouri (three weeks beginning June 8).

In addition, the company's Silao, Mexico plant will shut down for seven weeks beginning May 18. The shutdowns will result in 24,000 more workers laid off. The production cuts will help dealers clear out old inventory. GM's current supply of inventory is at 123 days, down from 162 days worth in January. The automaker wants to reduce that supply of stock from 767,000 to 525,000.

GM's North American Troy Clarke refused to say whether GM is planning further plant closings other then the extra 5 planned in it's restructuring plan. According to the company, it's not a sign of an more pessimistic outlook for the future but an effort to get the company in shape. "Instead of spending the whole year to get the inventory in line, we really needed to get it in line much quicker" he said.

Some fear it will scare buyers away further but they must take whatever steps neccessary to right the ship. Right now GM is losing cash at an alarming rate and something needs to be done. I hope they can get their house in order before the June 1st government deadline but it's looking more and more like they will have to enter bankruptcy protection.

I'm sick of this drama and the radical expansion of government into private business. It's a mess that never should have happened; if the government lets GM go bankrupt after all of this, it should have done it right from the get go. The faster GM can get in shape and the government out of it's business, the better. What that will happen is anyone's guess.