GM Slashing Production In Fight To Survive

Cash-Starved Auto Giant Tries To Save Money As Future Of Federal Bailout Hangs In Balance

(CBS/AP)  General Motors Corp. will extend its holiday shutdown or make other production cuts at five factories at as it deals with a continued U.S. auto sales slump and fights to stay solvent.

Also Friday, the company announced changes at five other factories that could increase production of some models, all based on a volatile U.S. auto market that has slumped to a 25-year low.

The changes won't be the last as cash-starved GM tries to conserve as much money as possible while awaiting Congressional action on a bailout loan package for Detroit's three automakers.

"Market demand is usually the prevailing criteria," said spokesman Chris Lee. "We're looking at this much more frequently than I've ever seen us as far as making minor adjustments. And I suspect that will be the norm going forward."

It was a busy, but ultimately disappointing week for the Big Three automakers, having appeared twice before Congressional committees seeking a $25 billion lifeline to save their struggling businesses from failure. Faced with stiff resistance from the White House on using bailout funds to aid the auto industry, Congress put off a vote on any rescue package.

Democratic leaders did, however, begin laying out conditions Friday that they say the three automakers need to meet before Congress will consider giving them the emergency loan.

GM said it will cancel a down week starting Dec. 8 at its Wentzville, Mo., factory that makes full-size vans, and will keep or restore overtime at factories in Delta Township, Mich., near Lansing; Spring Hill, Tenn.; Arlington, Texas; and Fort Wayne, Ind.

But factories facing cuts include a plant in Lordstown, Ohio, where workers were told that the normal two-week holiday shutdown will be extended until Jan. 20. The sprawling factory complex stamps parts for and assembles the Chevrolet Cobalt and Pontiac G5 small cars.

Also affected is a car plant in Oshawa, Ontario, which will see an additional week of closure starting Jan. 12 on the Chevrolet Impala assembly line. The holiday shutdown will be extended until Jan. 12 at a car-making plant in Orion Township, Mich., near Pontiac, and until Jan. 20 at a car assembly plant in Kansas City, Kan., GM said.

GM also plans to close the Oshawa, Ontario, truck plant sooner than planned. The company had said in June it would close the pickup truck plant by 2010; the new closure date was not available. In addition, GM will slow assembly line speeds at two of the factories.

The automaker normally shutters its plants for two weeks around the Christmas and New Year's holidays, reopening them the first week in January. But with U.S. auto sales down 15 percent and GM sales off 20 percent for the first nine months of the year, the closings were extended.

Workers will get holiday pay for the first two weeks, then go on layoff and get unemployment benefits and supplemental pay from the company.

At Lordstown, the last scheduled workday will be Dec. 23, although production will start to wind down before that, said Dave Green, president of a United Auto Workers local at the complex.

Green said that after Jan. 20, the Lordstown complex will keep operating around the clock, but assembly line speed will be reduced from the current 62 vehicles per hour to 46.5 vehicles. The Lordstown complex, located about 50 miles southeast of Cleveland, employs about 4,200 production workers.

Earlier this year the company added workers to the plant as demand for its small, fuel-efficient cars increased. But since then the bottom has fallen out of sales industrywide, and GM later announced it would lay off up to 1,100 of the plant's workers starting Jan. 20.

Green said he's optimistic that GM will resume production as scheduled on Jan. 20, although at the slower assembly line speed.

"I think we'll come back, and then if production warrants, or demand wanes, maybe there will be a little more down time," he said. "It's all driven by the market, so it's really out of our hands."

GM has announced thousands of factory layoffs so far this year and is cutting its salaried staff in order to pare expenses and conserve cash. The company has said it could run out of cash by the end of this year.

GM also announced that it was reducing the number of corporate jets available for executive travel, from five to two. The company started the year with seven jets.

Some in Congress pounced this week on what they view as the hypocrisy of auto executives flying on corporate jets to Washington to ask for public help.

Senate Majority Leader Harry Reid, a Democrat from Nevada, said in Washington that "these guys flying in their big corporate jets doesn't send a good message to people in Searchlight, Nev., or Las Vegas or Reno or anyplace in this country."

Corporations insist riding on private planes is not a lavish perk, but rather a necessary security requirement for top officials that also helps them be more efficient.

"For a lot of CEOs, the risk of kidnapping is a real risk," said Paul Lapides, a corporate governance expert at Kennesaw State University in Georgia.

He noted that risk has been heightened of late in some parts of the world. "I mean, heck, people are kidnapping entire oil vessels," he said, referring to piracy in the seas around Africa.

About 11,000 U.S. companies operate jets or powerful prop planes, and more use smaller planes, said Ed Bolen, president and CEO of the National Business Aviation Association. He said companies like their chief executives to be productive and to have access to phones and e-mail during flights. And if, say, the CEO and chief financial officer are flying together to meet with investors, they can talk about their company's books without worrying they'll be overheard, he said.

[antoniof123]

Why don''t you fire the exec''s and that should save you money plus make it possible so you can get some intellegent management in there.

[demdump]

TRUE STORY :
General Motors said today that it is putting TWO of its FIVE corporate jets out of service because the planes are not being used enough. The top three executives at GM, however, will continue to use the private luxurious jets for all of their business and personal travel, despite a flurry of criticism over the perk following an ABC News report this week.

GM CEO Rick Wagoner will continue to fly on private jets despite the cutbacks in the size of the fleet. Here a driver is seen dropping Wagoner off for a flight to Washington earlier this month.
(ABC)
An ABC News investigation revealed that the top three automakers have together spent several hundred million dollars to buy, maintain, and operate a fleet of top-of-the-line private jets for their top executives.


GM leased a fleet of seven planes at the beginning of this year, according to a company spokesperson. Two of the planes were dropped from the fleet in September and two more will be dropped by the end of the year.

[demdump]

Why don''''t you fire the exec''''s and that should save you money plus make it possible so you can get some intellegent management in there.

Posted by antoniof123

I HAVE BEEN WAITING FOR THIS QUESTION FOR LONG TIME ?????

[demdump]

The three companies burned through nearly $18 billion in cash reserves during the last quarter and GM and Chrysler have said they could collapse in weeks.

HOW LONG DO Y''ALL THINK 25 BILLIONS GONNA LAST ????

[craigh9]

These guys make stuff up as they go along. They need jets for security reasons???? Give me a break, many individuals (ie. congressman) are at significantly greater risk and they fly commercial. In this day and age of electronic communications it would be well worth these executives spending a little in airports while saving multiple millions of dollars on jets, maintenance and flight crews. They are pamper babies unable to face the realities of life.

[nomorekidds]

God has His ways of punishing the arrogant.

[random_radar]

"God has His ways of punishing the arrogant.

Posted by NoMoreKidds at 02:52 PM : Nov 21, 2008"

Yeah, he inspires them to elect Democrats and pay to bail out failed banks and automakers.

[viscor]

Let''s assume for the moment that the average U.S.A. autoworker makes $80,000 a year.

That means that the $100,000,000 in private jets equates to 1250 jobs. Yes, that right, the execs. think that it''s acceptable to trade 1250 jobs for the privilege of having a jet of their own. That''s some pretty *** expensive "saftey".

It%u2019s time we make a stand. NO MONEY!

[random_radar]

"The three companies burned through nearly $18 billion in cash reserves during the last quarter and GM and Chrysler have said they could collapse in weeks.

HOW LONG DO Y''''ALL THINK 25 BILLIONS GONNA LAST ????

Posted by Demdump at 02:40 PM : Nov 21, 2008"

Who says that is all they need? That is just the down payment. There will be plenty more flushed down the Detroit toilet, but they don''t want to tip their hands too soon.

[imotorist]

Chris Mathews on Leno: If the auto makers want government subsities, they should work for equal salaries.

[questionnews]

Let them go bankrupt & stick a knife in all those UAW labor contracts and then re-organize under a new business plan. This time play some serious hardball with the UAW. Over inflated labor, benefits & retirement packages is what is killing the big 3.

I don''t think the UAW ever hear the story of the goose that laid the golden eggs because they have done a great job of killing the goose. Or geese in this case.

[specialty8]

Pelosi also needs to give a detailed plan of her intentions.I am sure it would be a one line statement,"I have no idea". Just a few weeks ago she was saying we must bail them out. I guess Reid got to her or she ate something that didn''t agree.Vote her out of there California.

[hitoyou1]

The sooner they go bankrupt the BETTER. They make cars no body wants, and the UAW does not need to rip the car companies are the People off any longer. BANKRUPT, NO BAILOUT. The END

[cpelzar--2008]

Now, this is sad. It had to come to this before the executives of ONE of the "Big Three"---not all of them---to cut back. Mismanagement. clinging to one cashcow modeal without diversifying and bad decisions have plagued the Big Three for years. I still cannot say that a federal bailout may not be needed in order to curtail the collapse of these companies. In fact, I''''m not so sure that a bailout WILL prevent the collapse of these companies. For them to fly in a private jet to Washington to ask---more like beg---for taxpayer money is the ultimate in shameless. I do agree with Pelosi in that they need to show the COngress and the country what they plan to do to prevent something like this from happening in the future, as well as a detailed plan for how every dime of the money will be spent.

Posted by tj217 at 02:36 PM : Nov 21, 2008

Pelosi is the last person that should be criticizing anyone from using Private Jets as her Private Jet is provided by the US Air Force on our dime.

[hitoyou1]

Why did they noy announced all of this before. Because they through that comgree was going to habe over 25 Billion: Ley them go DOWN DOWN DOWN.

GM Slashing Production In Fight To Survive General Motors Corp. will extend its holiday shutdown or make other production cuts at five factories at as it deals with a continued U.S. auto sales slump and fights to stay solvent.

Also Friday, the company announced changes at five other factories that could increase production of some models.

[cpelzar--2008]

They should provide the automakers 25 billion each in exchange for getting high efficient new technologies on their lots by summer of 2010. Bypass the banks and use 20 billion to provide 0 % interest loans for all new technology vehicles and fire sale priced vehicles to move the existing inventory setting on their lots. No more than 2% of the 5 billion should be used for overtime to meet the deadline. This would encourage the hiring of new employees. The money should come from the bailout. Bypass the banks

Posted by rightbehind at 03:09 PM : Nov 21, 2008

If one penny goes to the UAW contracts, I will never buy an American ever....

[demdump]

The smart move for GM would be to close all of its plants, lay off everybody, and just keep the board of directors, CEO, and the corporate jets. That way they''''ll only have to split the bailout money between ten people.

Posted by DeckardBR
Now this is funny

[cpelzar--2008]

Why did they noy announced all of this before. Because they through that comgree was going to habe over 25 Billion: Ley them go DOWN DOWN DOWN.

GM Slashing Production In Fight To Survive General Motors Corp. will extend its holiday shutdown or make other production cuts at five factories at as it deals with a continued U.S. auto sales slump and fights to stay solvent.

Also Friday, the company announced changes at five other factories that could increase production of some models.

Posted by Hitoyou1 at 03:21 PM : Nov 21, 2008

Problem is that under the UAW contracts the workers ion those factories get paid 95% while they idle a factory.

There will be little if no savings out of this. They are doomed under the UAW contracts....

[art001-2009]

These execs just don''t get it.
One of the main reasons why peope don''t buy their cars is because the quality is far inferior imports. I know a senior engineer at GM who told me its not in GMs financial interest to build cars that last a long time. They want Americans to buy new cars every few years and sell them parts and service.
First and foremost improve your quality, improve the product line, improve the management, improve the brand image.
The excuse that these execs gave to Capitol Hill was that many people would lose jobs so give us the money so we can keep them employed. There is no mention of accountability, where they failed and what they''ll do differently if they got the money.

How many industries is America going to bailout? Where''s the corporate responsibility here? This sends out the message that corps can be fiscally irresponsible and then wait for hard working taxpayers to come to their rescue. They also need to get rid of those fat pensions that retirees have. They''ve made good money over the years and should have been responsible homeowners and saved for their retirement like the rest of this country has to.
With respect to the private jets, I used to work for the largest computer chip maker in the industry and our CEO flew commercial like everyone else on many business travels.

SORRY BUT NO SYMPATHY FOR THE AUTOMOTIVE INDUSTRY. Let them go bankrupt and learn to become responsible corporations the hard way.

[helloall34]

I hate hard-line rules, but any company with executives making more then ~1 million a year deserve to go out of business. No one earns that much. I don''t care who you are. There are ~6 billion people on the planet, everyone is replaceable. I am against the bailout, but if the board of directors would fire everyone with a compensation package over 1 million (or force renegotiation) that would sure be a good start to show taxpayers the companies are willing to change. Executive compensation is simply undeserved. There are no exceptions, I don''t care how much Company X made while "Sally Sue Supergirl" was the CEO, Sally Sue was a small part of the success.

[specialty8]

The real problem is 1 out of 4 work for some sort of goverment.Federal, state,county or local.That ratio may have increased by now.What this means is 3 out of 4 are going to have to suport themself while paying for the 4th.The 4th one does not come cheap,the best of everything.Salary, benifits, free health care for life,great retirment,what the 3 have to pay for comes free to this group.

[easeup-2009]

Posted by helloall34 at 03:40 PM : Nov 21, 2008

One million a year? BWAHAHA!!!! Not one CEO would work for the Big 3 for 1 million. It''s all about attracting talent & the MARKET decides who gets what.

How naive can you get....

[easeup-2009]

Anybody remember the statement that this congress has the lowest approval rating ever? The republicans better hope that the approval ratings improve or more of them will be removed

Posted by rightbehind at 03:40 PM : Nov 21, 2008

uhhhh.....the Democrats control Congress, Professor.

[presjfk]

If Gm had taken their electric car the EV1 and committed to its development, right now GM would be the largest and most profitable car company in the world.

Instead, they and other car makers decided to fight laws that created the electric car by going to court. They thought they won by overturning the laws that required electric cars- but they actually did the opposite by refusing to innovate for the future. When will American companies start using long term strategies and focus on market share rather than only profits? Shortsightedness is the core of America''s problems.

[specialty8]

Rihtbehind,
Sorry but you stuck your foot in your mouth with that one.Go tell it to Pelosi and her gang of misfits.

[patriot2381]

The average assembly worker costs $73.00/ hour!

This is what needs to be cut. How can GM sell million of cars and not have cash!! wake up

[pkelly79]

Give the money to Tesla Motors ... these big 3 waste billions of dollars every year building a bunch of junk. Tesla goes out with 1/1000 of the resources and builds an electric car - are you kidding me! Why should the tax payer support car companies that can''t compete in a global economy? Put a program in place to help workers get back on their feet, but these companies deserve what they get.

Sorry Detroit but this is long overdue. What is Microsoft couldn''t sell its software - should the tax payers buy it? Of course not.

[shimano35]

BOOOOOO----HOOOOOO!!!!!!!

[specialty8]

Seems everyone agrees greed has been the problem.Automakers selling out to big oil,Politicans selling out to lobbyist,etc. Its bad when some dumber than a rock football player gets 70 million.Must be time to readajust everything and put things back into perspective.

[pkelly79]

http://www.teslamotors.com/ - this is the only car company we should be supporting. America''s market system rewards innovation - that is what has always made this country great. Ford invented the assembly line & has made more than its fair share of profits - I''m sure it put many, many competitors out of business. Now its time for Tesla to do the same!

[helloall34]

The average assembly worker costs $73.00/ hour!

This is what needs to be cut. How can GM sell million of cars and not have cash!! wake up

Posted by patriot2381 at 03:58 PM : Nov 21, 2008
====================

Lets says that is true (it is not). $73 an hour is ~$150K a year that is a good amount of money, but if you''re supporting a family it''s basically upper-middle class. The truth is the average wage is closer to ~$18/hour which is ~36K per year. At $36K/year you''d better not be trying to support a family. Now lets examine the average CEO pay which is ~15million a year. That is ~7800/hour that is ~100x the rate of the worker if the worker made $150K and is ~430x the worker (given the reality the the average worker really makes ~$18/hour). The execs are way overpaid. Someone said in another comment they would work for ~1 million/year. They would if that was the prevailing wage for the job. The execs are doing a better job of selling themselves then their products. They are not worth that much. Not even an extremely successful exec is worth that much because the fact is no one is that much better then anyone else.

[helloall34]

The average assembly worker costs $73.00/ hour!
...
Posted by patriot2381 at 03:58 PM : Nov 21, 2008
====================

Lets says that is true (it is not). $73 an hour is ~$150K a year that is a good amount of money, but if you''re supporting a family it''s basically upper-middle class. The truth is the average wage is closer to ~$18/hour which is ~36K per year. At $36K/year you''d better not be trying to support a family. Now lets examine the average CEO pay which is ~15million a year. That is ~7800/hour that is ~100x the rate of the worker if the worker made $150K and is ~430x the worker (given the reality the the average worker really makes ~$18/hour). The execs are way overpaid. Someone said in another comment they would work for ~1 million/year. They would if that was the prevailing wage for the job. The execs are doing a better job of selling themselves then their products. They are not worth that much. Not even an extremely successful exec is worth that much because the fact is no one is that much better then anyone else.

[mandylou4u]

Wow, I support a family on less than 20,000 a year.
I say let these "big 3" learn their own lesson. There are plenty of new cars on the lots, just look around.

[gheemaster38]

You want to become profitable GM? Try this, sell a product for what is worth. There is no way any GM product (except the Corvette) should be over 30 Grand. I bought a new 06 that has been in the shop for mechanical failure at least 5 times including a transmission leak(Lemon law). Talking to others I found simular issues. Before this car I had a 85 Toyota Cressida my mother bought brand new and a year later gave to me that last over 20 years before I had to get the engine replaced due to CAM damage. The finally tally 385000 miles with 1 major engine replacement. Transmission still was good when I sold it. Think a Cadillac would last that long? H3LL NO! Reduce the price by 30% and sell them for what they are worth. Same with Ford and Chrysler! Layoffs wont work either

[Michael Arnold]

These morons at the Big Three didn''t learn a thing. So be it! Stick a fork in these losers... they''re done.

[mandylou4u]

gheemaster38
I wish more people thought like this. This is definately how I feel too.

Politics and emotion, gotta love it.

Strip away the emotion:

GM goes to the bank faces the banker
Asks for 10 Bil (the 25 bil is between all 3)

Banker stokes chin then asks

"How much business this year?"
GM "37.4 Bil so far"
Banker "Last year?"
GM "45.1 Bil"
Banker "Tangible Assets?"
Over 100 Bil, real estate, inventory, cash.
Banker "Profits?"
GM "All divisions profitable, excluding North America"
Banker "Reason" for loan?"
GM "Retooling, smooth out cash flow due to downturn in economy, quicker product turn around for North America."
Banker "Cash Flow?"
GM "Lower than normal, yet cash still flows. Cash flow will improve next year as Delphi settlement is done and UAW takes over retirement costs and 1Mil in new shares issued."
Banker "Cash reserves at the moment?"
GM "Approx 12 Bil"
Banker "Are you willing to put up tanagible assets as collateral?"
GM "Yes"
Banker "Repayment schedule?"
GM "10 years"
Banker "So 1 bil per year repayment plus interest?"
GM "90 days before first payment, 10 years from that point"
Banker "Interest might be a little high but no prepayment penalty"
GM "Fine"
Banker "Sign here"

And that is just about the way it would go if it were not for the credit crunch. Don''''t think so? It''''s been done that way for nearly 100 years with the car makers.

Govenment "Did you fly your own planes here? Why do you make so much? Are you willing to walk home?" Idiots personified.

[jackp32]

I say get rid of the UAW while you are at it. Their demands over the years have been outrageous. If GM mgmt had taken a stand years ago, even though strikes would have occurred, they would not be paying an auto worker $81.23 per hour. The work rules are horrendous and results in mgmt not being able to fire UAW workers for gross misconduct, incompetence, and excessive absenteeism. Sounds impossible? Just ask someone who has ever worked for any of the big 3. The old saying of do not buy a car made on Monday or the first day of work after a holiday is true.

[incog-nito]

Eliminating unions seems to be the call du jour later, but if it happens it still won''t save Detroit. What killed Detroit was and and is free trade, pure and simple. While the U.S. practices free trade with other countries, they DON''T do the same with us. While we happily eliminated our tariffs and outsource our labor and equipment to other countries, they do everything they can to PROTECT theirs. Case in point: While we happily import as many Japanese and Korean vehicles as the market will bear, guess how many U.S. cars they ALLOW in their country? Look it up. Other countries don''t practice free trade. We do. While we protect the profit of multinational corporations, they protect their domestic industries and thus their national interest.

As long as the U.S. keeps up this fallacy of "free trade", no amount of bailout or union-busting will save the Big 3.

[incog-nito]

Eliminating unions seems to be the call du jour lately, but if it happens it still won''t save Detroit. What killed Detroit was and and is free trade, pure and simple. While the U.S. practices free trade with other countries, they DON''T do the same with us. While we happily eliminated our tariffs and outsource our labor and equipment to other countries, they do everything they can to PROTECT theirs. Case in point: While we happily import as many Japanese and Korean vehicles as the market will bear, guess how many U.S. cars they ALLOW in their country? Look it up. Other countries don''t practice free trade. We do. While we protect the profit of multinational corporations, they protect their domestic industries and thus their national interest.

As long as the U.S. keeps up this fallacy of "free trade", no amount of bailout or union-busting will save the Big 3.

[gce65]

GM produces vehicles that few people want; they probably could give away a lot of what they make. And who decides what they make? Management, not labor.

All 3 car companies should start their downsizing by fining the boards, chairmen and executive staff.

[incog-nito]

Sorry about the double post.

Eliminating unions seems to be the call du jour later, but if it happens it still won''''t save Detroit. What killed Detroit was and and is free trade, pure and simple. While the U.S. practices free trade with other countries, they DON''''T do the same with us. While we happily eliminated our tariffs and outsource our labor and equipment to other countries, they do everything they can to PROTECT theirs. Case in point: While we happily import as many Japanese and Korean vehicles as the market will bear, guess how many U.S. cars they ALLOW in their country? Look it up. Other countries don''''t practice free trade. We do. While we protect the profit of multinational corporations, they protect their domestic industries and thus their national interest.

As long as the U.S. keeps up this fallacy of "free trade", no amount of bailout or union-busting will save the Big 3.




--------------------------------------------------------------------------------

Posted by incog-nito at 05:10 PM : Nov 21, 2008

On the mark 100%

[gce65]

The US government should wait for the first one to announce bankruptcy then buy up it''s assets, put some money into retooling the production line, and begin producing buses and light rail cars running on less poluting alternative energies.

Imagine the market for those products in US and international cities?

Why can''t the CEO''s and executives come up with simple innovative ideas like that?

GM produces vehicles that few people want; they probably could give away a lot of what they make. And who decides what they make? Management, not labor.

Posted by gce65 at 05:12 PM : Nov 21, 2008

Hmmm, based on your statement then I wonder why at the moment, GM is still the largest producer of vehicles world wide?

Seems some folks, like oh, say, 8 mil plus still want them.

The US government should wait for the first one to announce bankruptcy then buy up it''''s assets, put some money into retooling the production line, and begin producing buses and light rail cars running on less poluting alternative energies.

Imagine the market for those products in US and international cities?

Why can''''t the CEO''''s and executives come up with simple innovative ideas like that?


--------------------------------------------------------------------------------

Posted by gce65 at 05:17 PM : Nov 21, 2008

But wait! That would be government ownership! VS a 25 Bil loan.

Show of hands:

How many posters here own, have owned or manage a business? How many have an MBA?

How many have claimed Bankruptcy?

How many really understand how Chapter 11 really works?

Just wondering

[incog-nito]

The US government should wait for the first one to announce bankruptcy then buy up it''s assets, put some money into retooling the production line, and begin producing buses and light rail cars running on less poluting alternative energies.

Imagine the market for those products in US and international cities?

Why can''t the CEO''s and executives come up with simple innovative ideas like that?

Posted by gce65 at 05:17 PM : Nov 21, 2008

What''s more likely to happen is that foreign corporations will buy up what''s left of Detroit for pennies on the dollar. That''s the quickest, easiest, and cheapest way to gain a huge foothold into the U.S. market. Then they''ll gradually move manufacturing operations to other countries were labor is much cheaper. And the destruction of the American manufacturing sector will be complete.

[spadeisspade]

I''d back a loan to GM if they used it to make hybrid cars. Right now they are so broke that they can''t create anything new, just merely keep afloat, and American car companies desperately need an affordable competitor to the Prius.

[kphx]

The 25 billion will last another 6 months. After that they will definitely ask for more as AIG did.

In six months, they are going to come back and say "You have already spent 25 billions on us. Now we want another 25 billion. If you don''t pay a second 25 billion, you would end up losing the first 25 billion altogether."