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.

[presjfk]

Hey GM! make a plug in electric for $18,000 and you will own the auto industry worldwide...feel free to send me a million bucks for this billion dollar advice.

[jsd330]

wrmscvsuv but you only worked 8 1/2 months out of the year, plus twice as many holidays and that was your career choice to be a teacher. The big 3 were hiring up until the late 90''s.
The prices I have seen on comparable vechicals Japanese and American are pretty close to the same. Fords quality is right up there with Toyota''s according to JD Powers.

[wrmscvsuv]

I don''t feel sorry for them. Most GM workers I know make more money in one year than I made the first ten years I taught in public schools.

Make a comparable car to the Japanese or Koreans that we can afford, and we might start buying cars again.

[hennighg]

Typical corporate thinking. How about making good affordable cars? Wouldn''t that help them to survive, too?

[wnbear-2009]

I donot know how much the ceo make but not near wht people are claming.Let congres just give back the fed income taxes paid by gm and me since 1958.If Gm goes then Chrysler will go,and in 10 years are less no cars will be made in US. Ford will be in Canada and Mexico all the *** plants will go elsewere.Gm will make cars in china and india

[asamiller]

Bail out the big 3 ONLY IF:

They fully open their books
Executives take drastic pay cuts
No wage cuts or contract concessions are asked of labor, they''ve given enough over 30 years only to face the same management mistakes over and over
The taxpayers get a share, in other words theirs public ownership proportional to the investment (not a loan)so they can participate in management along with labor
The companies commit to building ecologically sound vehicles and agree to substantial conversion to mass transit priorities

[wnbear-2009]

I can not believe the hate or whatever it is that comes through thes comments. small business man do you have any GM workers or retirees as customers.Ask the congress people how many times in last two years theyflew on a corporate jet.As a retiree I will lose about 50 percent of my pension of under 1100 a month.This is after taking a hit of about serveral dollars a year in health care costs.

[wnbear-2009]

I can not believe the hate or whatever it is that comes through thes comments. small business man do you have any GM workers or retirees as customers.Ask the congress people how many times in last two years theyflew on a corporate jet.As a retiree I will lose about 50 percent of my pension of under 1100 a month.This is after taking a hit of about serveral dollars a year in health care costs.

[jsd330]

Why does everybody want the big three to file for chapter 11. Let them file for chapter 7. It seems like the majority of people in the US want them to go under , so no reorginization under chapt. 11, shut them down completly. That way no CEO''s, no union, no high priced poor quality cars to whine about. That should make the majority of the people happy.

I read in the paper this morning an article by AP news, that walmart is going to concentrate on overseas growth. They must not be making enough money in th US. I guess walmart will be asking for a bailout, so they can build more stores overseas.

[tigerrram9]

No bail out for the BIG 3 auto makers. Let their CEOs bail out their own companies. They make millions on their salaries and probably millions more on bonuses. Let them fall and restructure themselves to compete in the free market...free market. NO BAIL OUT! Let the unions also negotiate a more affordable contract...stop killing the hand that feeds you.