Decision Day At General Motors

General Motors logo - factory worker graphic
AP
General Motors Corp., which has been losing billions of dollars along with share in the key U.S. market, is planning to close some North American plants, a spokesman for the world's biggest automaker said Monday.

Rick Wagoner, GM's chairman and CEO, was expected to announce the closures during a speech to employees from GM's Detroit headquarters before the financial markets open, GM spokesman Brian Akre said.

Wagoner said last month that the automaker would announce plant closures by the end of this year in order to get its capacity in line with U.S. demand. GM plants currently run at 85 percent of their capacity, lower than North American plants run by its Asian rivals.

GM could still have a great future, but "you've got to shrink to grow," David Cole of the Center for Automotive Research told CBS Radio News. "You've got to get to a base that's a sustainable base, and they are not there right now."

The plant closings aren't expected to be final until GM's current contract with the United Auto Workers expires in 2007.

Cole says the only way the UAW itself can survive is to be a "collaborative partner" with the automakers.

Wagoner also announced earlier this year that GM plans to cut 25,000 jobs by 2008, mostly through attrition.

GM has been crippled by falling U.S. market share, high labor and health care costs and other issues. It lost nearly $4 billion in the first nine months of this year.

The automaker could be facing a strike at Delphi Corp., its biggest parts supplier, which filed for bankruptcy protection last month. GM spun off Delphi in 1999 and could be liable for billions in pension costs for Delphi retirees. GM also is under investigation by the U.S. Securities and Exchange Commission for accounting errors.

Last week, after the automaker's shares fell to their lowest level in 18 years, Wagoner sent an e-mail to employees saying the company has a turnaround strategy in place and has no plans to file for bankruptcy.

"I'd like to just set the record straight here and now: there is absolutely no plan, strategy or intention for GM to file for bankruptcy," Wagoner said in a letter to employees which was posted on an internal Web site.