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General Motors (GM) may close plants for up to 9 weeks this summer

By Amarendra Bhushan for CEOWORLD Magazine Updated:April 23, 2009

General Motors Corp. is planning to announce Friday it’s cutting about 170,000 vehicles from its planned production this year, closing factories for as long as nine weeks this summer, according to a Detroit News report.

The Associated Press also reported Wednesday that two people “briefed on the plan” confirmed the summer shutdown, saying it would take place around the normal two-week shutdowns that often occur in July.

The shutdowns are typical as the plants change over to the new model year before starting back up.

U.S. Auto sales, which were down 38 percent in the first quarter, remain downward pressure in April. The biggest U.S. automaker may have to cut production to save money.

GM is racing a 60-day deadline U.S. President Barack Obama announced on March 30. It keeps afloat with 13.4 billion dollars in U.S. loans and scrambles to reach an accord with bondholders and the United Auto Workers union.

The news come after the US government on Tuesday agreed to lend a further five billion dollars to GM as it works on a long-term viability plan.

The firm has received 13.4 billion dollars in public aid in an effort to stave off collapse of the sector, which employs thousands.

President Barack Obama’s administration has given GM until June 1 to present an aggressive restructuring plan, after the government rejected its previous proposals in late March.

Geithner told the Washington Economic Club that the United States has a large responsibility for the global recession because as the world’s largest economy, its reach is so extensive. He called on the world’s other major economies to keep stabilizing their financial systems so that future economic growth is not dependent on the U.S. consumer.

Struggling U.S. carmaker General Motors is reported to be planning to close most of its factories for as long as nine weeks during the upcoming summer season in the middle of this year.

“We continue to work with the U.S. Treasury to revise our business plan to go faster and deeper as required by President Obama,” GM spokesman Greg Martin said. “As part of the plan, we previously acknowledged we will idle several U.S. assembly, stamping and powertrain plants. We are currently finalizing our plans. It is our intent, as always, to tell our employees first.”

Leo Standora writes, The shutdowns would cause thousands to be laid off, but workers would still receive most of their pay because the United Auto Workers contract requires GM to make up any difference between unemployment benefits and wages.

The automaker’s first quarter sales were down 49% compared with the same period last year, according to Ward’s AutoInfoBank, and it has a more than six-month supply of pickup trucks and SUVs on dealer lots.

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