GM To Shut U.S. Plants Over Summer

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Troubled automaker GM plans to close most of its U.S. factories for up to nine weeks this summer because of falling sales. The automaker faces a government-set June 1 deadline to cut its debt, reduce labor costs and take other restructuring steps.

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MICHELE NORRIS, host:

And I'm Michele Norris.

Many General Motors plants will shut down this summer, some for up to nine weeks. That's according to people familiar with the plans, which the company has not yet announced.

Frank Langfitt covers the auto industry for NPR, and he joins me now in the studio.

Frank, why is the company planning such a long shut down?

FRANK LANGFITT: Well, you know, two weeks is normal for most automakers in the summer, but the reason I'm thinking of extending it (unintelligible) there's simply too much inventory. I mean, as you know, consumers aren't buying a lot of cars these days. They're really upset about the recession. And so, from G.M.'s perspective, they don't want to keep pumping out a lot of products that people aren't going to buy and that are just going to kind of keep filling up the deal a lot.

NORRIS: Do we know which plants might be closed?

LANGFITT: It's not clear yet. You know, the company wants to tell its workers first, but it probably will depend a lot on the sales and popularity of products. I mean, as you know, all cars are not created equal.

So let's take the Malibu. That's made in Kansas. It's a very popular car. Sales are actually holding up pretty well. That probably won't be as affected. Saturn could be a very different story. As you know, G.M. has said it's going to discontinue building the Saturn. And so, it could well be that a lot of people who work for Saturn could have a pretty long summer.

NORRIS: Now, Frank, you just updated us on General Motors. Next week is a big one for Chrysler. Let's just talk about that quickly. What's going to happen there?

LANGFITT: Well, I think Chrysler faces next week really, on Thursday, a kind of day of reckoning. The government has said by next Thursday, the company has to really cut its debt and do a deal with the Italian carmaker Fiat. Otherwise, it looks like the company would have to head to bankruptcy, possible liquidation and sell off parts.

Currently, right now, the White House is in the standoff with the Chrysler bondholders over debt. That's a lot of money. And the White House is only offering like 15 cents on the dollar. The Chrysler bondholders want a lot more.

And right now, I've got to tell you, I think the mood in Detroit have been on the (unintelligible) with a lot of people is pretty pessimistic about Chrysler. A lot of people think this is going to end up in bankruptcy court with many factories and probably a lot of models being eliminated.

NORRIS: Those bondholders have any leverage?

LANGFITT: Well, it's hard to say. I mean, at this point, what they want to do is to try to get some sort of deal. And I think that Chrysler wants to avoid bankruptcy, and that's one reason why the government might want to deal with them.

Bondholders also have to be very worried about bankruptcy court because a judge could wipe them out.

NORRIS: Thank you, Frank.

LANGFITT: Happy to do it, Michele.

NORRIS: That's NPR's Frank Langfitt.

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