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GM May Force Workers To Take Part Of Summer Off

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GM May Force Workers To Take Part Of Summer Off

Economy

GM May Force Workers To Take Part Of Summer Off

GM May Force Workers To Take Part Of Summer Off

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Troubled automaker General Motors is said to be discussing the idea of closing most of its U.S. factories for up to nine weeks this summer. Slumping sales and growing inventories of unsold vehicles are the reason.

STEVE INSKEEP, host:

It's MORNING EDITION from NPR News. I'm Steve Inskeep in Detroit.

RENEE MONTAGNE, host:

And I'm Renee Montagne at NPR West. We're examining Michigan's troubled economy this week and there's more bad news this morning. General Motors will shut down many of its plants this summer, some for up to nine weeks. That's according to people familiar with GM's plans, though the company hasn't yet announced them. Frank Langfitt covers the auto industry for NPR and he joins us now. Good morning, Frank.

FRANK LANGFITT: Good morning, Renee.

MONTAGNE: Now, we all know GM is in trouble. So, but what is this latest announcement, which actually sounds quite awful, but does it say that much about the trouble that GM is in?

LANGFITT: Well, I think it's the reaction to the market. I mean, normally two weeks during the summer automakers shut down; that's regular. But what GM is doing now is talking about extending it, because they just have too much inventory. The recession, as you know, has just demolished consumer demand and GM car sales, you know, are really down, like a lot of companies. So I think from GM's perspective, they don't want to keep pumping out products that people just aren't buying and kind of filling up those dealer parking lots.

MONTAGNE: And these plants are all over the country, right?

LANGFITT: They are, and it's not clear yet exactly which ones will shut down. We don't have official word on that. The company wants to tell its workers first. As to who's going to be affected, it's probably really going to depend on the sales and popularity of the products that they make. You know, all vehicles are not created equal, certainly they're not seen as equal by consumers.

So for instance, let's take this GM plant in Kansas that makes the Malibu, the Chevy Malibu. It's a popular sedan, its sales have actually held up really well in the recession. It's probably not going to be that affected. But you know, workers at Saturn, that's probably going to be a really different story, that GM has already said it's discontinuing the line, and all model sales now for Saturn are down at least half from the same time last year. So Saturn, you know, workers may have a lot of time on their hands this summer. I want to add one other thing. Factory workers aren't the only ones taking a hit right now.

I mean, this week it was even worse - the news for salary workers was even worse. Sixteen hundred of them are losing their jobs.

MONTAGNE: Let's change for a moment to Chrysler. What's - it's got a big week next week. What's going on there?

LANGFITT: Well, you know, Chrysler - it's kind of a day of reckoning next Thursday. The government has said by then Chrysler has to cut its debt and do a deal with the Italian carmaker Fiat. The White House and the bondholders at Chrysler are right now negotiating back and forth over that debt, how much money it's going to be, how much the bondholders are going to have to give up.

I was talking to Charles Heine yesterday. He teaches auto history at Wayne State University over there in Detroit, and he thinks the White House just isn't going to agree to the bondholders' demand. Here's just how he put it.

Professor CHARLES HEINE (Wayne State University): The Obama administration is going to say nope, and Chrysler will go into bankruptcy. Chrysler will survive or it will be absorbed into Fiat, but what's left is going to be maybe a quarter of its present size.

LANGFITT: Now, whether the company goes into bankruptcy or not, the thought in Detroit right now is that no matter what happens, more Chrysler factories are going to close and many models are going to be eliminated.

MONTAGNE: NPR's Frank Langfitt covers the auto industry. Thanks, Frank.

LANGFITT: Happy to do it, Renee.

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