GM Downsizing Taking Shape; Auto Maker Closing La. Factories
24 Juni 2009 - 11:37PM
Dow Jones News
General Motors Corp. (GMGMQ) on Wednesday said it will shutter
assembly and stamping Shreveport, La., factories by 2012, a move
that came as concerns surfaced over what will become of
unprofitable assets and liabilities being offloaded by the
company.
GM builds small pickup trucks and some Hummer models at the
plants. Sales of the trucks have fallen sharply, while GM early
this month announced plans sell the Hummer line to a Chinese
manufacturer. The plants join a list of nine others the auto maker
plans to permanently close.
GMis expected to make public a list of which assets will go to
"old GM" under the company's proposed bankruptcy sale by next week.
Not all idled factories will go to the old company, as some sit on
valuable land and could make money for the company.
Also Wednesday, a committee representing GM's unsecured
creditors asked the court to require GM to make some changes to the
sale proposal, citing concerns over what will become of the
discarded assets and liabilities. Despite the worries, the group
said it is satisfied that there are no viable alternatives to
restructure the ailing auto maker other than the company's proposed
bankruptcy sale.
The committee wants GM to permit lawsuits stemming from the
activities of the "old GM" to be filed against the "new GM" after
the sale closes. GM has said those lawsuits would have to be filed
against the old company, which will have limited assets and
resources to cover judgments from the suits. GM's bankruptcy plans,
called a 363 sale, separate the company's more attractive assets,
such as strong brands, from bad assets that are dragging the
company down. Bad assets will be wound down in a lengthy
liquidation.
The "new GM" assets would transfer to an entity owned by the
U.S. and Canadian governments, the United Auto Workers union and
the company's unsecured creditors. The company is hoping to emerge
from Chapter 11 in mid-July, sooner than earlier projected.
As part of the plan, the company is looking to clear out between
10,000 and 16,000 hourly workers with retirement incentives and
buyouts by Aug. 1, people familiar with the plans said. GM
ultimately hopes to cut an additional 14,000 factory jobs by 2010,
bringing the total hourly employment to 40,000. Local union leaders
have told workers GM has set a cap of 16,000 takers for the offer,
though the actual rate will likely be far lower as many workers
have already left through previous retirement programs.
Meantime, Chrysler Group LLC said Wednesday it will permanently
close its St. Louis North assembly plant effective July 10. The
auto maker had planned to shut the plant in the third quarter but
pulled ahead the decision due to dropping demand. Production of the
Dodge Ram pickup will be moved, as planned, to a Warren, Mich.,
assembly plant.
-By Sharon Terlep and Marie Beaudette, Dow Jones Newswires;
248-204-5532; sharon.terlep@dowjones.com.