GM to ax 30,000 jobs, close 12 facilities
(AP)
Updated: 2005-11-22 07:08

Earlier this month, GM's U.S. hourly workers agreed to pay more for their health care benefits, a concession UAW leaders said was necessary because of GM's financial status. But the union responded angrily to GM's latest announcement, saying the company needs to design attractive and exciting vehicles instead of trying to shrink its way to prosperity.

"Workers have no control over GM's capital investment, product development, design, marketing and advertising decisions. But, unfortunately, it is workers, their families and our communities that are being forced to suffer because of the failures of others," UAW President Ron Gettelfinger and Vice President Richard Shoemaker said in a joint statement.

The plan will cut the number of vehicles GM is able to build in North America by about 1 million a year by the end of 2008. GM will be able to build about 4.2 million vehicles a year in North America, down 30 percent from 2002. Wagoner said GM's plants are increasingly flexible and will be able to add capacity to meet market demands.

The General Motors Assembly plant in Doraville, Georgia is seen November 21, 2005. The Doraville plant will close in 2008. [Reuters]

The decrease could help Toyota Motor Corp. surpass GM in worldwide production, although it's unclear if that could happen, because GM is growing rapidly in Asia, said Greg Gardner of Harbour Consulting, a manufacturing consulting firm. Toyota expects to products 8.1 million vehicles this year, while GM expects to produce 9 million, he said.

Wagoner said the plan would get GM's North American plants running at 100 percent of their capacity rather than 85 percent, as they do now. In 2004, Toyota had the most productive plants in North America, with six plants that ran at 107 percent of their capacity, according to the Harbour Report, which measures manufacturing productivity.

The plants that are closing make a variety of vehicles. GM didn't target plants where it makes full-size trucks and SUVs, products it's counting on for a comeback. Instead, it's significantly reducing its capacity to produce minivans like the Buick Terraza, mid-size SUVs like the GMC Envoy and mid-size sedans like the Buick LaCrosse. It's also ending production at the Lansing plant that produces the slow-selling Chevrolet SSR, a small pickup.

Wagoner said GM has no plans to kill off any of its eight brands. He added that plants were chosen for closure based on overcapacity of their products in the market, the life span of various products and the state of the facilities.

"Frankly, we've done it in the fairest and most cost-effective way we could do it," Wagoner said.

GM said assembly plants will close in Oklahoma City, Lansing, Mich., Doraville, Ga., and Ontario, Canada. One production line will close and one will remain open in Spring Hill, Tenn. The company is removing shifts at plants in Moraine, Ohio, and Ontario.

An engine facility in Flint, Mich., will close, along with a separate powertrain facility in Ontario and metal centers in Lansing and Pittsburgh.

Wagoner said GM also will close three service and parts operations facilities. They are in Ypsilanti, Mich., and Portland, Ore. One other site will to be announced later.

GM has been crippled by high labor, pension, health care and materials costs, as well as by sagging demand for sport utility vehicles, its longtime cash cow. It could be facing a strike at Delphi, which filed for bankruptcy protection last month. GM spun off Delphi in 1999 and may be liable for billions in pension costs for Delphi retirees.

Last week, after the automaker's shares fell to their lowest level since 1987, Wagoner sent an e-mail to employees saying the company has a turnaround strategy in place and has no plans to file for bankruptcy. Wagoner repeated that Monday, and added that he continues to have the board's support and hasn't considered stepping down.

"I have given no thought to anything but turning the business around," Wagoner said. "I wasn't brought up to run and hide when things get tough."

Wagoner said the job cuts are part of a larger restructuring plan that includes the possible sale of a controlling interest in General Motors Acceptance Corp., GM's profitable finance arm. Wagoner said bankruptcy talk hasn't affected those plans and the company has had conversations with some possible buyers.