GM, Awaiting U.S. Aid Decision, Will Idle Plants, Return Jets

GM, Awaiting U.S. Aid Decision, Will Idle Plants, Return Jets

Nov. 22 (Bloomberg) -- General Motors Corp., under pressure after Congress delayed action on automaker aid, is idling four plants for an additional week, extending the shutdown of an engineering center and returning some corporate jets.

The closure of a truck factory in Oshawa, Ontario, is also being moved up by two months to May 14, Tony Sapienza, a spokesman for Detroit-based GM, said yesterday. The plants that will have the extra shutdown week in January are in Michigan, Ohio, Kansas and Missouri.

GM, which has said it may run short of operating cash by the end of this year, acted a day after Democratic leaders in Congress put off deciding on loans to automakers until next month. Congressional leaders want GM, Ford and Chrysler LLC to make a case for the help.

``At this point, GM is not thinking about 2015, they are thinking about 2009,'' said Mike Robinet, an analyst at CSM Worldwide Inc. in Northville, Michigan. ``Ninety percent of their decisions are focused on what they need do to bolster revenue and save cash.''

House Speaker Nancy Pelosi, a California Democrat, and Senate Majority Leader Harry Reid, a Nevada Democrat, told the automakers in a letter yesterday that they must provide ``a forthright, documented assessment'' of their current operating cash position, short-term funding needs ``and how they will meet the financing needs associated with the plan to ensure the companies' long-term viability.''

Pelosi told reporters that even if the automakers fail to make a convincing case, Congress must do something to help them.

Corporate Jets

GM is in the process of returning two leased corporate jets after sending back two others in September, said Tom Wilkinson, a company spokesman. The largest U.S. automaker will have three jets still in use, he said.

Ford, the No. 2 U.S. automaker, also is exploring the sale of its five corporate jets, Mark Truby, a spokesman for the Dearborn, Michigan-based company, said yesterday.

GM's decision on returning two additional planes was made before criticism this week from some members of Congress about GM Chief Executive Officer Rick Wagoner, Ford CEO Alan Mulally and Chrysler's Robert Nardelli flying in private jets to hearings in Washington to ask for a bailout, Wilkinson said.

The company has cut back on travel, using methods such as more video conferences, and doesn't need as many jets, he said.

GM rose 18 cents, or 6.3 percent, to $3.06 yesterday in New York Stock Exchange composite trading. The stock has declined 88 percent this year, the most among the 30 companies in the Dow Jones Industrial Average.

Declining Sales

The automaker is scaling back production after its U.S. sales of cars and light trucks tumbled 45 percent in October, part of a 20 percent decline so far this year.

The plants affected by yesterday's announcement are in Orion Township, Michigan; Lordstown, Ohio; Fairfax, Kansas; and Wentzville, Missouri. The Michigan and Ohio factories will be idled the week of Jan. 5, and the Kansas and Michigan facilities the following week.

GM will also shut its engineering operations in Warren, Michigan, and vehicle test facilities in Arizona and Michigan on Dec. 19, four days earlier than initially planned, to save money, Wilkinson said. The employees are being asked to use vacation days, he said.

Those actions follow GM's announcement Nov. 18 that it would idle five plants for as long as two weeks and limit overtime.

In addition, GM said on Nov. 7 that it would shut down production at eight plants through the beginning of February and permanently slow production at 10 factories, eliminating 3,600 jobs, starting in January and February. Those actions were part of a plan to cut an additional $5 billion after GM said it may run out of cash to pay its bills by year-end.

`Customers Are Waiting'

``The longer the debate goes on in Washington, the longer the stall on sales: Customers are waiting it out to see what's going to happen,'' said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. ``GM needs to take these production cuts.''

Ron Gettelfinger, president of the United Auto Workers, said his union is ``at the bargaining table every day working on things to make these companies, to put them in better shape.'' The UAW leader spoke in an interview on Bloomberg Television's ``Political Capital with Al Hunt.''

Gettelfinger said he backs a ``low-interest bridge loan'' to the automakers to keep them out of bankruptcy.

GM is still negotiating local agreements with the UAW at 19 plants. The automaker has eliminated about $500 million in U.S. union-related annual costs by hiring out jobs such as janitors and getting more flexibility from remaining workers.

The company said on Nov. 17 that it also has cut expenses by paying fewer workers who are idled by plant closings and don't have a new job. The so-called Jobs Bank has fallen to about 1,000 workers, after peaking at more than 7,000 before the 2007 accord.

BLOOMBERG