Auto analyst David Healy and Jim Leute, business editor at The Janesville Gazette, discuss today's GM announcement on more cuts
GM Chairman and CEO Rick Wagoner discusses changes to the company at a news conference Tuesday morning.
JANESVILLE — General Motors plans to further cut production of its struggling full-size trucks, but officials aren’t saying what that means for the automaker’s plant in Janesville that is scheduled to close by 2010 at the latest.
But indications out of Detroit are that the Janesville plant will close sooner than the forecast the automaker laid out just six weeks ago.
As a result of a weak U.S. economy and soaring gas prices, GM Chief Executive Officer Rick Wagoner said today the company plans to make operating cuts, sell assets and borrow money to generate about $15 billion by the end of 2009.
About $2.5 billion of that will come from reductions in truck capacity and related component, stamping and powertrain capacity. Wagoner said truck capacity will be reduced by 300,000 units by the end of 2009, half of which will come from the acceleration of prior announced actions.
In June, Wagoner announced that GM will end production at its Janesville plant by 2010 at the latest. In addition to the closure in Janesville, GM said it will close a pickup truck plant in Oshawa, Ontario, a mid-size SUV plant in Moraine, Ohio, and a medium-duty truck plant in Toluca, Mexico.
Because of continued slow sales and high dealer inventories, GM since has indicated that workers in Janesville will be laid off for more weeks in the remainder of 2008 than they will work. Workers were supposed to return from an annual two-week corporate shutdown Monday, but that break was extended by a two-week layoff.
Employees now will return July 28 but will face another 10 weeks of layoffs through the end of the year, including the entire months of November and December.
When GM does close its Janesville plant, it must give the state 60 days notice, which some have rumored the automaker will do at the end of October, ahead of the two months of downtime.
When asked if it’s possible the Janesville plant might not resume production in 2009, GM Chief Operating Officer Fritz Henderson said the automaker wouldn’t be specific about dates or individual plants.
“To the extent that we put dates out there, it will be those dates or sooner,” Henderson said.
When the Janesville plant resumes production later this month, about 1,150 workers will produce 440 full-size sport utility vehicles a day on one shift. With a line speed of 44 jobs per hour, local workers would build about 85,000 SUVs over the course of the year.
In response to GM’s June announcement, Gov. Jim Doyle appointed Tim Cullen, retired businessman and Janesville School Board member, and Brad Dutcher, president of United Auto Workers Local 95 in Janesville, to a task force charged with trying to maintain a GM presence in Janesville.
Cullen said Wagoner’s comments today only add urgency to the local group’s efforts.
“It really won’t alter our efforts at all,” Cullen said. “If anything, it just means we need to get to Detroit sooner rather than later.”
Cullen said the group’s goal is not to convince GM to continue building just SUVs in Janesville. The group is trying to put together a package of alternative production ideas for the Janesville plant.
“It could possibly be cars, motors or something else,” Cullen said.