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GM workers brace for more cuts, plant closures

/ Source: The Associated Press

As General Motors Corp. prepares for its annual shareholders meeting on Tuesday, workers across the country are worried that the next round of the company's restructuring could cost them jobs or even their factories.

GM executives were expected to announce the moves right before the meeting in Wilmington, Del., to deal with an evaporating pickup truck and sport utility vehicle market. It likely will mean shift cuts or even closures of some factories that make truck-based vehicles.

GM spokesman Tom Wilkinson on Monday would not say what moves the company would make, though GM officials previously have said that salaried job cuts are unlikely.

The restructuring concerns United Auto Workers President Ron Gettelfinger, whose union gave unprecedented concessions to GM and other U.S.-based automakers during contract talks last year to help them reorganize and become profitable again.

Gettelfinger, in an interview with The Associated Press, said there's little the union can do about the latest changes at GM and Ford Motor Co., except hunker down and survive until the economy improves.

GM Chairman and Chief Executive Rick Wagoner's management team is looking at cuts among the factories that make pickups and SUVs. GM makes full-size pickups in Flint and Pontiac; Fort Wayne, Ind.; and Oshawa, Ontario. Big SUVs are made in Arlington, Texas; Silao, Mexico, and Janesville, Wis.; while mid-sized SUVs are made in Moraine, Ohio, near Dayton. The company also makes mid-size pickups in Shreveport, La.

Among the factories most vulnerable are Janesville and Moraine, according to some industry analysts. Greg Gardner, an analyst with the Oliver Wyman Group, said both are a distance from parts suppliers. Plants in Texas and Mexico can easily satisfy demand for big SUVs, while GM may stop building mid-size SUVs in a few years, Gardner said.

Janesville is an older plant that builds the same product as the one in Arlington, Gardner said, and many of GM's large-SUV parts come from nearby Mexico.

"It would be hard to justify closing Arlington," said Gardner.

GM has not announced a new product for Moraine, and the company may also reduce full-size pickup truck capacity because it now has four factories making the vehicles.

"That's a lot of capacity, given the current demand for those trucks," Gardner said.

GM may also furlough entire shifts of workers at some truck factories and may move them to car plants as it restructures to adjust to a rapidly changing U.S. market brought on by $4 per gallon gasoline.

With high gas prices, more expensive groceries, the credit crunch and declining home values, fewer people are going to dealer showrooms, Gettelfinger said.

"People are going to stay away from the big-ticket items like automobiles," he said.

GM sales through April were off 12.2 percent when compared with the same period last year. The company sold 20.8 percent fewer Chevrolet Silverado pickup trucks, and the market for big SUVs has all but collapsed.

GM also lost $3.3 billion in the first quarter and a record $38.7 billion in 2007, largely due to a charge for unused tax credits.

JP Morgan analyst Himanshu Patel said he would not rule out a cut in GM's 25-cent-per-share dividend, and said in a note to investors Monday the company likely will have to borrow more money.

"GM no doubt needs to raise financing given current cash burn rate — we think as much as $10 billion of total financing may be needed, though not all immediately," Patel wrote.

Already the company has announced indefinite layoffs of one shift each at the Pontiac and Flint pickup plants, and more are expected.

Last week the company announced that 19,000 of its 74,000 U.S. blue-collar workers had signed up for buyout or early retirement offers. That clears the way to shrink the company's production footprint, but few know where the cuts will come.

For workers, it could mean being forced to move to another city, away from families and lifelong ties to the community, if their jobs are eliminated or their plant is closed. If they're lucky, there could be a factory nearby where GM will increase production of cars that get good gas mileage.

Workers in Flint and Pontiac may be able to transfer to a factory in nearby Orion Township that makes the hot-selling Chevrolet Mailbu and the Pontiac G6, which also has seen a sales increase. GM is negotiating with the UAW to add a third shift to the Orion plant.