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GM to close Michigan plant, cut 1,340 jobs

The auto slump worked its way to two Midwestern automaking towns when GM announced it would close a Michigan plant and stop making SUVs in Wisconsin by the end of the year.
/ Source: The Associated Press

The U.S. automotive sales slump worked its way to two Midwestern automaking towns Monday when General Motors Corp. announced it would close a Michigan metal stamping plant and stop making sport utility vehicles in Wisconsin by the end of the year.

Workers at the Grand Rapids Metal Center in suburban Wyoming were told Monday that it will close by the end of 2009. The plant employs about 1,340 hourly and 180 salaried workers, GM spokesman Tony Sapienza said.

In Janesville, Wis., workers got the news Monday that SUV production at the plant, with 1,200 employees represented by the United Auto Workers, will end Dec. 23. The closure is earlier than GM had expected, but was necessary because of declining sales, GM spokesman Chris Lee said.

The Janesville plant also has a small- to medium-duty truck production line with 35 to 50 workers. They will keep working until they have filled an order for Isuzu Motors Ltd., which should take the plant through May or June, Lee said. Then the plant “will cease operations completely,” he said.

Workers at both plants will get most of their pay from the company and unemployment benefits for up to two years under their union contract. They will have the option of transferring to other GM factories if jobs are open.

Most of the Janesville factory makes the GMC Yukon and the Chevrolet Tahoe and Suburban large SUVs, and sales of those vehicles have plummeted with an increase in gasoline prices to around $4 per gallon earlier this year. Gas prices have subsided closer to $3 per gallon nationwide, but that has done little to boost sales.

“That segment is really shrinking, so we had to make the difficult decision to have this cessation,” Lee said.

GM announced in June that it would close Janesville and three other factories as demand for pickup trucks and SUVs waned, but the only time frame that was given was by 2010. The company announced earlier this month that another of those plants — the Moraine, Ohio, SUV factory — will close Dec. 23.

GM Chairman and CEO Rick Wagoner has said that the automaker would have to make corresponding adjustments at other factories, particularly in metal stamping.

The Janesville plant opened in 1919 and is GM’s oldest. Its closure comes despite an incentive plan offered to GM last month by Wisconsin political leaders.

A state lawmaker held out hope Monday that GM will get a new product line and stay open.

State Rep. Mike Sheridan, a Janesville Democrat and former plant union representative, said in a statement that GM is still considering whether to bring a line of small cars to the facility.

Lee said those discussions continue but have no bearing on the decision to end SUV production.

Suburban, Tahoe and Yukon sales are down by more than 40 percent so far this year, and sales in the large SUV segment are down 49 percent, according to Autodata Corp. GM also makes those vehicles at its plant in Arlington, Texas, and GM officials have said that plant can crank out enough to meet present demand.

Industry analysts say closing factories or cutting shifts will help GM reduce costs and preserve cash at a critical time with the company losing billions and burning up cash at an alarming rate.

GM had $21 billion in cash and $5 billion available through credit lines at the end of June for total liquidity of $26 billion but has been burning up cash at a pace of more than $1 billion a month.

The company announced a plan in July that calls for cutting $10 billion in costs and raising another $5 billion through asset sales and borrowing through 2009.

GM’s shares had lost nearly half their value last week and plunged to their lowest level in 59 years, but they jumped $1.62, or 33 percent, to $6.51 Monday as the Dow Jones industrials soared more than 900 points after major governments’ plans to support the global banking system reassured distraught investors.

GM shares dropped to $4 in the first minutes of trading Friday, the lowest level since Nov. 16, 1949, according to the Center for Research in Security Prices at the University of Chicago. They rebounded to end six straight losing sessions and close at $4.89, up 13 cents, or 2.7 percent.

On Friday night, word leaked that GM had talks with Chrysler LLC owner Cerberus Capital Management LP about GM merging with or acquiring Chrysler. The talks have been shelved during the country’s financial crisis.