Report: GM Considering Temporary Closure of More Factories

DETROIT – General Motors Corp. is evaluating the temporary closure of more factories in the third quarter as it tries to control inventory to prepare for its exit from bankruptcy protection, a person briefed on the plans said Wednesday.

Decisions are still being made, but the company wants to have inventory under control before its target of emerging from Chapter 11 in 60 to 90 days, said the person, who spoke on the condition of anonymity because the plans are not final.

The closures wouldn't be as extensive as GM announced for the second quarter, the person said. In April, the company said it would shutter 13 assembly plants for up to 11 weeks starting in May to control a growing supply of cars and trucks.

Company spokeswoman Sherri Childers Arb declined to say whether further shutdowns are under consideration.

"We are taking a look at the schedule right now and no decisions have been made," she said.

Which plants would face additional downtime, if any, depends a lot on how much inventory can be reduced with the current round of shutdowns, some of which will last well into July.

"We're down to 671,000 units in the end of May, we plan to get ourselves down to 525,000 units by the end of the shutdown period," GM Chief Executive Fritz Henderson told The Associated Press Wednesday. "I have every confidence that we'll hit it. So once we get through that, there's no reason to shut more factories down in the third quarter."

GM normally releases third-quarter production estimates with its May sales statistics, but the figures were absent from data released Tuesday.

Mark LaNeve, GM's North American vice president of sales and marketing, told reporters and industry analysts on a conference call Tuesday that the forecast would be released in the next couple of days. GM's total dealer inventory at the end of May is 100,000 fewer than in May of last year, LaNeve said.

But the company wants to cut the inventory further with the summer production cuts, he said. The lower the inventory, the less pressure there is to use incentives to move cars and trucks off the lots.

"We would like to operate with a very lean level of inventory as part of the new reinvented General Motors, and that's exactly what we intend to do," LaNeve said.

Because the daily selling rate for GM vehicles is down due to the slumping U.S. market, its has a 92-day supply of cars and trucks, according to Ward's AutoInfoBank. That's down from a 123-day supply at the end of March. Industry analysts say a 60-day supply is optimal to provide enough of a selection, but not so much that large incentives will be needed to move vehicles.

GM's sales are down 42 percent through the first five months of the year, while the overall U.S. market is down 37 percent, according to Autodata Corp.

Possible targets of a new round of temporary shutdowns would be factories that make vehicles with the highest inventory levels, such as the Chevrolet Silverado pickup with 98 and the hybrid version with 244, the Pontiac G5 with 317 days' supply, and the Saturn Aura with 139.

The Silverado pickup, still GM's most popular vehicle, is made at factories in Pontiac and Flint, Mich.; Fort Wayne, Ind.; and Toluca, Mexico. The Pontiac G5 is made in Lordstown, Ohio, the Aura midsize car is made at a factory in Kansas City, Kan.