By on April 22, 2009

Huh? Is there anyone inside or outside of GM who seriously believes that all hell will break loose on or around June first, the federal deadline for the zombie automaker’s “restructuring”? At this point, GM planning for a summer production shutdown is roughly akin to a customer readying a garage charge point for his/her plug-in hybrid gas – electric Chevy Volt. This is the company that’s expected to kill somewhere between two and six brands. And yet, there it is, via The Detroit News: “General Motors Corp. is expected to announce Friday it’s cutting about 170,000 vehicles from its planned production this year, closing factories for as long as nine weeks this summer as the automaker works to dramatically toughen its restructuring plan before a June 1 government deadline.” Shouldn’t that be “melodramatically toughen”? If you want real drama, wait ’til the Presidential Task Force on Automobiles pulls the plug (or doubles down) on Chrysler. Then we’ll see whether or not an ocean of blood on the carpet is enough to convince GM’s stakeholders to let Uncle Sam add their scalp to his collection. I mean, take a haircut.

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40 Comments on “GM to Close Factories for Nine Weeks This Summer...”


  • avatar
    lw

    The denial continues…

    What if the government gave them $50B next week?

    Why would they build anything? Where would they put them?

    Shutting down for the summer is better than having to get out of bed at 5AM so you can be at the factory by 6AM to hang out for 8 hours hoping that someone buys a car that day.

    I still say the best option is a car crusher installed at the end of each assembly line.

    http://www.overbuilt.com/usedcrusher1.htm

  • avatar
    fincar1

    Some of those factories may reopen.

  • avatar
    Gregg

    Regardless of what the Obama admin does with GM, some of the fallout will start to occur. Expect to hear that Michigan unemployment rate tops 13% during July/August.

  • avatar
    derm81

    Expect to hear that Michigan unemployment rate tops 13% during July/August

    Michigan unemployment will hit near 18 by September

  • avatar
    derm81

    And…..I guess Michigan, especially SE Michigan and Metro Detroit will have to start fresh. There were other industries before the auto came along and there will be more innovation after. We had a good run and we will just have to revamp our tax structure and morph into other 21st century ideals. Basically, SE Michigan is ground zero for the global recession.

  • avatar
    mikey

    The darkest hour is just before the dawn.

  • avatar
    quasimondo

    Seriously, this crystal balling needs to stop. Wasn’t all hell supposed to break loose this past winter when there were extended factory shutdowns? Or the previous summer at Chrysler when they had their extended factory shutdowns?

    I thought this was the truth about cars, not Dionne Warwick’s Psychic Friends Network.

  • avatar
    Gregg

    @derm81 Michigan unemployment will hit near 18 by September

    I’m an optimist. You’re probably closer to the truth than I. Either way Michigan devastation will continue.

  • avatar
    Rastus

    Can we please just bulldoze the slums and return the property over to the Moose?

    http://farm1.static.flickr.com/100/297373423_e403f1ddfe.jpg

    http://www.michigan.gov/dnr/0,1607,7-153-10370_12143_12185—,00.html

    The Moose would be better caretakers and stewards of the area…and they would not charge upwards of $50,000,000,000.00 to do so.

    I love the idea of a mobile crusher. You don’t know how many times I’ve driven by a remote eyesore/junkyard…acres upon acres…wishing there were such a thing…a traveling crusher.

    Now I know…but I’m guessing the next hurdle would be to convince the owners to part with their “precious” junk. My guess is if they’ve been sitting on it for 20+ years…they’ll continue to sit on it.

  • avatar
    Gregg

    @quasimondo Michigan’s unemployment rate is now 12.6%. How is assuming that it will be quite a bit higher when GM shuts down for as much as 9 weeks crystal balling, especially when it looks like Chryco will be in C7 by the end of next week? Seems
    like it’s an obvious consequence.

  • avatar
    lutonmoore

    Something’s telling me that my 2006 Dodge Dakota with a seat belt-clicking issue ain’t gonna get fixed for free here…

  • avatar
    derm81

    Can we please just bulldoze the slums and return the property over to the Moose?

    Urban farming is the way to go. It is the only reasonable way to fill up the empty lots in the proper. The suburbs should fare better. The poor, uneducated population in urban Detroit ain’t going anywhere so they need to learn to adapt. The local non-profits are drying up and all the “edumucated” college grads are leaving for greener pastures such as Chicago and …um…Wyoming.

    The few bright spots will be battery and high tech RD along with the larger educational research institutions such as UM and Wayne State. The whole Hollywood film incentive thing will last but will be capped.

  • avatar
    rtx

    Hang tough Ken!!!…..don’t let a little thing like bankruptcy get in the way……Chrysler OWES you a living!!!

    Chrysler, CAW war of words escalates
    By Kristine Owram – THE CANADIAN PRESS

    Bookmark and Share

    Hundreds of Chrysler cars sit ready for final assembly and shipping at the assembly plant in Brampton, Ontario on Monday, April 20, 2009. THE CANADIAN PRESS/Frank Gunn

    CAW won’t budge on pay cuts

    Workers, seniors rally for pension protection

    Is the North American auto industry doomed?

    TORONTO — Chrysler is using an unfair measurement of its hourly labour costs that includes expenses related to downtime, layoffs and other factors out of workers’ control, the Canadian Auto Workers union says.

    But Chrysler says costs are costs as far as it’s concerned, escalatng the war of words between the two parties little more than a week before a government deadline for a new restructuring plan.

    Chrysler Canada says its all-in labour costs are about $76 an hour and it needs to reduce them by about $19 an hour to be competitive with non-unionized Japanese plants in Canada. Chrysler’s position has been endorsed by the federal government and Italian automaker Fiat, a potential Chrysler saviour.

    But CAW economist Jim Stanford said in an analysis that this calculation includes several costs that shouldn’t be attributed to labour, including payroll taxes paid directly to the government, expenses associated with downtime and layoffs, and legacy costs.

    According to Stanford’s analysis, the average CAW member will make between $43 and $44 an hour in wages and benefits under a new agreement with the Canadian subsidiary of General Motors (NYSE:GM) that the union is hoping to apply to similar deals with Chrysler and Ford (NYSE:F).

    Stanford said the notion that automakers make $76 an hour is an “enormous myth.”

    He said the more downtime a company has at its plants, the more it spends per worker because it isn’t using its facilities to their full capacity. He said this alone accounts for at least $4 of the difference between the all-in hourly labour costs at Detroit Three and non-unionized plants in Canada.

    In addition, supplementary unemployment benefits, or SUBs, paid to laid-off workers increase a company’s hourly labour cost.

    “Combining both effects of downtime (fewer hours worked and extra costs for SUB benefits), the mere fact that CAW plants have experienced more downtime increases their apparent all-in hourly labour costs by $5 or more relative to the facilities of Honda and Toyota,” the report said.

    Stanford added that it’s even more unreasonable to factor legacy expenses into a company’s hourly labour cost, given how much things like pension liabilities can fluctuate year to year depending on the state of financial markets.

    “Legacy costs reflect remaining unpaid expenses resulting from the fulfillment of contracts for work that was performed long ago — mostly by people who no longer work for the company,” Stanford wrote, adding that the fewer workers a company currently employs, the higher its hourly legacy costs will be.

    “To have those expenses included within what is interpreted as a measure of current labour expenses is entirely inappropriate.”

    But Chrysler said it has to address all costs associated with labour in its ongoing negotiations.

    “The $76 all-in labour cost represents the total cost of labour to the company. As such, all expenses contributing to our costs must be reflected, including retirement-related, or so-call legacy costs, regardless of whether they are associated with work that was performed in the past or current work,” Chrysler Canada spokeswoman Mary Gauthier said in an email.

    In a breakdown obtained by The Canadian Press of the difference in labour costs between Chrysler and Toyota plants in Canada, Chrysler’s base wages are pegged at $36.06 an hour while Toyota’s are slightly less at $34.20 an hour.

    The major difference appears to be in benefits, including overtime, paid time off and health care. According to the document, benefits cost Chrysler $31.32 an hour while they only cost Toyota $16.89 an hour.

    Discrepancies between other costs are minimal. Chrysler’s legacy costs are pegged at $3.69 an hour compared to $1.50 an hour at Toyota, while taxes and other legally required contributions are $4.93 an hour at Chrysler compared to $3.50 an hour at Toyota.

    Gauthier said the company believes it can reach its cost reduction goal of $19 an hour without cutting base wages, and quoted from an email sent to employees last week.

    “We have made several proposals to the CAW to offset these costs without affecting base wages and pensions,” Chrysler president Tom LaSorda and president Bob Nardelli wrote in the email, adding that those proposals have so far been rejected.

    Proposals outlined in the email included higher prescription drug fees, fewer benefits for hospitalized workers, lower shift premiums and the elimination of workers’ life insurance, out-of-province health-care coverage and some benefits like child care.

    Governments in the United States and Canada have given Chrysler until the end of April to reach a deal with its unions and Fiat. If it can’t reach a deal in time, the company will not receive long-term government assistance.

  • avatar

    I’m guessing they want all of the expensive machinery under lock and key when TSHTF.

  • avatar
    toxicroach

    quasimondo :

    You mean this isn’t all hell breaking loose? Jesus we’re screwed.

  • avatar
    Lee

    Who’s going to be running the pool on whether they’ll reopen at all?

  • avatar
    Luther

    “I still say the best option is a car crusher installed at the end of each assembly line”

    Nah…Set up a disassembly line and run them back thru…this will create more jobs!

    -JM Keynes
    Economic Idiot and tool of the State

  • avatar
    bluecon

    The darkest hour is just before the dawn.

    I think were in one of them 24 hour Arctic nights.
    The dawn is a long way off.

    Gold is good insurance.

  • avatar
    Stein X Leikanger

    Having amply rewarded themselves during the years when they steered the tanker towards land, at full speed, the executives are now eyeing their golf clubs and trophy wives.

    I believe what’s been done to GM, by management and the board, fits the basic definition of crime:

    crime |krīm|
    noun
    an action or omission that constitutes an offense that may be prosecuted by the state and is punishable by law :
    • illegal activities : the victims of crime.
    • an action or activity that, although not illegal, is considered to be evil, shameful, or wrong :

  • avatar
    Brett Woods

    Iw: “Car crusher at the end of the production line!” LOL. The demand is the demand. We all want personal transportation. There are many new start up vehicle companies waiting in the wings. Just gotta get your head around that. Cheaper to pay workers to re-educate (including living allownace) that what we are looking at now for GM.

  • avatar
    97escort

    Now let me get this straight: Chrysler includes legacy costs to calculate total labor costs. These costs are fixed. So as Chrysler reduces workers its labor costs per hour go up. If Chrysler fired all workers and had zero workers, it’s labor cost would approach infinity per hour.

    Clearly this labor cost per hour figure is total BS. The Union could agree to work for nothing and as Chrysler closed plants and workers were let go, labor costs would continue ever upward.

    The last worker on the payroll would be costing Chrysler millions of dollars per hour as he starved to death.

  • avatar
    Brett Woods

    What they don’t say is that these workers were making the same 20 years ago and they had houses and built bussineses on the side. I remember a dude who also was just about owning a scuba shop, bragging about he made $43 an hour while he sold me a $315 wet suit that didn’t fit. I made $6 an hour at that time. He said his dad got him the job. He was smart but no graduate. So now, being potentially $500,000 ahead of me, He’s one of those Whining? F em. Close it.

  • avatar
    mattstairs

    Let’s look at the legacy and benefit numbers again:

    Chrysler’s base wages are pegged at $36.06 an hour while Toyota’s are slightly less at $34.20 an hour.

    The major difference appears to be in benefits, including overtime, paid time off and health care. According to the document, benefits cost Chrysler $31.32 an hour while they only cost Toyota $16.89 an hour.

    Discrepancies between other costs are minimal. Chrysler’s legacy costs are pegged at $3.69 an hour compared to $1.50 an hour at Toyota, while taxes and other legally required contributions are $4.93 an hour at Chrysler compared to $3.50 an hour at Toyota.

    So, only comparing pay and benefits, Chrysler pays $ 67.38 an hour and Toyota pays $ 51.09. That’s a difference of $ 17.29.

    If you look at the “unfair” comparisons, Chrysler pays $ 8.62 in legacy costs, taxes, and other contribs, while Toyota pays $ 5.00, for a difference of $ 3.62.

    I see a total cost per hour difference of $ 20.91, $ 17.29 of which are related to pay and benefits and $ 3.62 are related to legacy costs and other items.

    Yep, you got ’em dead to rights, Lewanza! Keep on fighting all the way to bankruptcy court!

  • avatar
    mikey

    @Brett Woods You made 6.00 an hour,and bought a 315.00 wet suit,that didn’t fit.Somehow this was the buisness owners fault?

  • avatar
    troonbop

    “Somehow this was the buisness owners fault?”

    Good point, Mikey, it was not the “buisness” owner’s fault. Brett should have known better than to buy an expensive item like that: only autoworkers are entitled to expensive hobbies. At least they used to be…

  • avatar
    Rod Panhard

    What I think is funny about this is I began reading the articles yesterday about idling GM’s plants for the summer. Yet, in NONE of those articles does it mention that GM’s sales were in the toilet last November and that inventory remains stacked, and that GM probably should have idled production weeks ago.

    They wrote the articles as if the inventory was gobbled up. So there’s two stories here, actually.

    1. The slant should be “Hey, that’s no surprise” story that GM needs to idle plants because nobody is buying now, just as they weren’t buying in November. AND…

    2. “We’re so lazy that we’re just reporting this news as given to us on the press releases.” And that’s why the print & TV news business is going the way of the auto industry, but without the bailouts.

  • avatar
    Colinpolyps

    Would someone please tell me again what the point was in extending all these loans, knowing full well the end is inevitable.

  • avatar
    improvement_needed

    hmmmm

    nine weeks of ZERO production.
    Seems like a good time to separate GOOD gm from BAD gm in a quick and tidy bankruptcy and get GOOD gm back into operation mode…

  • avatar
    johnny ro

    Bush (well his people, he was watching cartoons the whole time) made the loans so it would be Obamas problem. Obama gave more time to do an orderly workout instead of uncontrolled closures.

    I feel bad the UAW workers lose their commie jobs. No, really, I actually do feel bad. I wish more people had that, outside of government, including me. Not that I am a commie. I just want guaranteed lifetime employment at upper working class pay with cradle to grave support regardless of whether I actually do anything valuable.

    Those startups coming out of woodwork -how many will go ahead and call UAW to get some talented car workers to relocate nearby? Or call D3 mgt either?

  • avatar
    jpcavanaugh

    praxis:
    I’m guessing they want all of the expensive machinery under lock and key when TSHTF.

    This makes the most sense of anything I have read on this topic. With everything locked up tight and under control, the Good/Bad GM sorting can start. This announced “shutdown” will be the time necessrary to shuffle tooling for Good GM products out of Bad GM plants. My bet is that many of the plants that reopen will be building different things than when they closed.

  • avatar
    johnny ro

    Wetsuit- first timer standing in diver supply store, asking for advice, gets fitted with something that makes no sense, somehow I blame the seller more than the buyer.

    Seller is supposed to know about wet suits and other diving gear and what works and does not work and what fits and “add some value” to the business transaction by offering appropriate advice and fitment as he charges a premium over big box store or internet prices. But no.

    If buyer were shopping at Walmart, then it is buyers fault.

    so seller is typical UAW slug? Um they are not all slugs but i get the part about his dad got him the UAW job above prevailing wage rates and he had large amount of excess income to spend on starting a side business.

  • avatar

    Did you mean “GM to Close Factories Forever This Summer?

  • avatar
    superbadd75

    I still don’t quite get the thought process going on in the minds of the UAW workers. In my mind I see two possibilities for those guys.

    One is to vote the union out. You’ll lose some benefits but could possibly save enough money for your respective automakers to keep jobs available.

    The other is to keep clinging to that hope that the government is going to keep piping money into the shithole that is the U.S. auto industry, and watch your jobs evaporate. Maybe the transplants will expand, and one will give you a job at one of their factories. You won’t have a union there, so all those days fighting GM/Chrysler/Ford over union benefits will have been wasted, and you will be able to say that you had a stake in the demise of American auto manufacturing.

    Wake the hell up, a job is a job. In this economy you are going to have to make concessions to stay employed. The unions get rich off of you, of course they want you to stick with them and fight Detroit. If you vote for lower pay, less benefits, or vote the unions out all together, their bank balances suffer. They’re not looking out for you, the worker, they’re looking out for their interests. If I were in the shoes of the auto worker, I’d take lower pay and benefits to keep a job. It sure beats the alternatives. Unemployment benfits are way lower than what your reduced pay would be, and a paycheck from Wendy’s would be even less than that.

  • avatar
    gusplus

    Who will make the Camaro?

  • avatar
    Bigsby

    What many do not realize about halting production for extended periods of time is that the process that builds the cars, the machines, robots, conveyors and other systems, breaks down even when it isn’t doing anything. Stop an assembly plant for a month or two and it takes weeks to get it up to speed again.

    Also The process etc., isn’t sent home on unemployment. There is, in effect, a jobs bank for the machinery since it sits there idly while the bills for it still have to be paid. It is not unlike leasing a car and then parking it for months at a time: you still have to pay the monthly lease bill.

    Then the workers on unemployment are still employees and their benefits have to be covered even while they aren’t making anything to sell. According to the popular accounting an autoworker at home still costs GM something like $20-30 per hour, forty hours per week.

    Not to mention that the salaried guys aren’t going to go on the dole. They are supported, like everything else at GM, by production and sales.

    Basically, nine weeks off is going to cost GM billions for zero cars produced. That is why continuing to build cars is often not much more expensive than not building them.

    Workers are, anyway, not the make or break factor that many assume. It is popular to blame humans for great debacles since that would mean that our world is still under our control. But really, the current situation is all about systems: production/engineering, sociological, political in terms of trade relations, and financial/economic. In other words History. And nobody runs history, least of all the workers, despite what Marx wrote.

  • avatar
    dolorean23

    The downsizing and general demise of GM has already begun. Recently I received a typed letter from my local Saturn dealership that informed me that as the date stamped on the letter, the dealership will no longer be Saturn. Living in Kansas City, I figured no big deal, but ALL OF THEM are closed. There were three in the area and now I have to drive over 100 miles to Topeka for Saturn service.

    GM claims that my warranty is still valid and that they will stand by it; however, not one Chevy dealership has the oil filter for my Astra nor the tires to fit it. They have to be special ordered and billed to guess who? I’m essentially screwed and am seriously considering a Jetta 2.0L TDI Sportwagen as a replacement.

  • avatar

    I still say the best option is a car crusher installed at the end of each assembly line.

    Hey, our government has been known to pay farmers not to farm, so now that the feds run GM, why not?

    John

  • avatar
    Richard Chen

    GM Reducing Output To Align With Market Demand (media.gm.com)

  • avatar
    psarhjinian

    Wake the hell up, a job is a job. In this economy you are going to have to make concessions to stay employed.

    Here’s the counterpoint: since GM actually has lower operating costs than Toyota, why are GM workers being asked to subsidize the incredibly ineptness that is GM management?

    The unions need to get the message of executive incompetence out, or they’re downfall will be the start of wholesale wage erosion. Instead of swallowing management’s excuses and marketing schtick, parroting points like currency manipulation, “only assembled here”, “profits go to Japan” and the like, perhaps they ought to take out a PR campaign something like the following:

    “Workers brought GM some of the highest-quality factories in the world. Workers made Chrysler the most profitable car company in the world. Workers, both union and not, have in fact already borne the brunt of cost cutting.

    What has management done?

    GM and Chrysler management has systematically failed to come up with products that people want to buy, made hay on high-margin products that couldn’t be sold in an economic collapse, cost-cut quality out of existence, flushed money down the toilet on failed mergers, lost more than half the market to foriegn competition and let their competitors completely outflank them during the fuel crisis. All the while pocketing multi-million-dollar salaries and bonuses.

    So why are the unions being asked to cut jobs and salaries?

    Talk to your representative about wholesale management changes at GM and Chrysler.”

  • avatar
    bluecon

    @psarhjinian

    Lots of blame to go around.

    Why should the taxpayers pay for this?

    The CAW is fighting to retain their free massages.

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