GM Fairfax Assembly Plant in Kansas City, Kansas March 30, 2009.
In its newest attempt to avoid bankruptcy, GM is purportedly planning to implement a 9-week production freeze on several of its North American assembly plants, effective next month. The decision is expected to reduce output by some 170,000 vehicles, and an estimated 55,000 workers will feel the blow of the shutdown on their paycheck. Undeniably an extremely aggressive manuever, GM has come under fire recently from the Obama administration for putting forth lackluster debt restructuring efforts and has been given until June 1st to get their act together, so to speak. Unfortunately, no amount of furious backpedaling appears sufficient enough to save GM from the dreaded Chapter 11 as the company has also confirmed that they will be unable to make their $1 billion debt payment due in June. According to GM’s chief financial officer, Ray Young, “We’re not going to make that payment…That’s part of the reason why we’re going to get this thing done one way or another.”
As far as the plant closures are concerned, GM spokesperson Greg Martin announced, “We continue to work with the U.S. Treasury to revise our business plan to go faster and deeper as required by President Obama. As part of the plan, we previously acknowledged we will idle several U.S. assembly, stamping and powertrain plants. We are currently finalizing our plans.”
Image Cred: Reuters Pictures