Buffalo News, April 23, 3009, Thursday

Buffalo News

April 23, 3009, Thursday

Buffalo News

GM fights harder to remain solvent

Cuts 60 managers at Tonawanda site and plans to shutter most plants for 9 weeks

By Matt Glynn

General Motors Corp.’s fight to stave off bankruptcy shifted into a higher gear Wednesday with word that most U. S. plants will close for up to nine weeks this summer.

The auto giant is dealing with slumping sales and growing inventories of unsold vehicles, said two people briefed on the plant closings.

The people did not know exactly when the shutdowns would occur, but both told the Associated Press that they will include the normal two-week closure in July to change from one model year to the next. Neither person wanted to be identified because workers had not been told of the shutdowns.

GM spokesman Chris Lee would not comment other than to say the company notifies employees before making any production cuts public.

Nina Price, a GM spokeswoman at the Tonawanda plant, had not heard of the extended shutdowns and did not know how it would affect the Tonawanda plant.

But the plant took a cost-cutting hit Wednesday with the loss of 60 management job cuts.

The job cuts are equal to about 30 percent of the Tonawanda plant’s white-collar work force.

The automaker earlier this week notified employees that it would cut 1,600 salaried positions across the company. And while the impact was expected to touch the Tonawanda plant, the number of reductions was not known until now.

“These difficult actions are a result of a need to restructure GM for long-term viability,” Price said in a statement.

The reductions will be made using GM separation programs and policies, which provide for severance payments, benefits contributions and outplacement assistance, Price said.

Price said she had not heard about the plan to shut down plants for nine weeks and did not know how it would affect the Town of Tonawanda plant.

GM is living on $13.4 billion in government loans and faces a June 1 deadline to restructure or seek bankruptcy protection.

Art Wheaton, director of labor studies at Cornell University’s School of Industrial and Labor Relations in Buffalo, said the manager job cuts show that the salaried work force is sharing the pain of GM’s restructuring, but are nonetheless a significant cut for the Tonawanda plant to absorb.

“They have to deal with the dramatically reduced output from the plant,” he said.

Wheaton said the cuts could have been far worse—they add up to about 4 percent of GM’s planned 1,600 salaried reductions this week — but they still will have a ripple effect on the local economy. “They’re pretty good positions,” he said.

Wheaton said he doesn’t see the reductions as undermining the viability of the Tonawanda plant. “The future’s still OK, but everything depends on [auto] sales.”

Tom Wilkinson, a GM spokesman, described the salaried job cuts occurring this week as coming from job categories “across the board.”

GM is aggressively cutting costs as it aims to qualify for more government aid. The restructuring resonates locally through the River Road engine plant, a linchpin of the region’s automotive manufacturing industry.

The plant’s hourly work force has already been impacted by the slowdown in auto sales and the decline in GM’s production volumes. About 350 of its roughly 1,000 hourly workers, who are represented by the United Auto Workers, are on layoff.

Also on Wednesday, GM said it may not make a $1 billion bond payment on June 1 if it doesn’t finish a debt-for-equity exchange by then.

The troubled auto giant plans to make the exchange offer soon to bondholders. GM has $28 billion in unsecured bond debt. The offer could come as early as next week.

GM said in a statement it would not make the payment if the exchange is still in progress June 1. The company also could miss the payment if it enters bankruptcy protection.

The Associated Press contributed to this report. mglynn@buffnews.com