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GM could announce production cuts soon

By ASSOCIATED PRESS   Friday, October 10, 2008 - 11:40 a.m.
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DETROIT (AP) General Motors Corp. is likely to announce further production cuts and possible plant closures as early as next week as it deals with slumping sales and a collapse in its stock price, a person with knowledge of the company's plans said Friday.

The person, who did not want to be identified because the plans are not finalized, said the cuts likely will hit engine, transmission and stamping operations to correspond with a June announcement that GM would close four truck and sport utility vehicle assembly plants.

The closure dates for those plants likely will be accelerated, the person said. GM announced last week that its Moraine, Ohio, SUV factory will close Dec. 23, and it has said it will idle assembly factories in Oshawa, Ontario; Toluca, Mexico; and Janesville, Wisconsin, by 2010.

Chairman and CEO Rick Wagoner said last month that GM would have to make adjustments, particularly in stamping factories.

Further cuts could shore up GM's share price, which lost nearly half its value this week, plunging to the lowest level in more than 58 years. The shares fell 31 percent to $4.76 Thursday and dropped to $4 in the first minutes of trading Friday before rebounding to $4.99 by midday.

Industry analysts say closing factories or pulling off shifts will help GM cut 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.

Mark Warnsman, an auto analyst with Calyon Securities, said further production cuts are consistent with what GM and other automakers have been doing all year — cutting factory capacity to match lower sales.

"I think it's a positive sign that GM is biting the bullet," he said. "for GM going forward, they're going to have to use everything available to them."

The drop in GM's share price Thursday was fueled by a statement from Standard & Poor's Ratings Services, which said the "rapidly weakening state" of the global automotive market could push GM's credit further into junk status, making it even tougher to borrow money.

GM issued a statement Friday saying that while it faces "unprecedented challenges" related to the ongoing problems in the financial markets and weakening economies across the globe, it still doesn't consider bankruptcy protection as an option.

"Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers, and we believe speculation about a possible filing is exaggerated and unconstructive," GM said.




reader COMMENTS
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(39)
klick
Oct 11, 2008 at 11:28 p.m.
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I got it janesberg lets have a food drive for the ole boy .

klick
Oct 11, 2008 at 11:26 p.m.
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TheJoker-------------Correct

snarly
Oct 11, 2008 at 10:38 a.m.
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O darn NO MORE GM at janesville best of luck finding a job

curlysue
Oct 10, 2008 at 11:21 p.m.
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It's the greed of AMERICANS - not GM workers. People in the US have been spending money they don't have for years now, buying houses, cars whatever, that they can't afford, now the economy is suffering because the money has run out after paying billions to CEOs. Companies are closing all over. Factories, resturants, retail and so on. Find something/someone else to blame.

chad_vader
Oct 10, 2008 at 9:21 p.m.
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Thanks for the great comment janesberg. It is terrible that those like Thejoker have to make their pitiful lives better by preying on the misery of others. But when you look at the sources these insults are pathetic.

janesberg
Oct 10, 2008 at 8:48 p.m.
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This is really amazing. I dont live in Janesville anymore. Never worked for General Motors either, yet I have enough sense to know what an awful thing this is for the workers. For all you workers who read some of the....well, not so smart comments people leave here. Ignore them! Things will turn around. The one question I have is how this Wagoner guy, the CEO keeps his job. My goodness

TheJoker
Oct 10, 2008 at 8:03 p.m.
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I hate to say it, but I told you so. Sen. Kohl has made the announcement that GM is shutting down immediately. My sources were correct again. Looks like the greed of the workers,UAW and GM has done them in. (Again!)

klick
Oct 10, 2008 at 8 p.m.
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I have faith in GM i just bought 5 shares.

chad_vader
Oct 10, 2008 at 7:16 p.m.
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Boy, it's just getting tired of reading comments from idiots railing against SUV's ( wahoooooooo) as if they are the evil empire. Some people need SUV's and trucks and most we have been building are going overseas to Saudi Arabia. Why don't you idiots complain about banning semi truck's or planes or other vehicles that are even way more less fuel efficient? Because they are needed and SUV's are the easy gripe for the wacko's. Get real!

etowntomilton
Oct 10, 2008 at 6:20 p.m.
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I heard today January 6, 2009.

jrf
Oct 10, 2008 at 5:47 p.m.
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Senator Herb Kohl's office said today that GM Janesville will be closing. From jsonline.com

Yooper
Oct 10, 2008 at 3:37 p.m.
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I trust you on the dinner. It WILL be made Monday, but the closing WILL not happen.

wahoo_35
Oct 10, 2008 at 3:29 p.m.
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That is a good plan, build SUV's that nobody wants. Or maybe, they will just announce that the plant will be closed as planned.

Red
Oct 10, 2008 at 3:20 p.m.
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I predicted GM's bankruptcy months ago. Say goodbye to your pension and retiree health insurance. As for selling the Detroit headquarters - who would want to buy it? Nobody has any credit to buy anything like that with anyway. Downtown Detroit is and will continue to be flooded with unwanted office space. Who would want to buy Janesville's white elephant? The Socialist States of Bailouts comrade?

gallon76
Oct 10, 2008 at 3 p.m.
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IT IS GOING TO BE ANNOUNCED WEDNESDAY

sannio
Oct 10, 2008 at 2:27 p.m.
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Watch out yooper - I think it's a trick!

Yooper
Oct 10, 2008 at 2:06 p.m.
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Your on. The Mrs. likes steak and shrimp, she's not a cheap date. LOL

prevobus
Oct 10, 2008 at 2:05 p.m.
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It is funny that no one has thought that just maybe it is also the unions fault.For many years, the unions were there to protect the workers. Now, because of greed they have priced the American worker out of the world market. Say what you will about the company and exec.'s but companies are not run as a hobby and those that run them are in it to make money. Lots of money. That is why people try to start and run their own companies, to make more money. That is why the general public who are not in these jobs can not afford to buy their products without massive debt to their families.

Yooper
Oct 10, 2008 at 1:50 p.m.
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gottabekidding, Time will tell just how crazy i am. But i will remember your name if any of my "PREDICTIONS" come true so i can rub it in all of the nay sayers faces. Bye the way, you really should not pick on people that ride the short bus.

Yooper
Oct 10, 2008 at 1:41 p.m.
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Future timeline: Monday, October 13th General Motors gives the state of Wisconsin it's 60 day notice of closing which they have to do in order to cover their butt. The third week in November, G.M. announces that all SUV production will be moved from Arlington Texas to the Janesville plant. Arlington in turn will receive two to three vehicles on that plants format. Early 2009, Janesville plant shuts down for painting system renovations to accomodate Cadillac Escalade and other plant changes.Mid 2009, both shifts back to work full time with possible overtime dates added. G.M. is happy with all the second tier payscale workers that are starting, and Gov. Jim Doyle put's on the hero suit for keeping them here at the taxpayers expense. Just the Yoopers crazy thoughts here!?!?

billnewbie
Oct 10, 2008 at 1:36 p.m.
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Change. Everyone thinks they want it. Well here it comes.
This economy has been operating on smoke and mirrors for a long time. Companies have been gauging their performance on the latest quarterly profits and stock price for quite a while, boosting both at the expense of the future, which is arriving like a hurricane. Government spending has been rising on the strength of treasury notes as the debt grows to nearly 10 trillion dollars while politicians use the treasury as a re-election campaign tool. Home values have increased disproportionally compared to other prices as credit requirements dropped and credit became much less expensive which induced many to borrow against their inflated value in an effort to live the high life so many seek. Energy prices have ballooned due to our reluctance to pollute our own environment by restricting energy development at home while continuing to increase our consumption by buying foreign oil at what ever price they set.
In short, we have been living on money borrowed from the future, and now the future may very well be here to collect what it is owed.
GM will not survive as we now know it and neither will Ford. They likely will continue on in some semblance of what they were, but there is no guarantee of that. On the bright side, Japanese cars may get very expensive for some time to come, so GM may just be able to pull itself up out of these ashes. But the Janesville plant is probably doomed.

janesvillean
Oct 10, 2008 at 1 p.m.
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GM's stock has fallen to 1950s levels, the Dow Jones Industrial Average may drop them as an index stock, they are considering selling the Detroit headquarters to get cash because the credit markets are so airtight, and bankruptcy is certainly not off the table yet. They may come out of this in some form still called "GM" but it may be hardly recognizable (e.g. selling Hummer, shedding still more nameplates like Buick, and some have even suggested a GMC spinoff).
.
This is grim.

Unidentified
Oct 10, 2008 at 12:59 p.m.
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Opinionsforfree: I would remind you that this is an industry wide problem now, not just a GM problem. Sales are down for all the major auto manufacturers. GM actually had lower sales declines than Toyota last quarter. Granted, they were practically giving them away, but it points out that people will buy their cars.

Opinionsforfree
Oct 10, 2008 at 12:43 p.m.
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How about they price their cars so people can buy them. I hope GM goes under any company that can't plan ahead or change with the times should die

garyprimer
Oct 10, 2008 at 12:23 p.m.
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OMG, it's the end of the world! ;-)

localboysince1968
Oct 10, 2008 at 12:12 p.m.
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It would not be the first time the auto industry went through a tough time. The early 80's were an example, and if GM and others make the right decision, they can weather the storm, and when the market swings back, they will be in a better profitable situation.

SarahB
Oct 10, 2008 at 11:52 a.m.
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The world as we know it is coming to an end.

thekid3477
Oct 10, 2008 at 11:48 a.m.
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that is a BOLD...cutting edge headline...wow...good work AP;)

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