DETROIT — General Motors Corp. says it will close its metal stamping plant near Grand Rapids, Mich., by the end of 2009, costing about 1,340 hourly jobs.
Workers at the factory in the suburb of Wyoming, Mich. were notified Monday afternoon of the planned shutdown.
The move comes as GM tries to cut costs in the middle of a U.S. sales slump and global financial crisis that has led to a big slump in vehicle sales.
The automaker announced earlier Monday that it would end sport utility vehicle production at its Janesville, Wis., factory in December, which is earlier than previously announced. The plant will close in mid-2009.
Janesville is one of four pickup truck and SUV factories that the company said in June it will close — including a truck plant in Oshawa, Ont. — as demand for pickup trucks and SUVs waned.
CEO Rick Wagoner said last month that GM had to make corresponding factory adjustments, especially in metal stamping.
GM spokesman Chris Lee said the Janesville plant's 1,200 workers represented by the United Auto Workers were told the factory would be shut down Dec. 23, earlier than GM had expected.
The Janesville factory makes the GMC Yukon and the Chevrolet Tahoe and Suburban large SUVs, and sales of those vehicles have plummeted with an increase in gasoline prices to around $4 (U.S.) per gallon — or $1.05 a litre — earlier this year. Gas prices have subsided closer to $3 per gallon across the United States, but that has done little to boost sales.
“That segment is really shrinking, so we had to make the difficult decision to have this cessation,” Mr. Lee said.
In Monday trading on the New York Stock Exchange, GM shares soared $1.07, or 22 per cent, to US$5.96 as markets rose on news that the Bush administration and European governments pledged co-ordinated actions to help the crippled financial system. The shares had lost nearly half their value last week.
GM announced earlier this month that another of those four plants to be shut down — the Moraine, Ohio, SUV factory — will close Dec. 23.
On Friday, a person with knowledge of GM's plans said it could close more factories as early as this week to deal with slumping sales and the collapse in its stock price.
The announcement was likely to include acceleration of the assembly plant closures, which also include factories in Oshawa — which is slated for shutdown next September with the loss of 2,600 jobs — and Toluca, Mexico.
The person, who did not want to be identified because the plans are not finalized, said further cuts would likely hit engine, transmission and stamping operations to correspond with the assembly plant closures.
Mr. Lee would not comment Monday when asked if further plant closures or announcements are expected.
On Friday night, word leaked that GM had talks with Chrysler LLC owner Cerberus Capital Management LP about GM merging with or acquiring Chrysler. The talks have been shelved during the country's financial crisis.
GM's shares plunged to the lowest level in 59 years last week. The shares fell 31 per cent to $4.76 Thursday and dropped to $4 in the first minutes of trading Friday, the lowest level since Nov. 16, 1949, according to the Centre for Research in Security Prices at the University of Chicago. They rebounded to end six straight losing sessions and close at $4.89, up 13 cents, or 2.7 per cent.
Industry analysts say closing factories or cutting shifts will help GM reduce 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.
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