General Motors Corp., watching indexes of consumer confidence sink, has lost some confidence in consumers.
Saying domestic auto sales continue to sag and don't show any signs of improving, the nation's biggest carmaker confirmed yesterday that it will be shutting down area assembly plants for two weeks to reduce production.
The moves will mean plants in Baltimore and Wilmington, Del., will be closed for two weeks starting Dec. 10, company officials ++ said yesterday. Laid-off workers at the plants will receive about 85 percent of their take-home pay, said Rodney Trump, president of the United Auto Workers local in Baltimore.
Mr. Trump said workers had already been told about the temporary shutdowns and were making preparations for it.
The approximately 3,400 workers at the Wilmington plant make Chevrolet Corsicas and Berettas.
The two-week layoff will merge with the assembly plants' regularly scheduled holiday shutdown from Dec. 23 to Jan. 2, during which workers will receive holiday pay.
The confirmation of long-rumored temporary closings by GM comes four days after the company announced it would indefinitely lay off 300 workers, or 8 percent of the work force, at the Broening Highway minivan assembly plant starting Jan. 22.
The area shutdowns, which probably will cut annual production at each plant by about 4 percent, are part of a companywide slashing of aut manufacturing, company officials said.
In a speech Thursday night, GM Chairman Robert Stempel said he had already cut GM's North American production for the fourth quarter by 181,000 trucks and cars, but that sales were so poor he would cut an additional 111,000. The two reductions will cut GM's production by 40 percent. Mr. Stempel said sinking consumer confidence and rising inventories have prompted the company to cut back.
In January, facing a similar slump, GM shut down many plants, including Baltimore's, for several weeks.
Kari Hulsey, a spokeswoman for the company, said GM had discussed the possibility of additional shutdowns with workers but that no other layoffs could be confirmed.
The only other auto assembly plant in the region, a Chrysler Corp. plant in Newark, Del., has been working a little overtime, said Chrysler spokesman Doug Nicoll.
The Newark plant makes Dodge Spirits, Plymouth Acclaims and Chrysler LeBarons.
bTC Auto industry analysts had mixed views on whether GM had overreacted to the sales slump, but most agreed the move was designed to reduce dealer inventory and thus stop the current deep discounting.
John Franck, an auto analyst at Provident National Bank in Philadelphia, said GM's announced cutbacks seemed to indicate the company expects cars to sell at a pace of only 5 million a year, when cars are currently selling at 7 million units a year, he said.
He said profits of domestic carmakers are falling because consumers, worried about fuel prices, seem to be buying mostly inexpensive, low-profit cars. Because inventories are soaring on bigger, high-profit cars, the automakers have "rolled prices back and started discounting aggressively," Mr. Franck said.