Gm's Restructuring Plans Hit Home

Closing Dealerships, Furloughing White Marsh Plant Affects Employees, Customers

April 28, 2009|By Lorraine Mirabella and Brent Jones | Lorraine Mirabella and Brent Jones,lorraine.mirabella@baltsun.com and brent.jones@baltsun.com

General Motors Corp. will increase job cuts in its factories, close additional plants, eliminate more dealerships and discontinue the Pontiac brand under a revised restructuring announced Monday.

The struggling automaker, hoping to avoid bankruptcy and retire most of the company's $27 billion in unsecured debt, also plans to ask the government to take more than half its stock in exchange for half of its government debt. It is uncertain how GM's latest plans, to slash 21,000 jobs by next year and close 16 factories, might affect the automaker's Powertrain Baltimore Transmission Plant in White Marsh.

A spokesman for the Baltimore County plant said Monday the factory will shut down temporarily May 18 and stay closed for two months. The move was announced last week as a result of GM's plans to temporarily stop operating 13 assembly plants in North America, including several served by the White Marsh facility, but officials had not confirmed the time frame. The plant, which makes transmissions for Chevy Silverados and GMC Sierras, employs 202 hourly and 40 salaried workers.

"This is a longer period than we have experienced in the past," said spokesman John Raut. "We are shutting most of our assembly plants over the summer. There were large numbers of inventory at the dealers' lots. This is all part of reducing the vehicle inventory in transit and at the dealers."

He said the temporary closures, which include a traditional summer shutdown of two weeks that occurs at GM's U.S. and Canadian plants every year, were scheduled before the revised restructuring.

GM officials have not identified the 16 plants to be closed by 2010. When asked whether the White Marsh plant could be vulnerable, Raut said, "I doubt it right now," because the plant builds transmissions for Chevrolet and GMC brands, not Pontiacs.

But the possible closures of GM dealerships would have a detrimental impact on employers and consumers in Maryland, the president of a statewide trade association said Monday.

In its announcement, GM said it plans to reduce its dealership ranks by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605. Fritz Henderson, GM's chief executive, said the company would be making offers to the dealers in the coming weeks.

Peter Kitzmiller, president of the Maryland Automobile Dealers Association, said the state has about 100 GM dealers, and about 40 could close if the car company follows through with its proposal. Each dealership employs an average of 68 people, Kitzmiller said.

"It's something that is a ludicrous idea," said Kitzmiller, whose association represents 340 new-car and -truck dealers with 26,000 employees.

He said he spent much of his day Monday on the Eastern Shore, where he talked to several dealers concerned about the announcement.

Bob Darr, general manager of two car dealerships in Dundalk, including Bob Bell Pontiac GMC & Kia, said larger dealerships like the ones he runs will probably withstand any closures. Darr said the smaller GM dealerships are likely the more vulnerable ones. "We actually think, as a dealership, we're going to pick up more market share," Darr said. "It will be a leaner, meaner GM."

Darr said his dealership was selling only about six to 10 Pontiacs a month, so phasing out that line will have minimal impact.

But the decision means the death of a storied brand known for its muscle cars, including the Trans Am and the GTO, the subject of a nostalgic song by Ronny and the Daytonas.

GM has been living on $15.4 billion in government loans and faces a June 1 deadline to restructure and get more government money. If the restructuring fails to satisfy the government, the company could go into bankruptcy protection.

President Barack Obama's administration said in a statement that the bond exchange filing announced Monday is an important step in the restructuring efforts. The statement said the administration has not made a final decision about taking stock for part of its loans to the company.

The Associated Press contributed to this article.

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