Monday, June 1, 2009

GM Bankruptcy and Plant Closures

General Motors is now Government Motors, as many say. GM filed for bankruptcy as expected, and as part of restructuring it plans to close 9 more plants and idle 3 plants in the US. The story is everywhere, and here's one of them. Here's the announcement from "New GM".

This is just as expected; all GM has done since the CEO was changed from Rick Wagoner to Fritz Henderson is to prepare for bankruptcy under the "guidance" from the Presidential Auto Task Force.

So how many plants does GM have in the US? As the number was not readily available in the news, I went to the GM website, found the information about GM's plants, and counted the number.

There are still 41 GM plants in the US. The one in Massena, New York was closed already on May 1. Here's the list of plants and number of employees (as GM lists them) affected:

  • Wilmington, DE: 1875
  • Indianapolis, IN: 819
  • Flint North, MI: 1012
  • Livonia, MI: 164
  • Orion, MI: 3800 (idle)
  • Pontiac, MI (stamping): 1481 (idle)
  • Pontiac, MI (truck): 1362
  • Ypsilanti Township (Willow Run), MI: 1285
  • Parma, OH: 2120
  • Mansfield, OH: 1754
  • Spring Hill, TX: 3425 (idle)
  • Fredericksburg, VA: 102
  • (Grand Rapids, MI plant previously slated to close. About 800 employees)

12,931 jobs will be eliminated, 6,268 made idle. Total number of jobs affected: 19,199.

According to GM's 10-Q for the 1st quarter of 2009, GM employs 112,000 people in North America, and 235,000 worldwide. The total jobs affected amount to 17% of all GM North American employees.

I don't know whether the number is considered large or not enough. This could be simply a first wave of plant closures. Job losses at GM's dealers that are being forced to close will be definitely bigger.

The stock market is cheering the "less bad" news, as usual these days: ISM manufacturing number contracted less than feared, April consumer spending dropped less than expected. I think the market is also cheering GM's bankruptcy, that there will be no more uncertainty; thinking here must be "it cannot go any worse, can it?"

As of 9:38 am Pacific Standard Time, Dow is up 219 points (2.5%) to 8,719, S&P500 up 25 points (2.7%) to 944, and Nasdaq up 55 points (3.1%) to 1829. GM's stock is up 13 cents (18%) to 88 cents. (Common is going to be worthless. So what's the deal here?)

By the way, according to the above New GM's announcement, it is a DIP (Debtor In Possession) financing from the government. Why then didn't the Congress have extensive hearing over GM's restructuring? They did, before they gave the DIP financing to Chrysler back in 1979.


Post a Comment