GM closing plants for summer; Chrysler bankruptcy nears

GM closing plants for summer; Chrysler bankruptcy nearsWashington - Under government pressure to prove its viability by June 1 and bracing for a prolonged recession, General Motors on Thursday announced an unprecedented series of nationwide summer plant shut-downs to reduce ballooning inventory.

Meanwhile, with an April 30 deadline looming for the smaller Chrysler, the government was already drawing up a bankruptcy filing that would protect Chrysler union members' pensions and retiree health-care benefits, The New York Times reported.

Michigan Senator Debbie Stabenow told Bloomberg financial news that the preparations were only a matter of "due diligence" and not yet a certainty.

"They are preparing all options," Stabenow said.

The US government, which has already given GM and Chrysler a combined 22 billion dollars to stay afloat, insists that the two companies cut losses and prove long-term viability to earn continued taxpayer support.

In March, President Barack Obama's administration ordered a GM management shake-up, and officials have pushed Chrysler toward a deal with Italian carmaker Fiat, which would purchase a 20-per-cent stake, by April 30.

Both GM and Chrysler face bankruptcy reorganization as an alternative.

On Thursday, Fiat chief executive Sergio Marchionne indicated his company could switch its overtures from Chrysler to GM's Opel and Vauxhall lines in Europe, if the Chrysler talks stall.

Marchionne said that completing arrangements with Chrysler by the US government deadline of April 30 was still his "first and foremost objective," the Detroit Free Press reported online. He described the Opel option as an attractive alternative.

In announcing its temporary plant shutdowns, General Motors said it would close 13 assembly operations in North America for several weeks each, staggered across the summer months, with the aim of cutting production by 190,000 vehicles.

Current GM inventory stands at 767,000 vehicles. Troy Clarke, GM North America president, said in a statement that GM was bracing for "even more conservative market assumptions."

US car sales have plummeted nearly 40 per cent since October amid the worst economic crisis in decades. (dpa)

Business News: 
General: