GM Canada & Mexico



GM Canada & Mexico

Canada-

U.S. and Canadian assembly plants are scheduled for traditional summer

shutdown the weeks of 6/29 and 7/6. GM has 6 plants in Canada

CAMI Automotive Plant

Oshawa Car Assembly Plant

Oshawa Metal Centre

Oshawa Truck Assembly Centre

St. Catharines Powertrain Operations

Windsor Transmission

In Canada, Magna international is Canada’s largest Auto parts maker. Magna has 15,000 Canadian employees at 53 plants that shipped $2.1-billion worth of parts to General Motors Corp. and $1.4-billion in components to Chrysler LLC last year. Magna and its employees alone have paid about $5.7-billion in income, payroll and property taxes over the past 10 years.

According to Carlos Gomes, auto industry economist at Bank of Nova Scotia in Toronto:

Assembly jobs went from 50k in 2004 to 42k in 2008 and will drop to 39k in the next few years. Parts jobs went from 98k in 2004 to 75k in 2008, and will drop to 60k over next few years

Mexico- Mexico has 4 plants. The one in Silao, which makes the Chevrolet Avalanche, Cadillac Escalade and several models of extended-cab pickup trucks will be shut for 7 weeks starting May 18th and was closed this week as well. GM’s website says it has 2,766 hourly workers, 191 salaried.

Vitro (with a lot of subsidiaries making windshields), AlfaSA (whose auto parts subsidiary is Nemak), and Grupo Industrial Saltillo (whose auto parts subsidiary is Cifunsa) are major Mexican auto parts makers.

“The auto parts sector has already cut some 28,000 official jobs, hurting northern states like Coahuila and Chihuahua.” April 7

“Vehicles and parts account for nearly a fifth of total exports (of Mexico) and the industry offers some of the country's best-paying manufacturing jobs.”

The head of Mexican auto industry consultancy Kaso y Asociados said the entire auto industry, including factories, parts makers and distributors, could shed around 100,000 jobs out of a total 1 million due to the downturn.

Other GM plants in Mexico



Ramos Arizpe with 3,305 hourly works, and 129 salaried

Toluca Assembly with 373 hourly and 199 salaried

Toluca GM SPO Mexico with 78 hourly, 107 salaried



Most U.S. and Canadian assembly plants are scheduled for traditional two-week summer shutdowns in late June and early July.

But the following plants also will be shut down for these periods:

(12 US plants) and

• Silao, Mexico -- seven weeks starting May 18



U.S. auto bankruptcies could deepen Mexican downturn

Tue Apr 7, 2009 9:54pm BST

 

MEXICO CITY (Reuters) - Any bankruptcies among U.S. automakers could further batter Mexico's auto industry, push some parts suppliers to the breaking point and spur tens of thousands of layoffs.

Fears are mounting that General Motors Corp (GM.N) and Chrysler LLC could be lurching toward bankruptcy. On Tuesday, a source close to GM said the company is in "intense" preparation for a possible bankruptcy filing.

A Chapter 11 filing by either automaker could upset Mexican assembly lines and disrupt the flow of cash to auto parts makers, possibly spurring bankruptcies among the smallest or those already facing liquidity problems, analysts say.

"It could set off a domino effect throughout the whole (car parts) industry," said Armando Soto, head of Mexican auto industry consultancy Kaso y Asociados.

Mexican subsidiaries of U.S. automakers are unlikely to close their Mexico plants, as cheaper labor costs there make the factories essential to restructuring and cost-cutting plans.

But hundreds of parts makers who are primarily suppliers to U.S. firms -- either in their Mexican or U.S. factories -- stand to be hit hard by U.S. auto sector woes.

Companies that are major suppliers to U.S. firms and are owed large amounts of money could be pushed to breaking point by a bankruptcy process, said Agustin Rios, head of Mexico's auto parts industry association, or INA.

"If they can't deal with the financial weight, they will go bankrupt and that is going to affect the other automakers they supply," Rios said.

FEELING THE PINCH

Most of the world's top automakers have plants in Mexico, attracted by low labor costs, docile unions and proximity to the United States. Detroit's car makers operate around a dozen Mexican plants, accounting for more than half of the 2.1 million vehicles made here last year, most of them for export.

The U.S. government's rejection of turnaround plans by GM and Chrysler, owned by Cerberus Capital Management LP CBS.UL, has deepened worries that two of Detroit's "Big Three" automakers could be headed for bankruptcy.

Their plants in northern and central Mexico may be key to future turnaround plans, keeping them safe from closure even if the parent firms file for bankruptcy in the United States.

But the more vulnerable parts industry is one of Mexico's biggest manufacturing sectors, employing roughly 450,000 people. Some players, such as Vitro (VITROA.MX), Alfa (ALFAA.MX) and Grupo Industrial Saltillo (GISSA.MX) are already feeling the pinch from their U.S. clients' troubles.

A U.S.-government task force has given GM two months to come up with a restructuring plan while Chrysler has a month to work on an alliance with Italy's Fiat SpA (FIA.MI).

If GM and Chrysler kill certain brands and models under an overhaul, that could further dampen Mexican auto production, which industry group AMIA already sees declining by up to a quarter this year as U.S. demand hovers near a 30-year low.

Withering U.S. appetite for Mexican-made pick-up trucks and sports utility vehicles knocked down Mexican auto production by 44 percent in the first two months of 2009 to its lowest level since a 1995 economic slump.

The sector is weighing on Mexico's economy, which analysts see contracting by 3.3 percent this year. Vehicles and parts account for nearly a fifth of total exports and the industry offers some of the country's best-paying manufacturing jobs.

The auto parts sector has already cut some 28,000 official jobs, hurting northern states like Coahuila and Chihuahua.

Soto said the entire auto industry, including factories, parts makers and distributors, could shed around 100,000 jobs out of a total 1 million due to the downturn.

Even if Mexico's auto sector has further to fall this year, in the medium term U.S. automakers may shift more production south of the border to help them get back into the black.

Pascual Francisco, an auto industry analyst at IHS Global Insight in Boston, noted that U.S. carmakers cannot profitably produce small fuel-efficient cars in the United States.

"The only way these companies can meet upcoming U.S. emission standards and become profitable will be by shifting more production to Mexico," Francisco said.



Special report: The auto industry’s shrinking footprint

Downsizing will be felt by car makers, parts manufacturers and dealers (IE:TV)

Thursday, April 23, 2009

By Catherine Harris

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|The second in a three-part series on the auto industry. |

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|The North American auto industry casts a huge footprint on the economies of United States and Ontario -- and now it is shrinking.|

|Just how much it shrinks will depend on whether the Detroit 3 -- General Motors Corp., Ford Motor Co. and Chyrsler LLC -- can |

|hold on to 50% market share. |

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|Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont., expects the auto industry to |

|contract by 15%. And the effect of the restructuring and downsizing in the auto industry -- brought on by plunging cars sales -- |

|will be felt not only by car makers, he says, but also by auto parts manufacturers and car dealers. The spotlight may be on auto |

|assembly workers but it is workers at parts manufacturers and car dealers who are particularly vulnerable and whose incomes are |

|less protected. |

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|Historically, two auto parts jobs are lost for every auto assembly job, says Carlos Gomes, auto industry economist at Bank of |

|Nova Scotia in Toronto. That ratio has been reduced slightly recently but there are still many more jobs lost in auto parts than |

|in assembly. |

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|For example, Canadian assembly jobs dropped to about 42,000 in 2008 from a peak of 50,000 in 2004, while auto part jobs fell to |

|around 75,000 vs 98,000 in the same time frame. Gomes expects that to fall further, as assembly plants in Canada and the U.S. are|

|closed. The means the loss of another 3,000 assembly jobs in the next few years, reducing employment in that sector to 39,000. |

|(GM has already announced the closing of a GM truck plant in Oshawa as of May, which will affect 2,600 workers.) Auto parts |

|employment, on the other hand, is likely drop to closer to 60,000. |

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|Gomes’s analysis suggests that for every 10,000 assembly jobs lost, real gross domestic product contracts by 0.2%. |

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|Car dealerships are also reeling with the plunge in sales. About 1,000 dealerships closed in the U.S. in 2008, leaving about |

|20,500. Another 1,000 are expected to close this year and Tony Faria, professor at the Odette School of Business at the |

|University of Windsor in Windsor, Ont., expects that pace to continue through to 2014, resulting in 15,000-16,000 U.S. car |

|dealerships by 2015. |

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|In Canada, there are about 3,500 dealerships; Faria expects the same kind of shrinkage as is the U.S. |

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|The problem is not just low sales but also the difficulty new car buyers are having getting financing, thanks to the credit |

|crisis. Small dealerships are the most vulnerable but some big dealerships are also running into problems and have closed. |

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|The auto companies are no help, says Faria. They want to reduce the number of dealerships and are encouraging consolidation into |

|fewer but large multi-brand dealerships. He notes that about 65% of car dealerships are Detroit 3 dealerships while those |

|companies account for only 50% of vehicle sales. |

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|An important question is whether the Detroit 3 will be able to maintain market share. Both Gomes and Richard Cooper, vice |

|president Canada with U.S. auto consulting firm J.D. Power in Toronto, think their share of the North American auto market could |

|slip to around 40%, from 50% in 2008. |

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|Analysts say most of these lost sales will go to “transplants” – foreign companies making their vehicles in North America – |

|rather than to imports. Certainly transplants are increasing capacity. Witness the new Toyota plant in Woodstock, Ont., which |

|increases transplants’ annual vehicle production by 19% to 950,000, and boosts transplants’ share of the 2.8 million in total |

|vehicle assembly capacity in Ontario to 34% from 30%. |

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|At the same time, Japanese auto parts manufacturers are increasing their North American capacity to provide inputs for this |

|additional production. |

|On the bright side, as transplants increase capacity and production, they will hire suppliers and workers laid off by the D-3, |

|lessening the impact on employment numbers. But, because the D-3 automakers pay higher wages, it will affect incomes. |

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|D-3 assembly worker earn, on average, $34 an hour or $55,000 a year, vs $20-$24 an hour or $32,400-$38,800 a year for an auto |

|parts worker, says Jim Stanford, economist at the Canadian Auto Workers Union. |

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|Furthermore, most auto workers get supplementary benefit payments -- SUB payments -- if they are laid off. This tops up |

|employment insurance benefits to about 65% of what the auto worker was making after-taxes for up to one year, and lesser amounts |

|after that, depending on the worker’s seniority. Most auto parts workers don’t get these benefits. |

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|Assembly worker pensions are also bigger, with retirees on average receiving $68 a month for every month worked up to 30 years vs|

|$35-$40 for auto parts workers. Thus, the average pension for an auto worker is about $24,500 a year, vs $12,500-$14,500 for auto|

|parts. |

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|Furthermore, if an assembly worker is laid off a year or two before he or she reaches 30 years service, the union will negotiate |

|with the company for supplementary payments, which will allow the worker to qualify for full pension. This option isn’t available|

|for auto parts workers. |

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|This assumes that the autoworkers pensions will be paid. If GM and/or Chrysler go bankrupt, that is questionable. In theory, the |

|Ontario Pension Benefits Guarantee Fund will ensure that the first $1,000 a month due to each worker is provided. But that fund |

|only has $100 million in funds, a fraction of what would be required if one or both companies go under. |

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|Premier Dalton McGuinty has said that the Ontario government would never have all the money needed to meet the demands of all |

|Ontarians whose pension plans were not able to provide promised payments. The province is looking at how to put the OPBGF on a |

|sound financial basis. |

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|The pension shortfall will be greatest at GM. The Ontario government allowed GM to underfund its pensions to a greater extent |

|than other companies on the assumption that GM was too big to fail. If GM Canada dissolves, its pension plan will have an |

|estimated shortfall of almost $5 billion, or 43.5%. Pensioners will receive only 43.5% of what they expect. |

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|At Chrysler, the pension shortfall is expected to be smaller but there are no firm estimates. It is believed Ford’s Canadian |

|pension plan is not in trouble. |



GM Reducing Output to Align with Market Demand

13 North American assembly plants to be down multiple weeks in second and third quarters

Launch vehicle schedules - Camaro, LaCrosse, Equinox and SRX - to be maintained

DETROIT - General Motors Corporation (NYSE:GM) announced today that, due to certain business developments, it is scheduling multiple down weeks at 13 assembly operations in North America. Under this plan, approximately 190,000 vehicles will be removed from GM's North American production schedule in the second and early third quarter of this year.

There are three primary reasons for this scheduled downtime:

1. Dealer vehicle inventories are at high levels, given the current depressed market.

2. The shutdown will allow GM the opportunity to bring production in line with current market demand.

3. The downtime actions also consider the possible production implications of the complicated and difficult negotiations with Delphi and its debtor in possession lenders.

"We're taking aggressive steps to accelerate our inventory initiatives that have worked well since the first of the year. While sales have been performing at or close to our plan estimates, and dealer inventories have been reduced accordingly, we want to more closely align inventories with even more conservative market assumptions," said Troy Clarke, GM North America president. "By reducing our inventories even more aggressively we reduce pressure on GM and our dealers, and set ourselves up well for a clean 2010 model year start-up."

GM's Total Confidence program, which reinvents the ownership experience by providing payment, equity and vehicle protection for owners and their families, is a strong incentive for customers to feel comfortable getting back into the new-car market. Additionally, Federal programs to make credit more available, and proposals to provide additional consumer incentives such as tax credits or scrappage programs, could rekindle additional market demand in the months ahead.

"Our dealers will continue to have plenty of high-quality, fuel-efficient cars, trucks and crossovers at tremendous value for customers. It's still a great time for customers to buy a new GM vehicle," added Clarke.

With regard to Delphi, GM has been actively engaged with Delphi management and the various constituencies involved since the inception of Delphi's bankruptcy case almost four years ago. More recently, in light of adverse developments in the industry, at GM and at Delphi, GM has been in negotiations with Delphi and its lenders to arrive at solutions that would ensure GM's source of supply under fair and reasonable terms. While GM has proposed a potential solution that would allow for the successful and rapid resolution of Delphi's bankruptcy case, its lenders have rejected this proposal. Without the successful resolution of this dispute, it is General Motors' view that Delphi or its lenders could force GM into an uncontrolled shutdown, with severe negative consequences for the U.S. automotive industry.

In the actions announced today, the plant down weeks are staggered and vary in duration, based on current inventory levels and expected demand for the products. Corresponding down weeks are also scheduled at GM's stamping and powertrain facilities. The scheduling actions do not impact operations that are in the process of launching new products, including the all-new Chevrolet Camaro built at Oshawa, Ontario, Canada and the Buick LaCrosse launching soon at the Fairfax, Kan. assembly plant.

At the end of March, approximately 767,000 vehicles were in U.S. dealer stock, down about 108,000 vehicles (or 12 percent) compared with the same period last year, and down 105,000 vehicles from year-end 2008. These new scheduling actions will help reduce U.S. dealer inventory levels to a level of approximately 525,000 vehicles by the end of July.

For information regarding each individual plant, please click here:

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Production Scheduling Actions Summary

NOTES:

• Actions through July 13

• U.S. and Canadian assembly plants are scheduled for traditional summer

shutdown the weeks of 6/29 and 7/6, except:

• Lansing Delta Twp. is scheduled for production the weeks of 6/29 and 7/6

• Fairfax is scheduled for production the week of 7/6

ASSEMBLY - U.S.

Arlington (Full Size SUV)

• Add down weeks of 5/11, 5/18, 5/25, 6/01, 6/08, 6/15, 6/22 and 7/6

 

Bowling Green(Cadillac XLR / Chevy Corvette)

• Add down week of 7/13

 

Detroit / Hamtramck (Buick Lucerne, Cadillac DTS)

• Add down weeks of 6/01, 6/08, 6/15 and 6/22

 

Fairfax (Saturn Aura, Chevy Malibu)

• Add production week of 7/6 (2nd week of shutdown)

 

Flint Assembly (Chevy Silverado, GMC Sierra) (HD Reg and Crew)

• Add down weeks of 5/11, 5/18, 5/25, 6/01, 6/08, 6/15, 6/22 and 7/6

 

Ft. Wayne(Chevy Silverado, GMC Sierra) (LD Reg and Ext)

• Retime down week from 4/27 to 5/4

• Add down weeks 5/11, 5/18, 5/25, 6/01, 6/08, 6/15, 6/22, 7/6 and 7/13

 

Lansing Grand River (Cadillac STS & CTS)

• Add down weeks of 5/4, 5/11, 6/1 and 6/22

 

Lordstown(Chevy Cobalt, Pontiac G5)

• Add down weeks of 6/01, 6/08 and 6/15

 

Pontiac Assembly (Chevy Silverado, GMC Sierra) (HD Ext.)

• Add down weeks of 6/1, 6/8, 6/15, 6/22, 7/6 and 7/13

 

Shreveport (Chevy Colorado, GMC Canyon, H3 and H3T)

• Add down weeks of 6/15, 6/22 and 7/13

 

Spring Hill (Chevy Traverse)

• Add down weeks of 6/8, 6/15 and 6/22

 

Wilmington (Pontiac Solstice, Saturn Sky, Opel GT)

• Add down weeks of 6/15 and 6/22

 

Wentzville (GMC Savana, Chevy Express)

• Add down weeks of 6/8, 6/15 and 6/22

 

ASSEMBLY (Mexico)

Please refer all media calls to Mauricio Kuri, Dir. Comm. for Mexico (52-555901-3050)

Silao(Chevy Silverado, GMC Sierra) (LD Crew, Avalanche, Cadillac EXT)

• Add down weeks on 5/18, 5/25, 6/1, 6/8, 6/15, 6/22 and 7/6



April 20th MEXICO CITY -(Dow Jones)- The Mexican unit of General Motors Corp. (GM) will idle its plant in the central city of Silao for one week beginning Monday following a decline in demand for vans, a company spokeswoman said.

Teresa Cid said the stoppage is scheduled to last one week, with production set to resume on April 27.

The Silao plant, which makes the Chevrolet Avalanche, Cadillac Escalade and several models of extended-cab pickup trucks, is one of four production plants that the auto maker operates in Mexico.



Government auto aid makes sense: Magna

Globe and Mail Update

April 23, 2009 at 2:33 PM EDT

Government support for the auto industry makes sense and money lent will be returned in the form of taxes and revenue, the co-chief executive officer of Canada's largest auto parts maker says.

“The easiest thing for the government to do is nothing,” Magna International Inc.'s [MG.A-T] Don Walker said in an interview Thursday.

“This industry gives billions and billions and billions to the government. When I ran the math on what Magna conservatively – what our spinoff benefits are in terms of revenues to the government, it shocked me,” he said.

The figure amounts to $5.7-billion in revenue for governments from Magna and its employees through income, property and payroll taxes in the past 10 years, he said.

'In essence, Canadian governments are reinvesting a small portion of the money they have received from the auto industry, to protect their revenue stream in the future,” says Magna co-CEO Don Walker.

Magna International

Two sources say the company plans to temporarily close most of its U.S. factories for up to 9 weeks this summer because of too many unsold vehicles

He issued an open letter Thursday, weighing in on a debate that has gripped governments for months, but now appears to have moved well beyond whether Ottawa and Ontario should help the industry, to a discussion of how much financial help they should provide and whether that will be enough to stave off a disastrous uncontrolled bankruptcy-protection process of General Motors of Canada Ltd. or Chrysler Canada Inc.

“In essence, Canadian governments are reinvesting a small portion of the money they have received from the auto industry, to protect their revenue stream in the future,” he said in the letter.

If they decide not to provide financial support to GM Canada and Chrysler Canada, those companies would likely move their assembly operations to Mexico, the United States or offshore, he said.

He noted that Magna has 15,000 Canadian employees at 53 plants that shipped $2.1-billion worth of parts to General Motors Corp. and $1.4-billion in components to Chrysler LLC last year.

He made his comments one week before the deadline Ottawa, Ontario and Washington have given Chrysler to submit a revised restructuring plan that reduces hourly labour costs with its unions and includes a strategic alliance with Italian auto maker Fiat SpA.

All stakeholders in the industry need to make sacrifices, he said, pointing out that Magna has cut jobs, eliminated programs for some employees and has been giving back to the car companies for years through price cuts.



GM slashes summer production, cites Delphi risk

• Reuters, Thursday April 23 2009

*GM to cut 190,000 vehicles from Q2, Q3 production

*Cites high inventory levels, risk from Delphi situation

*Shares of major GM suppliers plunge (Adds details from GM announcement, analyst comment, supplier stock price reaction, bylines)

By Kevin Krolicki and David Bailey

DETROIT, April 23 (Reuters) - General Motors Corp said on Thursday it would slash production over the next three months to cut its inventory of cars and trucks and avoid the risk of an "uncontrolled shutdown" from the financial crisis at bankrupt supplier Delphi Corp.

By shutting down 13 assembly plants for as long as nine weeks, GM will cut its North American production by 190,000 vehicles in the second and third quarters.

The action represents one of the deepest cutbacks by any of the major U.S. automakers during a four-year downturn that has driven the industry to the brink of collapse.

Analysts said it also will have the effect of choking off GM's revenue and adding to the financial stress on its key suppliers at a point when the automaker is seen as facing a growing risk of a government-financed bankruptcy.

"In our view, these actions increase the financial risk profile not just for GM but for the industry in general," S&P equity analyst Efraim Levy said in a note for clients.

"We also believe a GM bankruptcy filing is becoming more likely, as the chances for settlement with various stakeholders diminishes."

The shutdowns of the 13 assembly plants from Michigan to Mexico range from two weeks to nine weeks. Collectively, the plants employ about 21,000 workers who will be left temporarily unemployed during the time the plants are idled.

GM will also reduce output at the stamping and powertrain plants that provide components to the assembly plants, affecting an unspecified number of workers.

The news dragged down shares of auto parts suppliers, which depend on GM for a significant portion of their revenue.

American Axle & Manufacturing Holdings Inc, which relies on the automaker for three quarters of its sales, closed down 21 percent, or 28 cents, to $1.07 on the New York Stock Exchange.

Shares of Lear Corp dropped nearly 10 percent, or 9 cents, to 84 cents, while shares of Tenneco Inc fell 12.5 percent, or 32 cents, to close at $2.24.

GM said it expected the production shutdown would cut its U.S. dealer inventories by almost 32 percent to 525,000 vehicles by the end of July.

GM North America President Troy Clarke said the automaker's decision to shut down production was not intended to prepare for any bankruptcy filing. "These really are just production schedule adjustments," he told reporters.

He said GM executives had told the U.S. Treasury's autos task force of the production cutbacks in advance, but they had made the decision on their own.

TOO MANY TRUCKS

The production shutdowns will run longest at four GM truck plants: Fort Wayne, Indiana; Flint, Michigan; Pontiac, Michigan; and Silao, Mexico.

Those plants are scheduled to be shut down for six weeks to nine weeks from May to July as GM runs down excess inventory of unsold Chevy Silverado and GMC Sierra pickup trucks.

As of the end of March, GM had an inventory equal to 152 days of sales for its big pickup trucks, about twice the inventory that industry planners typically target, according to industry tracking firm Autodata.

GM has been kept in operation with $13.4 billion in emergency government funding since the start of the year and has been given until June 1 to win deep concessions from its bondholders and the UAW.

Many analysts have concluded that the government will follow through on a threat to take GM through a bankruptcy process to shed debt from its balance sheet and allow the top U.S. automaker to shed cash-burning assets.

GM said the complication of the bankruptcy process for its former subsidiary Delphi is one of the reasons it has chosen such an extensive production shutdown over the summer.

GM said that while it has been in negotiations with Delphi and its lenders to arrive at a resolution that would allow the parts supplier to emerge from bankruptcy, that result could not be guaranteed.

"Without the successful resolution of this dispute, it is General Motors' view that Delphi or its lenders could force GM into an uncontrolled shutdown with severe negative consequences for the U.S. automotive industry," the automaker said.

GM said it would keep factories in production that are in the process of launching new models, including the Oshawa, Ontario, Canada, plant that is building the new Chevrolet Camaro and the Fairfax, Kansas plant that is to build the new Buick LaCrosse.

Workers represented by the United Auto Workers union collect state unemployment benefits and supplemental payments from GM that amount to about 70 percent of normal wages. (Reporting by Kevin Krolicki, Poornima Gu

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