Temporary idling for GM

DETROIT - General Motors Corp. plans to temporarily close most of its U.S. factories for up to nine weeks this summer because of slumping sales and growing inventories of unsold vehicles, two people briefed on the plan said yesterday.

The exact dates of the closures are not known, but both people said they would be around the normal two-week shutdown in July to change from one model year to the next. Neither person wanted to be identified because workers had not been told of the shutdowns.

GM spokesman Chris Lee would not comment other than to say the company notifies employees before making production cuts public.

One of the people briefed on the plan said a few plants that make more popular models could remain open for part of the shutdown period, but at reduced assembly-line speeds.

Thousands of workers could be laid off but would still get most of their pay because their United Auto Workers union contract requires the company to make up much of the difference between state unemployment benefits and their wages.

GM is living on $13.4 billion in government loans and faces a June 1 deadline to cut its debt, reduce labor costs, and take other restructuring steps. If it does not meet the deadline, the company's chief executive officer has said it would enter Chapter 11 bankruptcy protection.

UAW officials at several factories said they had meetings scheduled for today and tomorrow with plant managers and GM human resources officials to discuss production changes.

The automaker's sales were down 49 percent in the first quarter compared with the same period a year earlier, and GM had a 123-day supply of cars and trucks at the end of March, according to Ward's AutoInfoBank. That is down from 162 days' worth in January.

But as of March 31, the automaker had a more than six-month supply of several models, including the Pontiac G5 compact and Chevrolet Silverado hybrid pickup truck. The long shutdown likely means that GM does not expect its sales to rebound soon, said Tom Libby, an independent Detroit-area auto-industry analyst.

"They must be forecasting a sales level that is low enough between now and the summer that they see their inventories building," he said. "It's sort of an ominous comment on what they see for the industry."

The company's sales could be declining because of talk about a potential bankruptcy, Libby added.

GM chief executive Fritz Henderson has said that the company prefers to restructure outside court but that it was preparing for a prearranged bankruptcy as well as one in which good assets would be separated from underperforming ones.

"Just using the word bankruptcy, their [market] share is down a lot just because of this talk," Libby said. "They may be counting on a further decline."

Libby, however, said GM should be applauded for not building too many vehicles and then having to spend big on rebates and other incentives to move them, which the Detroit Three have been guilty of in the past.

Some GM dealers said a shutdown of up to nine weeks was jarring but not unexpected, given the sales slump.

"Nine weeks seems like an awful long time, but the way business is, not an awful lot of cars are being sold anyway," said George Tasker, fleet manager at Martin Chevrolet in Torrance, Calif.

Tasker said the move would not affect business, as dealers would "get together and trade more easily" to find the exact cars customers wanted.

Earlier this year, Chrysler L.L.C., also subsisting on government loans, closed all 30 of its manufacturing plants for a month to counter the sales downturn. The automaker extended its traditional two-week holiday shutdown further into January to adjust production to slowing demand and to conserve cash.