29 June 2009

Louisiana Plants Added To GM's Closing List

Story from the Wall Street Journal

General Motors Corp. on Wednesday said it will close its vehicle assembly and metal-stamping plants in Shreveport, La., by 2012, a move that came as concerns surfaced over what will become of unprofitable assets and liabilities being offloaded by the company.

GM builds small pickup trucks and some Hummer models at the plants. Sales of the trucks have fallen sharply, while GM early this month announced plans sell the Hummer line to a Chinese manufacturer.

The plants join a list of nine others the auto maker plans to close permanently.

Separately, Chrysler Group LLC said it will permanently close its St. Louis North assembly plant effective July 10. The company had planned to shut the plant in the third quarter but accelerated the move because of declining demand. Production of the Dodge Ram pickup made there will be moved, as planned, to a Warren, Mich., assembly plant.

GM by Tuesday is expected to make public by next week a list of which assets will go to "old GM" under the company's proposed bankruptcy plan and which to the surviving "new GM." Not all idled factories will go to the old company, as some sit on valuable land and could turn a profit for GM.

Also Wednesday, a committee representing GM's unsecured creditors asked the bankruptcy court in Manhattan to require GM to make some changes to the sale proposal, citing concerns over what will become of discarded assets and liabilities.

The creditor committee wants GM to permit lawsuits stemming from activities of the "old GM" to be filed against the "new GM" after that company emerges from bankruptcy. GM has said those lawsuits would have to be filed against the old company, which will have limited assets and resources to cover judgments from suits.

Despite the concern, the group said it is satisfied that there are no viable alternatives to restructure the ailing car maker other than the company's proposed bankruptcy sale.

GM's bankruptcy plan, called a 363 sale, separates the company's more attractive assets, such as strong brands, from bad assets that are dragging the company down. Bad assets will be wound down or sold in a lengthy liquidation.

The "new GM" assets would be transferred to an entity owned by the U.S. and Canadian governments, the United Auto Workers union and the company's unsecured creditors.

The company hopes to emerge from Chapter 11 in mid-July, sooner than earlier projected.

As part of the plan, the company is looking to eliminate 10,000 to 16,000 hourly workers with retirement incentives and buyouts by Aug. 1, people familiar with the plans said. GM ultimately hopes to cut an additional 14,000 factory jobs by 2010, bringing total hourly-worker employment to 40,000.

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