Crescent-News.com - GM to close Janesville, Wis., plant in December (adds detail about other factories slated for closure)

URGENT
GM to close Janesville, Wis., plant in December
Eds: RECASTS lead; ADDS detail about other factories slated for closure; ADDS photo. Will be updated.
AP Photo WIJAN201
By TOM KRISHER
AP Auto Writer
DETROIT (AP) " The U.S. automotive sales slump worked its way to Janesville, Wis., Monday when General Motors Corp. told workers that it would cease operations at a sport utility vehicle factory there in December.
GM spokesman Chris Lee said the plant's 1,200 workers represented by the United Auto Workers were told the factory would be shuttered Dec. 23, earlier than GM had expected.
The factory makes the GMC Yukon and the Chevrolet Tahoe and Suburban large SUVs, and sales of those vehicles have plummeted with an increase in gasoline prices to around $4 per gallon earlier this year. Gas prices have subsided closer to $3 per gallon nationwide, but that has done little to boost sales.
"That segment is really shrinking, so we had to make the difficult decision to have this cessation," Lee said.
In early trading Monday, GM shares soared $1.07, or 22 percent, to $5.96 as markets rose on news that the Bush administration and European governments pledged coordinated actions to help the crippled financial system. The shares had lost nearly half their value last week.
GM announced in June that it would close Janesville and three other factories as demand for pickup trucks and SUVs waned, but the only time frame that was given was by 2010.
GM announced earlier this month that another of those plants " the Moraine, Ohio, SUV factory " will close Dec. 23.
On Friday, a person with knowledge of GM's plans said it could close more factories as early as this week to deal with slumping sales and the collapse in its stock price.
The announcement was likely to include acceleration of the assembly plant closures, which also include factories in Oshawa, Ontario, and Toluca, Mexico.
The person, who did not want to be identified because the plans are not finalized, said further cuts would likely hit engine, transmission and stamping operations to correspond with the assembly plant closures.
GM Chairman and CEO Rick Wagoner said last month that the automaker would have to make adjustments, particularly in metal stamping factories.
Lee would not comment Monday when asked if further plant closures or announcements are expected.
On Friday night, word leaked that GM had talks with Chrysler LLC owner Cerberus Capital Management LP about GM merging with or acquiring Chrysler. The talks have been shelved during the country's financial crisis.
GM's shares plunged to the lowest level in 59 years last week. The shares fell 31 percent to $4.76 Thursday and dropped to $4 in the first minutes of trading Friday, the lowest level since Nov. 16, 1949, according to the Center for Research in Security Prices at the University of Chicago. They rebounded to end six straight losing sessions and close at $4.89, up 13 cents, or 2.7 percent.
Industry analysts say closing factories or cutting shifts will help GM reduce costs and preserve cash at a critical time with the company losing billions and burning up cash at an alarming rate.
GM had $21 billion in cash and $5 billion available through credit lines at the end of June for total liquidity of $26 billion but has been burning up cash at a pace of more than $1 billion a month.
The company announced a plan in July that calls for cutting $10 billion in costs and raising another $5 billion through asset sales and borrowing through 2009.