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DETROIT-General Motors is restructuring its manufacturing operations in the US and Canada as part of its comprehensive four-point plan to boost profitability. In its attempt to reduce structural costs, the company is closing nine assembly, stamping and powertrain facilities and three service and parts operations facilities.

"The decisions were very difficult to reach because of their impact on our employees and the communities where we live and work," said GM chairman and CEO Rick Wagoner in a statement. "But these actions are necessary for GM to get its costs in line with our major global competitors. In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible."

The assembly plant closures include: Oklahoma City, which will cease production in early 2006; Lansing, MI Craft Centre, which will end production in mid-2006; Spring Hill, TN Plant/Line No. 1, which will cease production at the end of 2006; and Doraville, GA, which will cease production at the end of its current products' lifecycle in 2008.

At the Oshawa Car Plant No. 1, in Ontario, Canada, the third shift will be removed in the second half of 2006. Subsequently, Oshawa Car Plant No. 2 will cease production after the current product runs out in 2008. Additionally, the third shift will be removed at Moraine, OH during 2006, with timing to be based on market demand.

The service and parts operations and powertrain facilities that will be affected include: The Lansing, MI Metal Center, which will cease production in 2006; the Pittsburgh Metal Center, which will close in 2007; and the parts distribution center in Portland, OR, which will cease operations in 2006.

Also affected by the restructuring program, the parts distribution center in St. Louis will terminate warehousing activities and will be converted to a collision center facility in 2006; the parts processing center in Ypsilanti, MI will cease operations in 2007; and one additional parts processing center, to be announced at a later date, will also cease operations in 2007. Finally, St. Catharines Ontario Street West powertrain components facility in Ontario, Canada, will cease production in 2008; and the Flint, MI North 3800 engine facility, known as Factory 36, will cease production in 2008.

The closures will result in the loss of 30,000 jobs. Given the demographics of GM's workforce, the company says it plans to achieve much of the job reduction via attrition and early retirement programs. "These are difficult moves that will affect thousands of dedicated GM employees and families, as well as state and local governments," Wagoner said. "We will work our hardest to mitigate that impact."

Meanwhile, the company has further accelerated its efforts in structural cost reduction, raising the previously indicated $5 billion running rate cost reduction plan in North America to $6 billion by the end of 2006. In addition, GM continues to pursue its plans to target $1 billion in net material cost savings, which will result in an aggregate $7 billion in cost reduction by the end of 2006. "We are making steady and significant progress in implementing the plan to turn around our US business," Wagoner said.

Instant Insights /

GM To Close 12 Plants, Reduce Costs by $7B

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