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November 21, 2005

USA: General Motors to axe four assembly plants and 30,000 jobs

Nine North American General Motors assembly, stamping and powertrain facilities plus three service and parts facilities will cease operations by 2008, with the loss of 30,000 jobs, the automaker announced on Monday.

Nine North American General Motors assembly, stamping and powertrain facilities plus three service and parts facilities will cease operations by 2008, with the loss of 30,000 jobs, the automaker announced on Monday.

The restructuring is part of a comprehensive four-point plan to return the company to profitability and long-term growth, GM chairman and CEO Rick Wagoner told employees in a closed-circuit TV announcement.

The move will reduce GMNA assembly capacity by about one million units by the end of 2008, in addition to the previously implemented reduction of one million units between 2002 and 2005.

Including additional capacity from the new Delta Township facility in Lansing, Michigan, scheduled to begin production next year, the overall net result will be a GMNA assembly capacity of 4.2 million units, down 30% since 2002. A total of 30,000 manufacturing positions will be eliminated from 2005 to the end of 2008.

Six assembly plants will be affected by closure or shift reduction.

Oklahoma City will cease production in early 2006; the Lansing, Michigan, Craft Centre will cease production in mid-2006; Spring Hill, Tennessee, Plant/Line No. 1, will cease production at the end of 2006 and Doraville, Georgia, will cease production at the end of its current products’ lifecycle in 2008.

The third shift will be axed at Oshawa Car Plant No. 1, in Ontario, Canada, in the second half of 2006 and, subsequently, Oshawa Car Plant No. 2 will cease production after the current product runs out in 2008.

The third shift will be removed at Moraine, Ohio, during 2006, with timing to be based on market demand.

Stamping facilities affected are the Lansing Metal Centre, which will cease production in 2006; the Pittsburgh, Pennsylvania, Metal Centre will cease production in 2007.

The parts distribution centre in Portland, Oregon, will cease operations in 2006; a similar centre in St. Louis, Missouri, will cease warehousing activities and will be converted to a collision centre facility in 2006 and the parts processing centre in Ypsilanti, Michigan, will cease operations in 2007.

One additional parts processing centre, to be announced at a later date, will also cease operations in 2007.

GM said the competitiveness of all packaging operations at the Pontiac, Drayton Plains, and Ypsilanti processing centers in Michigan, as well as portions of the packaging operations at the Flint processing centre will be evaluated in accordance with the provisions of the GM-UAW national agreement.

The St. Catharines Ontario Street West powertrain components facility in Ontario, Canada, will cease production in 2008 and the Flint North 3800 engine facility (“Factory 36”) will cease production in 2008.

“The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work,” Wagoner said 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.

“We have received ratification of the agreement with the UAW, which will help significantly to address our health-care cost challenges,” Wagoner added. “We are making steady and significant progress in implementing the plan to turn around our US business.”

GM plans to achieve much of the job reduction via attrition and early retirement programmes.

Wagoner also said the company has further accelerated its efforts in structural cost reduction, raising the previously indicated $5bn 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.

The plan is to achieve $7 billion of cost reductions on a running rate basis by the end of 2006 – $1 billion above the previously indicated target.

“Our collective goal remains the same: to return our North American operations to sustained profitability as soon as possible, thereby helping to ensure a strong General Motors for the future,” Wagoner concluded.

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