Rick Wagoner: Bankruptcy rumors are false.
According to a company insider, Wagoner will outline his planned cutbacks in a "bold announcement" that should "cause a lot of people to shut up."
A company spokesman did not return calls.
GM had never indicated exactly when it would announce its turnaround plan. But rumors of a financial crisis have hammered its stock price. Now Wagoner has an opportunity to demonstrate that he is still in charge.
"This is all rolling out to the original schedule," the insider said. "It's carefully coordinated with the UAW and other constituencies to avoid blowing the place up."
It's not clear how many jobs will be eliminated. The shutdowns will not affect GM's future product plans, the source said.
Automakers prefer to operate their assembly plants at 100 percent capacity, but GM's North American assembly plants are running at only 74 percent. That has triggered huge losses as GM resorts to periodic blowout sales to eliminate unsold inventories.
Now GM is trying to get off this merry-go-round, but it will be costly. The UAW's labor contract stipulates that GM cannot close any assembly plants until the contract expires in 2007. GM can idle the plants, but it must continue to pay the workers.
Nevertheless, GM can save money by shutting down those plants.
"Capacity is the most important issue that GM needs to address," said Jon Rogers, senior automotive analyst with Citigroup in New York. "You have a company with nearly 33 percent of North American production capacity and only 25 percent of market share. That's expensive."
Automotive News has estimated that GM would have to shut half a dozen assembly plants to eliminate all excess production capacity. Idling four plants now is "a step in the right direction," Rogers said.
It's not clear which plants are targeted. Analysts have speculated that assembly plants in Janesville, Wis.; Doraville, Ga.; and Lansing, Mich., will close. The GM source said those plants are candidates but cautioned that the list has not been finalized.
Janesville is one of eight assembly plants that produce GM's full-sized light-duty pickups and SUVs. Sales of GM's big trucks have plunged as gasoline prices escalated.
The turnaround plan could help Wagoner quell at least some of the rumors that have swept Wall Street. Last week, he refuted the bankruptcy rumors by e-mailing 325,000 employees.
"I'd like to just set the record straight here and now: There is absolutely no plan, strategy or intention for GM to file bankruptcy," Wagoner wrote.
After investors heard about the e-mail, GM's stock price rebounded.
You may e-mail Jamie LaReau at [email protected]