GM to close four plants, launch new 'green' vehicles

NEW YORK: General Motors Corp said on Tuesday it was closing four truck and sports utility vehicle plants and launching a new series of environmentally friendly vehicles in the face of high fuel prices.

The automaker said it was also considering selling its hulking Hummer brand as consumer demand for gasoline guzzling vehicles dried up in its home market.

"These moves are all in response to the rapid rise in oil prices and the resulting changes in the US, changes that we believe are more structural than cyclical," said Rick Wagoner, GM chairman and chief executive officer.

"While some of the actions, especially the capacity reductions, are very difficult, they are necessary to adjust to changing market and economic conditions and to keep GM's US turnaround on track and moving forward."

Wagoner said the affected plants, which build pickups, SUVs and medium-duty trucks, are located in Oshawa, Canada; Moraine, Ohio; Janesville, Wisconsin; and Toluca, Mexico.

GM expects to see additional structural cost savings of more than one billion dollars by 2010 for its North America operations from the moves.

This follows an announcement earlier this year of plans to cut five billion dollars in annual costs by 2011 and a massive restructuring plan involving the shuttering of scores of plants in 2006 and 2007 which led to annual cost savings of nine billion dollars.

A representative for the Canadian Auto Workers union, which had recently ratified a new three year contract with GM, called the move a betrayal.

"We'll have approximately 2600 of our members that won't have jobs by the end of 2009 yet we have a commitment from General Motors to keep the truck in Oshawa," plant representative Chris Buckley told the Canadian Broadcasting Corporation.

"General Motors is going to produce our truck in Mexico and the United States. That's disgusting and I'm absolutely feeling betrayed today." The automaker's board has also approved funding for the Chevrolet Volt extended-range plug-in electric vehicle, Wagoner said.

"We intend to show a production version of the Chevy Volt publicly in the very near future, and we remain focused on our target of getting the Volt into Chevrolet showrooms by the end of 2010," Wagoner said.

The company will also launch a new global compact car program for the Chevrolet brand, including a next generation for its Aveo model and the introduction of a high-efficiency engine module for the US market.

That new compact car will begin US production in 2010, GM said. "This car will represent the first US application of our global architecture strategy," said Wagoner.

"This strategy will pay major dividends as we leverage our extensive car product development capability in Europe, Korea, and other locations to accelerate the shift in our US product portfolio."

The company is adding third shifts for production of its Chevy Malibu, Chevy Cobalt and Pontiac G6 models at two separate plants in Michigan and Ohio to respond to growing demand for smaller vehicles.

GM said it was undertaking a range of strategic initiatives "to aggressively respond to growing demand for fuel-efficient vehicles and to economic and market challenges in North America."