Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 25, 1992 TAG: 9202250261
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: STATE
SOURCE: The Washington Post
DATELINE: DETROIT LENGTH: Medium
GM CLOSING 12 PLANTS
General Motors Corp. Monday reported that it lost a record $4.5 billion in 1991, and it identified 12 of the 21 plants that will close as it downsizes its operations during the next few years.GM's loss, the worst annual loss for an American corporation in history, brought last year's total loss for the Big Three - GM, Chrysler Corp. and Ford Motor Co. - to $7.7 billion. GM's loss was larger than expected and reflected the impact that a weak economy and cautious consumers were having on the company's sales.
There also was a surprise in the list of plant closings, which will eliminate about 16,000 jobs. Workers at GM's Willow Run assembly plant in Ypsilanti, Mich., were stunned that GM had decided to close their facility rather than a competing plant in Arlington, Texas. Analysts had expected GM to close the Texas plant because it is farther from suppliers, which increases costs.
"Right now we are shocked," said Charles D. Evans, 46, who repairs cars at the end of production at Willow Run. "We feel we were cheated. Nobody was expecting it. We thought Texas didn't stand a chance."
The General Motors plant closings "shouldn't affect" the Kingston-Warren plant in Wytheville, a maker of rubber channels for the windows of GM cars, according to Fred Starling, personnel manager.
"We sell according to the number of cars produced," he said, and it doesn't matter how many auto plants are in operation. The Wytheville plant has about 550 employees. Another 100 were laid off in January.
On Capitol Hill, the announcement added fuel to the political reaction against Japan's trading policies. House Majority Leader Dick Gephardt, D-Mo., said that if the United States did not take steps to counter Japan's auto companies, "we're going to be out of the business."
The closings announced Monday and others to come by the end of the year, coupled with the shrinkage of GM's administrative groups, will eliminate 74,000 jobs by 1995. In all, by the mid-1990s, GM will have cut both its hourly and salaried work forces to half the size they were in 1985, when the company had 142,000 hourly workers and 500,000 salaried employees.
"In 1991, the North American automotive industry sustained losses unparalleled in its history," GM Chairman Robert Stempel said. "General Motors is taking aggressive action to reverse this trend and improve our prospects for future profitability."
GM officials said Monday that all employees, including top-level executives, will share the pain. For example, they said, the company is trimming pension benefits for current and retired top executives by $14 million a year through a change in its executive compensation plans.
Stempel also said GM will centralize most of its North American design, engineering and administrative functions in a move that promises to undo a previous reorganization implemented by former GM chairman Roger B. Smith in the early 1980s.
All of the changes are meant to halt GM's precipitous decline, in which the company "has been going down like a rock," Stempel said.
In fact, the results released Monday understated the company's weakness in its home market. GM showed an $8.5 billion loss in its North American automotive operations, including $1.8 billion for costs related to the plant closings. The losses were partly offset by a $2 billion profit in GM's overseas operations and another $2 billion gain in its non-automotive North American businesses. GM's sales and revenue last year totaled $123 billion, slightly lower than the year before.
Business Editor George Kegley contributed to this report.
\ BAD DAY AT GM
MONDAY'S ANNOUNCENTS
\ RECORD LOSSES GM posted fourth-quarter loss of $2.5 billion, making a record $4.5 billion loss for the year.
SHUTTERED PLANTS Plant closings and cutbacks will affect 12 plants and 16,000 workers. White-collar operations to be streamlined, affecting undetermined number of jobs.
SAGGING SALES GM's vehicle sales last year declined 12.5 percent from previous year. U.S. sales last year for all automakers dropped 11.4 percent from depressed levels of 1990.
NOT-SO-BIG THREE Combined with net losses last year of $2.3 billion at Ford and $795 million at Chrysler, the Big Three lost $7.6 billion in 1991. Previous record was $4.5 billion in 1980.
Memo: shorter version ran in the Metro edition.