General Motors Corp is closing its Arlington plant for nine weeks beginning on May 11, a spokeswoman for the plant said Thursday.
The plant is one of many U.S. factories that GM will close for up to nine weeks this summer, CNBC and the Associated Press reported.
"This is an aggressive step to reduce inventory (of unsold vehicles) and conserve cash," said Wendi Sabo, a spokeswoman for the Arlington plant.
The U.S. auto industry was down 34 percent in March, but GM had the biggest decline, 43 percent, she said.
The Arlington facility will be closed from May 11 through July 13. The move will effect about 2,300 hourly employees and about 200 salaried employees.
The closure will also impact the jobs of about 1,400 additional employees who work for various suppliers to the Arlington plant.
Thirteen of the company's plants will have some sort of shutdown, several during the same nine-week period.
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GM's sprawling Arlington facility, which is located off Highway 360 between Abram and Division streets, makes the GMC Denali, the GMC Yukon, the Chevrolet Tahoe and the Cadillac Escalade.
During the nine-week shutdown, most union employees will draw state unemployment benefits along a union-negotiated benefit supplement. The employees will, in essence, take a 25 to 30 percent cut in pay, J.R. Flores, the president of United Auto Workers Local 276 said.
Entry-level employees will draw state unemployment benefits, but do not qualify for the supplemental pay.
News of the summer shutdown spread quickly at the Arlington plant on Wednesday.
"Better nine weeks than nine years," one worker said outside a convenience store across the street.
"Hopefully everything will work out for the best," said Rajeenie Bell, another worker. "Personally, I'm a single mother taking care of my son, so I really think I'd rather work than to be laid off."
The automaker's sales were down 49 percent in the first quarter compared with the same period last year, and GM had a 123-day supply of cars and trucks at the end of March, according to Ward's AutoInfoBank. That's down from 162 days worth in January.
But as of March 31, the automaker had a more than six-month supply of several models including the Pontiac G5 compact and Chevrolet Silverado hybrid pickup truck. The lengthy shutdown likely means that GM doesn't see its sales rebounding anytime soon, said Tom Libby, an independent Detroit-area auto industry analyst.
"They must be forecasting a sales level that is low enough between now and the summer that they see their inventories building," he said. "It's sort of an ominous comment on what they see for the industry."
The company could be seeing sales decline because of talk about a potential bankruptcy, Libby added.
GM CEO Fritz Henderson has said the company would prefer to restructure outside of court, but it is preparing for a prearranged bankruptcy as well as one in which good assets would be separated from underperforming ones.
"Just using the word bankruptcy, their (market) share is down a lot just because of this talk," Libby said. "They may be counting on a further decline."
Libby, however, said GM should be applauded for not building too many vehicles and then having to spend big on rebates and other incentives to move them, something the Detroit Three have been guilty of in the past.
GM has received $13.4 billion in government loans and faces a June 1 deadline to make a $1 billion debt payment. But the company's chief financial officer, Ray Young, told reporters Wednesday the automaker is "not going to make that payment," the Detroit Free Press reported.
The automaker is trying to get its debt holders to agree to exchange the debt for a stake in the company, the newspaper reported.