January 26, 2009 / 5:21 PM / 10 years ago

UPDATE 1-GM cuts N. American production, plans layoffs

DETROIT, Jan 26 (Reuters) - General Motors Corp (GM.N) on Monday said it would lay off 2,000 workers at two assembly plants in Michigan and Ohio and temporarily idle another nine North American assembly plants in response to weak demand.

GM said it would cut second shifts of workers at plants in Lordstown, Ohio, and Delta Township near Lansing, Michigan. Those moves will slow production of the Chevrolet Cobalt and a trio of crossover vehicles including the Buick Enclave.

The production cuts come at a time when U.S. auto sales are near their lowest level since the early 1980s and will add to rising unemployment claims as well as pressure on the struggling auto parts supply sector.

GM’s planned shift reduction will mean 800 layoffs at the Lordstown plant and 1,200 at the Delta Township plant, GM spokeswoman Susan Waun said.

“We’re just continuing to bring our production in line with market demand,” Waun said.

GM factory workers in the United States are represented by the United Auto Workers.

The union is expected to surrender a controversial provision of its current contract that guarantees nearly full wages to auto workers whose jobs are eliminated as a condition of winning support for GM’s $13.4 billion federal bailout.

The 2,000 workers on the eliminated shifts in GM’s Michigan and Ohio plants will be eligible to collect just over 70 pct of their normal wages through benefits provided by GM and state unemployment benefits for 48 weeks, Waun said.

GM will begin phasing out the second shift of production at the two plants from the first week of February, Waun said.

The layoffs mark a sharp reversal of fortune at Lordstown, which geared up to run three shifts last summer when a spike in gas prices spurred demand for the Cobalt and other small cars.

GM plans to build an upcoming small sedan at the Lordstown plant and has said the new fuel-efficient Chevy Cruze will show it has learned how to make a profitable small car.

Another nine GM plants will schedule additional weeks when they are not making vehicles, GM’s Waun said.

Three other GM plants are cutting production by slowing line speeds or pulling forward a week of shutdowns that had been planned for the summer, she said.

In total, the GM output cuts outlined on Monday will affect 14 of the automaker’s 15 U.S. assembly plants. GM did not have an immediate estimate for the total of workers that would be affected by the layoffs.

The only GM plant in the United States not affected by the latest output cut was the Bowling Green, Kentucky, plant that builds the Corvette. That plant was part of an earlier move to cut production near the end of last year.

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