Filed under: International markets, Bad news, Products and services, Management, Competitive strategy, General Motors (GM), Employees, Recession, Financial Crisis
For Detroit automaker General Motors (NYSE: GM) the tough times are being felt outside of the United Says as sales declines in Europe are forcing the troubled manufacturer to suspend production at some European factories.
As the financial crisis that is being felt in America continues to spread, demand for autos outside of the country are also feeling the pressure, and in August, sales in Europe fell by 16%. As a result, General Motors has decided that it needs to reduce its 2008 production by about 40,000 cars by the end of the year.
To accomplish this production shift, the company is going to be shutting down several factories for a few weeks. Starting next week, GM’s factory in Eisenach, Germany, where the company produces its Opel brand, is going to start a three-week shut down period. This news comes as another of the company’s factories, one in Bochum, Germany is completing a current two-week shut down period to help reduce the company’s inventories. Other temporary shut downs are taking place in England and Spain.
While the production halts are probably in the best interest of the company, its labor celebrations are not too happy with the decision, to state the least. Labor representatives voiced their disappointment that they were not consulted before the decision was reached.
Making his feelings known, the head of the division’s works council, Klaus Franz, said that if the two sides could not come together and reach some sort of agreement, that he would be forced to take matters into his own hands and try to get a court order to put a stop to the production halts.
Times are definitely tough for General Motors, which has been struggling to stay competitive as consumers have moved away from heavy gasoline guzzlers and into fuel efficient cars. Another move that the company is considering in order to bring a much need cash infusion is the sale of its headquarters in Detroit.
GM said, though, that it has each intention of staying in the building. It had been leasing the building since 1999, and recently bought the property earlier this year.
GM stock has been taking a beating lately, hitting another new 52-week low today, trading as low as $8.06. Currently, the stock is sitting at that low price.
What is it going to take to bring back the glory days for General Motors? Your guess is as good as mine!
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the internet investment advisory service Investor’s Observer.
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