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GM Closing Four Plants In North America

Automaker closing four truck and SUV plants in the U.S., Canada and Mexico as surging fuel prices hasten a dramatic shift to smaller vehicles.

WILMINGTON, Del. (AP) -- General Motors is closing four plants and taking a hard look at its iconic Hummer brand as surging fuel prices hasten a dramatic shift to smaller vehicles.

CEO Rick Wagoner said Tuesday before the automaker's annual meeting in Delaware that the Hummer line, some of which is produced in northern Indiana, will be reviewed and potentially sold or revamped. GM also will close truck and SUV plants in Oshawa, Ontario; Moraine, Ohio; Janesville, Wis.; and Toluca, Mexico.

AM General makes Hummer H2s for General Motors at a Mishawaka factory that employs about 400 people. The northern Indiana factory employed more than 1,000 people in 2002 when it opened.

Wagoner announced the GM moves in response to slumping sales of pickups and SUVs brought on by high oil prices. He said a market shift to smaller vehicles in the U.S. market is likely permanent.

''We at GM don't think this is a spike or a temporary shift,'' Wagoner said.

Wagoner said GM is ''undertaking a strategic review of the Hummer brand, to determine its fit with GM's evolving product portfolio'' in light of changing market conditions.

''At this point, we are considering all options for the Hummer brand ... everything from a complete revamp of the product lineup to partial or complete sale of the brand,'' he said.

AM General also made the original, larger Hummer H1, the civilian version of the military's Humvee, but stopped production on that in 2006. The factory resumed production on H2s this week after layoffs that started in March following the strike at American Axle and Manufacturing Holdings Inc., a key parts producer for GM.

AM General spokesman Lee Woodwind declined to comment on the GM news.

But local chamber of commerce representative Phil D'Amico welcomes the carmaker's strategic review. He said rising gas prices have made people concerned about Hummer production. AM General is the fourth largest employer in St. Joseph County and one of the largest taxpayers.

The company also employs about 1,400 people in a separate factory that makes the military's Humvee, a brand owned by AM General, not GM.

''I think when you start looking at the (vehicle) cost, then you start looking at gas prices, I think they've got to do something,'' said D'Amico, director of business growth for the Chamber of Commerce of St. Joseph County.

Mishawaka Mayor Jeff Rea said he wasn't ''100 percent sure'' what Tuesday's announcement about the Hummer meant. But he said GM chose Mishawaka for H2 production in part because of the area's transportation network, the well-run Humvee plant already there and the skilled work force.

He noted that his city still holds those advantages, which could attract future business.

''If something were to happen with H2, hopefully something else could step right in,'' he said.

The moves Wagoner discussed Tuesday will save the company $1 billion per year starting in 2010. Combined with previous efforts, GM will have trimmed costs by $15 billion a year, the CEO said.

The cuts will affect 10,000 hourly and salaried workers, total, at the four plants. Many will be able to take openings created when 19,000 more U.S. hourly workers leave later this year through early retirement and buyout offers.

Wagoner said General Motors Corp.'s board also approved the production schedule of the Chevrolet Volt in Detroit, and the company plans to bring the plug-in electric car to showrooms by the end of 2010. The Volt runs on an electric motor and has a small engine to recharge its batteries.

The Detroit-based automaker has just emerged from a spate of labor problems, with two local union strikes at key factories and a nearly three-month strike at American Axle.

GM said in a recent regulatory filing the strikes will cost it a total of $2 billion before taxes in the second quarter.

Detroit's automakers have been making the shift to more fuel-efficient vehicles, but not at the pace that matches consumers' drive to hybrids and high mileage models made overseas. Gas prices have accelerated the retreat from trucks and sport utility vehicles, leaving the Big Three at the most critical crossroads in 30 years.

The U.S. market is difficult for every automaker, with consumer confidence weak and 2008 sales expected to be the lowest in more than a decade. But it is most difficult for the Detroit Three, who have relied more heavily on sales of trucks and SUVs than their foreign counterparts. Trucks make up 70 percent of Chrysler LLC's U.S. sales, for example, compared to 41 percent at Toyota Motor Corp.

More cuts will be announced later. Wagoner said GM will consolidate engine, transmission and other parts operations to go with the assembly plant actions.

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