GM to close its oldest plant in December

DETROIT (Reuters) - General Motors Corp said on Monday it would close its oldest plant, which has built vehicles since 1919, by the end of the year because of the shrinking market for the full-size SUVs it manufactures there.

GM had said it would close the Janesville, Wisconsin, assembly plant by 2010, but spokesman Chris Lee said the sharp decline in SUV sales through September forced it to act sooner. It will close on December 23.

The plant employs about 1,200 hourly workers represented by the United Auto Workers (UAW) and assembles GM's Yukon and Suburban SUV models.

GM said earlier in October that it would close an SUV plant in Moraine, Ohio by the end of the year, cutting about 1,200 jobs, most of them hourly workers. It builds the Chevrolet TrailBlazer, GMC Envoy and Saab 9-7X SUVs at that plant.

In June, GM said it expected to close the Ohio and Wisconsin truck plants by 2010.

"The forecasts are that the market will continue to shrink," GM's Lee said, adding that the automaker believes it has sufficient production capacity for SUVs at its plant in Arlington, Texas.

GM's U.S. sales through September were down 18 percent from a year earlier, a steeper decline than the 13 percent posted by the industry as a whole.

Shares of GM suppliers that rely heavily on truck and SUV production dropped sharply after GM's announcement, even as most auto stocks rallied in a broad market rebound tied to governmental actions to stabilize the banking system.

American Axle and Manufacturing Holdings Inc, which derives 75 percent of its revenue from GM and relies on light trucks for 90 percent of its business, closed down 21.52 percent at $2.99 on the New York Stock Exchange.

Investors have focused on the possibility of a GM merger since reports that the automaker had recently been in talks with Chrysler LLC, owned Cerberus Capital Management, and Ford Motor Co.

Shares in GM surged on Monday after reports that the automaker had explored options ranging from a merger with Ford or Chrysler to federal funding to help it ride out a punishing downturn in sales.

GM shares closed up 33.13 percent at $6.51 on Monday after closing at $4.89 on Friday, a near 60-year low.

Ford shares closed up 20.1 percent at $2.39 on Monday on the New York Stock Exchange.

(Reporting by Kevin Krolicki and Soyoung Kim, editing by Gerald E. McCormick, Dave Zimmerman, Toni Reinhold)