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GM rally should be good news for Longview’s Dana
Shares of U.S. automakers soared Wednesday as investors took comfort in GM’s announcement that it was slashing its work force and production and suspending its dividend in an effort to stay afloat in an increasingly difficult market.
That should be good news for the long run for the Longview Dana truck frame plant and its 540 workers. The plant produces frames going to GM’s Shreveport assembly plant.
Shares of GM surged $1.56, or 15.9 percent, to $11.40 in afternoon trading. Ford shares gained 76 cents, or 16.3 percent, to $5.41.
Dana shares jumped 7.5 percent Wednesday, closing at $6.56, up from Tuesday’ close of $6.16.
GM announced it was cutting white-collar job costs in the U.S. and Canada by more than 20 percent, shedding thousands more factory jobs by cutting truck production even further, and suspending its $1 per share annual dividend for the first time in 86 years.
The moves come during a desperate time for GM as it struggles with a weak economy, record-high gas prices and an unprecedented shift in demand away from its traditionally popular trucks and sport utility vehicles.
GM shares have lost nearly two-thirds of their value since the start of the year and have declined more than 75 percent from a 52-week high of $43.20 in October.
GM said it hopes the latest cuts save $15 billion through 2009. It said if its latest predictions hold true, it should have enough cash to sustain itself at least through 2010.
Immediately after Tuesday’s news, GM shares plunged to $8.81, their lowest level since June 23, 1954, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes. But the shares rebounded later in the day and closed at $9.84, up nearly 5 percent.
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