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Thread: General Motors seeking $30B in aid.. and plans to layoff almost 50,000 workers

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    Elite Member Penny Lane's Avatar
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    Default General Motors seeking $30B in aid.. and plans to layoff almost 50,000 workers

    General Motors Seeks Up To $30B In Aid, Plans To Cut 47,000 Jobs

    DETROIT — General Motors Corp., presenting a dire outlook for the future, said Tuesday it may need $30 billion in total government financing to weather the economic downturn and would cut 47,000 jobs worldwide and shutter five more U.S. factories in a massive restructuring plan.

    The job cuts, which would take place by the end of this year, include 10,000 salaried and 37,000 blue-collar positions, amounting to 19 percent of the company's current global work force.

    GM is already surviving on $13.4 billion in federal loans and said in a 117-page plan submitted to the Treasury Department that it would seek an additional $16.6 billion if economic conditions worsen, but it could achieve profitability in two years and fully repay its loans by 2017.

    The U.S. automaker presented its turnaround plan as it worked to win concessions from the United Auto Workers Union and bondholders to dramatically resize the company. The UAW said it reached a tentative deal with GM, Chrysler and Ford Motor Co. on contract changes, but discussions were still under way about how the companies would fund union-run trust funds that will take over the companies' retiree health care obligations starting next year.

    GM said it was making progress but had not yet achieved all the concessions from union workers, lenders, dealers and suppliers that the Bush administration sought in the loan terms provided last December.
    Chief Financial Officer Ray Young said the company hopes to exchange two-thirds of its roughly $28 billion in unsecured bond debt by the end of March in order to meet the loan terms.

    Bondholders, he said, signed a letter saying that they were making progress with the company. The UAW also signed a similar letter saying progress had been made on the health care trust fund. The terms of the loan suggest that GM make half of the required $20 billion in payments to the fund as company stock instead of cash.

    Young said the talks have reached a critical stage.


    A truck drives under the pedestrian bridge at the General Motors Canada Oshawa Car Assembly Plant in Oshawa, Canada, on Tuesday, Feb. 17, 2009. General Motors Corp. and Chrysler LLC, racing to finish restructuring plans to present to the U.S. government, are unlikely to complete deals with debtholders and union workers by the government-imposed deadline on Tuesday. (AP Photo/The Canadian Press, Nathan Denette)

    "At this juncture we feel we can make progress" and meet requirements to finalize the deals by March 31, he said.

    President Barack Obama's administration will review the plans from GM and Chrysler LLC but could pull the loans if they don't approve the turnaround plans by then. The review could be extended into April, but if the government demands the money back it would force the companies into bankruptcy.

    Chairman and CEO Rick Wagoner said the plan submitted Tuesday is more aggressive than the one presented to the government in December because besides U.S. sales plummeting to a 26-year low, the global economy and auto sales worldwide have deteriorated since then.

    "Today's plan is significantly more aggressive because it has to be," Wagoner told reporters Tuesday night. "We have taken stronger actions, we needed to."

    In December, GM said it might need a total of $18 billion in government financing but only got a commitment of $13.4 billion, including $4 billion that the automaker received Tuesday.

    GM predicted it could run out of money next month and said it wants to receive an additional $2 billion in March and an additional $2.6 billion in April.

    The company has a $4.5 billion revolving line of credit that must be refinanced in 2011 but now believes that private funding won't be available, so the automaker is asking the government to lend the money.

    If market conditions deteriorate, GM says it may also need an additional $7.5 billion revolving line of credit to stay afloat, for a total potential request of $30 billion.

    Chief Operating Officer Fritz Henderson said the company explored three bankruptcy scenarios, all of which would cost the government more than $30 billion.

    The government, he said, is the only place the company could get financing for a Chapter 11 reorganization, because the credit markets are frozen. The worst-case bankruptcy scenario would cost the government $100 billion, Henderson said, because revenue would severely drop.

    He said there is not a lot of research about whether people would buy cars from an automaker in bankruptcy protection, but "that which is there suggests that sales fall off a cliff."

    GM's plan details extensive cuts. Of the 47,000 jobs to be slashed, 26,000 will be outside the U.S. The new plan has the U.S. work force declining from about 92,000 hourly and salaried employees at the end 2008 to 72,000 by 2012.

    In its Dec. 2 plan to the Bush administration, GM said it would cut the number of plants from 47 in 2008 to 38 by 2012. But the new blueprint goes further, cutting an additional five plants by 2012 to a total of 33 facilities. GM didn't identify which plants will be closed.

    GM would further reduce the number of vehicle models. The plan envisions a reduction in nameplates from 48 in 2008 to 36 by 2012. That's four fewer models than in the December plan.

    GM said all of its major U.S. vehicle launches from 2009 to 2014 would be high-mileage cars and crossovers.

    GM's eight brands would be reduced to four core lines _ Chevrolet, Buick, Cadillac and GMC _ as the automaker said in December. But the company said Pontiac also would remain as "a highly focused niche brand."

    GM, which has been reviewing the Saab brand and offered it for sale, said the Swedish unit could file for bankruptcy later this month. GM said it is requesting support from the Swedish government prior to any sale, and the company has developed a proposal that would cap GM's financial support with Saab's operations becoming an independent business by January 2010.

    Wagoner said the company is still talking to potential buyers for the Hummer brand.

    "We're going to try to draw that to a conclusion one way or another by the end of March," he said.

    The Saturn brand, meanwhile, will remain in operation through the end of 2011. GM said it's open to the possibility of a plan from retailers or investors that would allow a spin-off or sale of Saturn.

    GM would significantly accelerate the number of gas-electric hybrids and plug-in hybrid cars. It plans to offer 14 hybrids and plug-ins by 2012 and 26 by 2014, when alternative-fuel vehicles are expected to account for 65 percent of sales.

    Included in the projection is the plug-in Chevrolet Volt, due in showrooms by late 2010, and two additional vehicles sharing the Volt's extended-range electric vehicle technology.

    GM, however, is scaling back its anticipated fuel economy gains, a metric closely watched by environmentalists in Congress. GM said it will meet federal fuel efficiency standards through the 2015 model years, but the progress will be slower.

    The Dec. 2 plan said its car fleet average would reach 37.3 miles per gallon by 2012 compared with 31.6 in 2008. But GM now predicts its car fleet will reach 33.7 mpg by 2012 and not surpass 38 mpg until 2014.

    General Motors Seeks Up To $30B In Aid, Plans To Cut 47,000 Jobs

    Restructuring plan here: http://www.treasury.gov/initiatives/...turingPlan.pdf

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    Elite Member Grimmlok's Avatar
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    47 thousand jobs! christ.

    i wonder if any plants in canada will close.. probably not, cheaper to operate
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    A*O
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    All the auto companies face the same problems.

    Bottom Line: Too much supply and not enough demand.
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    Indeed, what happened to toyota is proof that all the auto makers are suffering. That is not in dispute. However, it does seem to me some auto makers will be better equipped to ride out this storm compared to others. Obviously the blame then cannot solely be on the economy. But I had a feeling the first round wasn't enough.

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    US companies make cars that nobody wants any more even if the economic situation wasn't so bad. Toyota and other makers actually take notice of what the customers want and try to provide it, ie, smaller, cheaper, more fuel efficient cars that don't totally fuck up the environment. But the US companies continue to make small tanks, aka SUVs, and other lumbering monsters. I believe Ford was warned several years ago that their customers were moving towards smaller cars but did they listen?
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    Quote Originally Posted by A*O View Post
    US companies make cars that nobody wants any more even if the economic situation wasn't so bad. Toyota and other makers actually take notice of what the customers want and try to provide it, ie, smaller, cheaper, more fuel efficient cars that don't totally fuck up the environment. But the US companies continue to make small tanks, aka SUVs, and other lumbering monsters. I believe Ford was warned several years ago that their customers were moving towards smaller cars but did they listen?
    Ford had the #1 selling vehicle, the F-150 last year and for the past 27 years. Ford has not asked for any goverment loans. So although times are tough and Ford is having problems, it can hardly be said they aren't listening to the customers. Considering GM outsold Toyota worldwide the problems of the American manufacturers run deeper than just "what the customers want."

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    Elite Member Grimmlok's Avatar
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    1 truck does not a product line make ;P
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    Elite Member B.C.'s Avatar
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    Quote Originally Posted by Grimmlok View Post
    1 truck does not a product line make ;P
    I didn't say it did! But it shows that trucks are what the customer wants...we can go on about this again? forever!

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    Ford has made progress toward smaller, more fuel efficient cars, albeit slower than their foreign counterparts. It has even begun to add the amenities consumers seem to want, such as SYNC. The F-150, as mentioned was the number one selling vehicle again, but Ford has begun to offer more alternatives in small vehicles and crossovers.

    I think GM is suffering because it has seemed stubborn in its refusal to listen to consumers and be influenced by the obvious needs as influenced by outside forces. The SUVs are still front and center on the GM lots. If they refuse to change, pumping endless money in will only prolong the inevitable implosion.



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    Quote Originally Posted by A*O View Post
    US companies make cars that nobody wants any more even if the economic situation wasn't so bad. Toyota and other makers actually take notice of what the customers want and try to provide it, ie, smaller, cheaper, more fuel efficient cars that don't totally fuck up the environment. But the US companies continue to make small tanks, aka SUVs, and other lumbering monsters. I believe Ford was warned several years ago that their customers were moving towards smaller cars but did they listen?
    Yeah, I believe they did listen, they made the Ford Focus.

    That's a load of crap. There are plenty of American's that would buy them just because they were American made. Then you have people that would rather have a nice built car, over a piece of shit mini any day. You also have the men and workers that prefer trucks because they have to have them for business sake.

    And a little note just to prove it, check out the list of the "10 best selling cars of 2008", you will find that AMERICAN cars hold 4 of the 10 spots. With the 1st two being American.

    The Top 10 Best-Selling Cars of 2008 - KickingTires

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    What is all this bailout money going to anyways? Debt? If the companies that are receiving the bail out funds need it for operational purposes, wouldn't that include salaries, healthcare and other employee benefits? What a nice time for them (any company receiving bailout funds) to decide to do some fat trimming and streamlining. How about they did that BEFORE they needed the funds?

    It just seems counter-productive.
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    Elite Member suede's Avatar
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    Does Ford still own a chunk of Mazda?
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    I believe Mazda is made is Japan, but Ford has some controlling stocks.
    Don't quote me on that though.

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    Yes, they do. I've heard there is talk of selling it. The Madza 6 is built at the same plant as the Mustang in Flat Rock MI.

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    Quote Originally Posted by nwgirl View Post
    What is all this bailout money going to anyways? Debt? If the companies that are receiving the bail out funds need it for operational purposes, wouldn't that include salaries, healthcare and other employee benefits? What a nice time for them (any company receiving bailout funds) to decide to do some fat trimming and streamlining. How about they did that BEFORE they needed the funds?

    It just seems counter-productive.


    DETROIT – The United Auto Workers' deal with Detroit's three automakers limits overtime, changes work rules, cuts lump-sum cash bonuses and gets rid of cost-of-living pay raises to help reduce the companies' labor costs, people briefed on the agreement said Wednesday.
    The UAW announced Tuesday that it reached the tentative agreement with General Motors Corp., Chrysler LLC and Ford Motor Co. over contract concessions, as GM and Chrysler sent plans to the Treasury Department asking for a total of $39 billion in government financing to help them survive.
    Concessions with the union are a condition of the $17.4 billion in government loans that the automakers have received so far.
    Base wages for UAW workers will remain the same, but the deal limits supplemental pay that laid-off workers receive while they collect unemployment benefits, said the people, who spoke on condition of anonymity because union members have not been told about the terms.
    GM Chief Operating Officer Fritz Henderson declined to give details of the agreement Wednesday but said it takes major steps in cost and work rules toward narrowing the gap between U.S. automakers' labor costs and those at Asian automakers' U.S. plants.
    The UAW said it won't release details until it reaches agreements with the companies on payments into a union-run trust that will take over retiree health care expenses next year.
    UAW spokeswoman Christine Moroski declined to comment Wednesday.
    At issue is whether the union will accept payments to the health care trust in stock, instead of cash. Requirements of the government loans ask the union to take up half of what they're owed as an equity position in the companies.
    GM has to pay roughly $20 billion into the health care trust, while Chrysler must pay around $9.9 billion.
    The union fears that if it takes too much stock, the trusts won't have enough to pay benefits for hundreds of thousands of retirees and spouses. However, if the UAW refuses to take the stock and GM and Chrysler don't satisfy the government's loan terms, the companies could tumble into bankruptcy, putting those benefits into greater jeopardy.
    Ford, which borrowed billions from private sources before credit markets tightened, has said it can make it through 2009 without government help and isn't required to make the same changes, but Ford CEO Alan Mulally has said he expects his company to get the same concessions from the union so that it isn't left at a disadvantage.
    Ford owes $6.3 billion to its trust fund at the end of this year. Chrysler figures were unavailable.
    All three companies agreed to fund the trusts, called voluntary employee beneficiary associations or VEBAs, as part of the landmark 2007 contract reached with the UAW. By doing so they move billions in liabilities off their books.
    The trusts would pay health care bills for about 800,000 UAW retirees, spouses and dependents at the three companies. GM expects to save about $3 billion a year when the expenses are moved, while Ford says it will save $1 billion.
    GM and Chrysler also are negotiating with their debtholders so that the companies can swap two-thirds of their debt for equity as required by the loan terms.
    GM Chief Financial Officer Ray Young said the company's bondholder signed a letter saying that they were making progress with the company.
    GM bondholders said in a statement it was "premature to comment on any specific terms" in their plan. They said they couldn't "make an accurate or conclusive assessment of the company's long-term viability without specific details of the tentative agreement" between GM and the UAW.


    AP sources: UAW deal cuts bonuses, some raises - Yahoo! News

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