GM asks for billions more, slashes 47,000 jobs
General Motors said it could need up to another 22.6 billion dollars in Govt loans in order to survive the current economic downturn and announced plans to slash 47,000 jobs worldwide amid a massive restructuring plan.autos Updated: Feb 18, 2009 21:43 IST
General Motors said on Tuesday it could need up to another 22.6 billion dollars in government loans in order to survive the current economic downturn and announced plans to slash 47,000 jobs worldwide amid a massive restructuring plan.
The largest US automaker said it will be closing plants, killing brands, slashing production and revamping its product offerings in order to return to "sustainable profitability in 24 months."
"These are the kind of actions we need to take to survive the current industry crisis, and position GM for sustainability and success," said GM Chairman and CEO Rick Wagoner.
"We are working non-stop to put this plan into action, and we greatly appreciate the support and encouragement we continue to receive as we take these important steps toward viability."
GM presented a 117 page long-term viability plan to the US Treasury on Tuesday as part of the terms of a 13.4 billion dollar bailout packaged approved in December.
Rival Chrysler, which received four billion dollars in loans, submitted a plan in which it requested an additional five billion dollars.
White House spokesman Robert Gibbs said after receiving the reports that "more will be required from everyone involved -- creditors, suppliers, dealers, labor and auto executives themselves -- to ensure the viability of these companies going forward."
GM said the plan was "aggressive, comprehensive and doable" and said it would be able to fully repay the loans by 2017.
However, GM said it could need up to another 16.6 billion dollars in loans from the US government by 2011.
Even more help might be needed in 2013 and 2014 if GM has to make contributions to its currently overfunded US pension funds.
The automaker said it is also asking for funding support from the governments of Canada, Germany, the United Kingdom, Sweden, and Thailand and has "included an estimate of six billion dollars in funding support by 2010 to provide liquidity specifically for GM's operations in these countries."
GM warned that the cost of doing nothing would be even higher: it estimated the cost of restructuring through bankruptcy at 100 billion dollars and said up to three million US jobs could be lost if it were to fail.
"We did a lot of work with bankruptcy and came to the same conclusion we did before," Wagoner said in a press conference.
"We continue to believe that bankruptcy would be highly risky."
GM said it would be shuttering 14 US plants by 2012, five more than were included in a December plan submitted to Congress.
It also planned to cut its US vehicle offerings by 25 percent and slash its US brands in half by selling or phasing out Swedish mark Saab, the hulking Hummer brand and its Saturn operations. Pontiac will become a "niche" brand sold alongside Buick and GMC.
GM said it has reached a tentative agreement with its union to further reduce its US labor costs and would cut its total US workforce to 72,000 by 2012 from 92,000 in 2008.
But more than half of its planned job cuts -- some 26,000 -- will come from outside the United States.
GM said hopes to cuts European costs by 1.2 billion dollars and could close or spin off plants in "high cost locations."
It said it will indefinitely suspend plans to expand plants in Thailand and is reconsidering expansion plans in India.
In Canada, GM is working with the union to cut labor costs and the federal and Ontario governments to provide long-term financial assistance and expects to finalize agreements by March.
First Published: Feb 18, 2009 21:41 IST