GM, Chrysler survival plans call for more bailout billions
Restructuring includes major layoffs, factory closures
DETROIT – General Motors and Chrysler asked the government for an additional $14 billion in aid, a dramatic acknowledgment that conditions in the U.S. auto industry have grown significantly worse in just two months.
GM presented a survival plan that also calls for cutting a total of 47,000 jobs globally and closing five more U.S. factories. That represents the largest work force reduction announced by a U.S. company in the economic downturn. Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models.
Meanwhile, the United Auto Workers union said it has reached a tentative agreement with Chrysler, GM and Ford Motor Co. on modifications to labor contracts. Such concessions were also a condition of the government bailout.
GM said it could need up to $30 billion from the Treasury Department, up from a previous estimate of $18 billion. That includes $13.4 billion previously allocated and $9.1 billion in new loans. The world’s largest automaker said it could run out of money by March without new funds.
GM’s request includes a credit line of $7.5 billion to be used if the downturn in the auto industry is more pronounced than expected. But the automaker claimed it could be profitable in two years and fully repay its loans by 2017.
Chrysler LLC requested $5 billion in new loans on top of the $4 billion it received in December. The company had said it might need an extra $3 billion.
Both requests were part of restructuring plans the two automakers owed the government in exchange for earlier loans.
Ford, which borrowed billions from private sources before credit markets tightened, has said it can make it through 2009 without government help.
GM and Chrysler plan to reduce the number of models they offer to car buyers. GM on Tuesday raised the possibility its Saturn brand could be phased out.
The restructuring plans must be vetted by the Obama administration’s new autos task force. In a sign the administration views the U.S. steel industry as a case study for revamping the auto industry, one of the task force’s appointees played a key role in the reshaping of that industry earlier this decade.
President Barack Obama’s top spokesman told reporters aboard Air Force One on Tuesday that he wouldn’t rule out bankruptcy for the Detroit automakers.
The GM job cuts include 10,000 salaried and 37,000 blue-collar positions, amounting to 19 percent of its current global work force of 244,500. A total 26,000 of the cuts will come from outside the U.S. The cuts would take place by the end of this year.
The new plan has the U.S. work force declining from about 92,000 hourly and salaried employees at year-end 2008 to 72,000 by 2012.
Chrysler had 54,007 employees at the end of 2008, so Tuesday’s cuts would equal about 6 percent.
Auburn Hills, Mich.-based Chrysler said the economy and the market for new cars has deteriorated significantly since its initial request. Chrysler said it now projects that automakers will sell 10.1 million vehicles in the U.S. this year, the lowest level in four decades.
Chrysler will eliminate the Dodge Aspen, Durango and Chrysler PT Cruiser, according to company president Jim Press. GM said it plans to sell or spin-off its Saturn brand. If those attempts are unsuccessful, GM will phase out the brand.
GM is also evaluating options for a sale of its Hummer division and sought buyers for its Saab unit. Selling or eliminating those brands would leave GM to focus on Chevrolet, Cadillac, GMC and Buick, with Pontiac reduced to one or two models.
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