Posted tagged ‘GM’

GM Cuts 10,000 Jobs

February 10, 2009

Will the job cuts ever end in the US?

General Motors  is planning to slash another 10,000 salaried jobs this year, saying the cuts are unavoidable with a government restructuring deadline looming and industrywide sales in one of the worst downturns in history.

From the Associated Press:

The Detroit-based automaker said Tuesday it will reduce its total number of white-collar workers by 14 percent to 63,000. About 3,400, or 12 percent, of GM’s 29,500 salaried U.S. jobs will be eliminated.

Most of the company’s remaining salaried employees will have their wages cut.

In its plan to Congress submitted late last year, GM said it would have to reduce both salaried and hourly positions so that the company could become viable long-term. The company plans to reduce its total U.S. work force from 96,537 people in 2008 to between 65,000 and 75,000 in 2012, but did not specify how many of the surviving jobs will be salaried or hourly.

GM Chief Executive Rick Wagoner, who was meeting with congressional leaders in Washington about global warming legislation, said Tuesday’s announcement is “indicative of the kind of things we need to do to get this viability plan in shape and respond to these tough market conditions.”

GM has dramatically downsized both its salaried and hourly work forces in recent years as the U.S. auto market has shrunk from an annual sales rate of around 16 million vehicles to 13.2 million last year.

Since 2000, GM’s salaried work force has shrunk by 33 percent from its 2000 high of 44,000 people. At the same time, the number of hourly workers has plunged by more than half — to about 63,700 people at the end of last year from 133,000 in 2000.

Most of the cuts announced Tuesday are expected to take place by May 1. GM said the cuts will vary by global regions depending on staffing levels and market conditions.

The company’s statement said there would be no buyout or early retirement packages as GM had offered in the past, but laid-off employees will get severance pay, benefit contributions and other assistance.

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President Bush Announces Auto Industry Bailout

December 19, 2008

President Bush announced a rescue plan for General Motors and Chrysler this morning that will make $13.4 billion in federal loans available to the industry almost immediately.

From CNNMoney:

A senior administration official briefing reporters said he expects that GM and Chrysler LLC will be signing the loan papers to access the cash later Friday morning.

The money will come from the $700 billion fund set aside to bailout Wall Street firms and banks in October.

With these loans, Treasury will have committed virtually all of the $350 billion of that fund that it can hand out without additional authorization from Congress. Once Congress releases the other $350 billion, the two automakers will be able to borrow an additional $4 billion.

GM will get $9.4 billion from the first allocation of federal loan money, while Chrysler would get the other $4 billion.

The loans are for three years but the money will have to be repaid in full within 30 days if the firms do not show themselves to be viable by March 31. It is expected that the companies will have to negotiate new agreements with unions and creditors in order to do so.

Here is the text of President Bush’s remarks delivered this morning at the White House, courtesy of the Associated Press, on financial assistance to troubled auto makers:

BUSH: Good morning.

For years, America’s automakers have faced serious challenges; burdensome costs, shrinking share of the market and declining profits. In recent months, the global financial crisis has made these challenges even more severe.

Now, some U.S. auto executives say that their companies are nearing collapse and that the only way they can buy time to restructure is with help from the federal government. It’s a difficult situation that involves fundamental questions about the proper role of government.

On the one hand, government has the responsibility not to undermine the private enterprise system. On the other hand, government has a responsibility to safeguard the broader health and stability of our economy.

Addressing the challenges in the auto industry requires us to balance these two responsibilities. If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers.

Under ordinary economic circumstances, I would say this is the price that failed companies must pay. And I would not favor intervening to prevent the automakers from going out of business. But these are not ordinary circumstances.

In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action. The question is how we can best give it a chance to succeed.

Some argue the wisest path is to allow the auto companies to reorganize through Chapter 11 provisions of our bankruptcy laws and provide federal loans to keep them operating while they try to restructure under the supervision of a bankruptcy court.

But given the current state of the auto industry and the economy, Chapter 11 is unlikely to work for American automakers at this time. American consumers understand why. If you hear that a car company is suddenly going into bankruptcy, you worry that parts and servicing will not be available and you question the value of your warranty.

With consumers hesitant to buy new cars from struggling automakers, it would be more difficult for auto companies to recover. Additionally, the financial crisis brought the auto companies to the brink of bankruptcy much faster than they could have anticipated. And they have not made the legal and financial preparations necessary to carry out an orderly bankruptcy proceeding that could lead to a successful restructuring.

The convergence of these factors means there is too great a risk that bankruptcy now would lead to a disorderly liquidation of American auto companies. My economic advisers believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry. It would worsen a weak job market and exacerbate the financial crisis. It could send our suffering economy into a deeper and longer recession.

And it would leave the next president to confront the demise of a major American industry in his first days of office.

The more responsible option is to give the auto companies an incentive to restructure outside of bankruptcy and a brief window in which to do it. And that is why my administration worked with Congress on a bill to provide automakers with loans to stave off bankruptcy while they develop plans for viability.

This legislation earned bipartisan support from majorities in both houses of Congress. Unfortunately, despite extensive debate and agreement that we should prevent disorderly bankruptcies in the American auto industry, Congress was unable to get a bill to my desk before adjourning this year.

This means the only way to avoid a collapse of the U.S. auto industry is for the executive branch to step in. The American people want the auto companies to succeed and so do I.

So today I’m announcing that the federal government will grant loans to all the companies under conditions similar to those Congress considered last week. These loans will provide help in two ways. First, they will give automakers three months to put in place plans to restructure into viable companies which we believe they are capable of doing.

Second, if restructuring cannot be accomplished outside of bankruptcy, the loans will provide time for companies to make the legal and financial preparations necessary for an orderly Chapter 11 process that offers a better prospect of long-term success and gives consumer confidence that they can continue to buy American cars.

Because Congress failed to make funds available for these loans, the plan I’m announcing today will be drawn from the financial rescue package Congress approved earlier this fall. The terms of the loans will require auto companies to demonstrate how they would become viable.

They must pay back all their loans to the government and show that their firms can earn a profit and achieve a positive net worth. This restructuring will require meaningful concessions from all involved in the auto industry — management, labor unions, creditors, bond holders, dealers, and suppliers.

In particular, automakers must meet conditions that experts agree are necessary for long-term viability, including putting their retirement plans on a sustainable footing, persuading bond holders to convert their debt into capital that companies need to address immediate financial shortfalls, and making their compensation competitive with foreign automakers who have major operations in the United States.

If a company fails to come up with a viable plan by March 31st, it would be required to repay its federal loans. The automakers and unions must understand what is at stake and make hard decisions necessary to reform.

These conditions send a clear message to everyone involved in the future of American automakers. The time to make hard decisions to become viable is now. Or the only option will be bankruptcy.

The actions I’m announcing today represent a step that we wish were not necessary. But given the situation, it is the most effective and responsible way to address this challenge facing our nation. By giving the auto companies a chance to restructure, we will shield the American people from a harsh economic blow at a vulnerable time and we will give American workers an opportunity to show the world, once again, they can meet challenges with ingenuity and determination and bounce back from tough times and emerge stronger than before.

Thank you.

Chrysler to Shut Factories for One Month

December 17, 2008

Chrysler stated on Wednesday that it would close all 30 of its factories for at least one month, starting at the end of this week, in response to plunging vehicle sales in the United States.

From CNN:

All 30 of the carmaker’s plants will close after the last shift on Friday, and employees will not be asked to return to work before Jan. 19.

Chrysler blamed the “continued lack of consumer credit for the American car buyer” for the slow-down in sales that forced the move.

The company ordinarily shuts down operations between Dec. 24 and Jan. 5. This closure would add roughly two weeks to that shutdown.

Chrysler is the third of the Big Three automakers to suspend operations for January. Last week, General Motors announced it was idling 30% of its North American manufacturing capacity during the first quarter of 2009 in response to deteriorating market conditions. That move will take 250,000 vehicles out of production. On Wednesday, a Ford spokeswoman confirmed for CNN that the automaker is adding a week to its normal two-week seasonal shutdown at a number of its plants.

Chrysler would not say how many fewer vehicles would be produced because of this shutdown. A total of 46,000 employees will be affected. They will be paid during the time off through a combination of state unemployment benefits and Chrysler contributions, but they will not receive the full amount of their working pay, a Chrysler spokesman said.

“Chrysler dealers confirmed to the company at a recent meeting at its headquarters, that they have many willing buyers for Chrysler, Jeep and Dodge vehicles but are unable to close the deals, due to lack of financing,” the carmaker said in an announcement. “The dealers have stated that they have lost an estimated 20% to 25% of their volume because of this credit situation.”

Auto Bailout Talks Collapse

December 11, 2008

Bad news for the auto industry. A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.

From the Associated Press:

Senate Majority Leader Harry Reid said he was “terribly disappointed” about the demise of an emerging bipartisan deal to rescue Detroit’s Big Three.

He spoke shortly after Republicans left a closed-door meeting where they balked at giving the automakers federal aid unless their powerful union agreed to slash wages next year to bring them into line with those of Japanese carmakers.

Republican Sen. George V. Voinovich of Ohio, a strong bailout supporter, said the UAW was willing to make the cuts — but not until 2011.

Reid was working to set a swift test vote on the measure Thursday night, but it was just a formality. The bill was virtually certain to fail to reach the 60-vote threshold it would need to clear to advance.

Reid called the bill’s collapse “a loss for the country,” adding “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.”

The implosion followed an unprecedented marathon set of talks at the Capitol among labor, the auto industry and lawmakers who bargained into the night in efforts to salvage the auto bailout at a time of soaring job losses and widespread economic turmoil.

“In the midst of already deep and troubling economic times, we are about to add to that by walking away,” said Sen. Chris Dodd, D-Conn., the Banking Committee chairman who led negotiations on the package.

Auto Bailout Deal Reached…Maybe…

December 10, 2008

According to congressional officials, Democrats in the Congress and the White House have finally finalized a deal to spend $15 billion on emergency loans for struggling U.S. automakers.

From the Associated Press:

The White House did not go quite so far, saying it has made “very good progress.” The measure could see a House vote later Wednesday and be enacted by week’s end.

It would create a government “car czar” to dole out the loans, with the power to force the carmakers into bankruptcy if they didn’t cut quick deals with labor unions, creditors and others to restructure their businesses and become viable.

Congressional Republicans, left out of negotiations on the package, are expressing grave reservations and may seek to block it.

Sen. David Vitter, R-La., promised to filibuster the measure, which could delay a final vote for days.

He said the package has an “ass-backwards” approach to curing what ails the U.S. auto industry.

Nevertheless, Democratic leaders were confident enough that a bill could advance that they set a procedural vote for the House floor later Wednesday. Even still, Sen. Mitch McConnell, the GOP leader, said in late morning that his side hadn’t seen the measure yet and wouldn’t agree to votes on the measure Wednesday.

“Republicans will not allow taxpayers to subsidize failure,” McConnell said, although he added that the auto situation would be addressed by the end of the week.

The congressional officials revealed agreement on a bill only on grounds of anonymity because the deal has not been formally announced.

Congress Agrees on Auto Bailout Plan

December 5, 2008

Democratic Congressional leaders said late today that they were ready to provide a short-term rescue plan for the American automakers, and they expect to hold votes on the legislation during a special session next week.

From the New York Times:

Details of the rescue package were not immediately available but senior Congressional aides said that it would include billions of dollars in short-term loans to keep the automakers afloat at least until President-elect Barack Obama takes office.

Ending a weeks-long stalemate between the Bush administration and House Speaker Nancy Pelosi, senior aides said that the money would likely come from $25 billion in federally subsidized loans intended for developing advanced fuel efficient cars.

Ms. Pelosi had resisted using that money, which was approved as part of an energy bill last year, and Democrats had called repeatedly on the Bush administration or the Federal Reserve to act unilaterally, using existing authority, to aid the auto companies.

On Friday, Ms. Pelosi said that she would allow that money to be used provided “there is a guarantee that those funds will be replenished in a matter of weeks” and that there was no delay in working toward higher fuel-efficiency.

Word of a breakthrough came as Congress wrapped up two days of hearings at which lawmakers grilled the chief executives of the companies, Chrysler, Ford and General Motors, and experts warned that GM could collapse by the end of this month.

Ford Says CEO Will Work for $1

December 2, 2008

And he will be giving me the rest of his salary 🙂 I can dream, right?

Ford Motor Co. CEO Alan Mulally said he’ll work for $1 per year if the automaker has to take any government loan money.

From the Associated Press:

The plan Ford is presenting to Congress this week also says it will cancel all management employees’ 2009 bonuses and will not pay any merit increases for its North American salaried employees next year.

Other cost-cutting actions include a plan to sell Ford’s five corporate aircraft, the company said.

Mulally said in an interview with The Associated Press on Tuesday that Ford will emphasize its cost cutting efforts with the United Auto Workers union and will give much more detail to Congress than it did when lawmakers grilled the automakers’ CEOs earlier this month.

The company said it also will accelerate plans to roll out electric vehicles as part of the plan it will present to Congress this week. The vehicles will come out starting in 2010 and include the Transit Connect small van and a car the size of the Ford Focus compact.

Mulally says Ford will seek $9 billion in government loans but may not need them. The Dearborn-based has said it has enough cash to make it through 2009 without assistance.

All three Detroit automakers are scheduled to appear before congressional committees Thursday and Friday to seek a total of $25 billion in government loans. Chrysler LLC and General Motors Corp. have said they are perilously low on cash and need the government loans to survive the recession and the worst auto sales environment in 25 years.

Mulally also said he will encourage other automakers to join forces to develop new battery technologies in the U.S. for future electric cars.

An electric car and profitability are hallmarks of a plan Ford submitted to Congress Tuesday.

Ford’s plans call for an investment of up to $14 billion to improve fuel efficiency over the next seven years. The company said would improve the overall efficiency of its fleet by an average of 14 percent in 2009.

The company’s plans to achieve profitability or break even by 2011 are based on industrywide sales estimates of 12.5 million units in 2009, 14.5 million in 2010 and 15.5 million in 2011.