GM to Slash Factory Jobs, Eliminate Pontiac Brand
The struggling automaker’s plans were outlined in a Securities and Exchange Commission filing. GM has $15.4 billion in government loans and faces a June 1 deadline to restructure and get more government money.
If the government isn’t satisfied with the company’s restructuring plans, GM could go into bankruptcy protection.
GM also said in a press release that it plans to ask the government to take half of its stock in exchange for cancelling half of the government loans to the company, according to the Associated Press.
The bond exchange is aimed at reducing much of the company’s $27 billion in unsecured debt. After the exchange, bondholders would own 10 percent of the company, GM estimates.
In addition, GM said it would speed up the closing of six more factories announced in February, leaving 34 factories at the end of next year — down from 47 at the end of 2008, the AP reported.
“The Viability Plan reflects the direction of President Obama and the U.S. Treasury that GM should go further and faster on our restructuring,” GM CEO Fritz Henderson said in a statement.
“This stronger, leaner business model will enable GM to keep doing what it does best — provide great new cars, trucks and crossovers to our customers, and continue to develop new advanced propulsion technologies that are vital for our country’s economy and environment.”
GM also plans to step up dealer shutdowns. The automaker originally said it would have 4,100 dealers by 2014, a 34 percent cut, and the new reduction will come by the end of next year, according to Bloomberg News.
The new plan also calls for GM to have 40,000 union workers in the United States by the end of next year from 62,000 in 2008.
GM decided to phase out its Pontiac brand no later than next year because the company felt it was spread too thin, Henderson said Monday at a news conference.
“We didn’t think we had the resources to get this done from a product perspective,” or marketing, he said, according to the AP.
Meanwhile, Chrysler cleared two key hurdles on Sunday in its bid to avoid a bankruptcy filing, agreeing on a concession agreement with negotiators for the United Auto Workers and winning ratification of its cost-cutting deal with the Canadian Auto Workers.
Chrysler must now cement a partnership deal with Italy’s Fiat Group SpA and negotiate an agreement to swap equity for debt with banks and hedge funds that hold $6.9 billion in secured Chrysler loan if it wants to receive some $6 billion in additional loans from the U.S. government, the AP reported.