GM & Chrysler Submit Long-Term Viability Plan to Government Today
DETROIT – General Motors and Chrysler are scheduled to submit recovery plans demonstrating their long-term viability to the government today. To prove its viability to the U.S. Treasury and keep the $13.4 billion in pledged government loans needed to stay in business, GM outlined a combination of organization restructuring, product line overhaul, and cost-trimming measurements.
Under the agreement closed with GM on Dec. 31, 2008, Treasury provided the automaker $4 billion of the loan immediately and then funded an additional $5.4 billon on Jan. 16. The remaining $4 billion is scheduled to be provided to the automaker today, subject to GM meeting certain conditions and funds being available. To protect taxpayers, the agreement requires GM to use these funds to become financially viable and includes other binding terms.
Chrysler has so far accepted $4 billion and hopes to get an additional $3 billion in loans.
GM outlined its restructuring plan, focusing on long-term sustainable success. Responding to the market demands, the automaker said will introduce seven new cars and crossovers to its product line, expand its hybrid lineup and make more than half of its vehicles flex-fuel capable by 2012, and begin production of the Chevrolet Volt extended-range electric vehicle in 2010.
Since 2005, GM has reduced North American structural costs by $9 billion, and has also outlined its plan to improve its liquidity position by $20 billion through the rest of 2009.
In dealing with labor costs, the UAW suspended GM's the Jobs Bank program Feb. 2, and agreed to executive another Special Attrition Program, according to the automaker. GM is also working to reduce salaried employment globally by approximately 10,000 employees (an estimated 3,400 in the U.S.), and temporarily implement pay cuts for salaried employees this year. The company also announced the restructuring of the global powertrain group. GM has scheduled a press conference for this evening to discuss its restructuring plan.
Chrysler was said to be in the final stages of completing its plan on Monday, which will include further cuts in its manufacturing operations in the United States and more details on its strategy to rebuild its product lineup with a network of foreign alliances, according to the New York Times.
Ford has not received government loans.