UAW approves GM concessions
Members of the United Auto Workers union have ratified a package of concessions designed to reduce General Motors’ labor costs.
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GM All but Certain to File for Chapter 11
General Motors, the company that was once the nation’s largest employer, moved to the edge of bankruptcy protection Wednesday as debtholders refused a last-ditch deal.
GM moves closer to bankruptcy
General Motors said Wednesday it has fallen far short of the bondholder support it needed for its proposed debt-for-stock offer, virtually guaranteeing that the nation’s largest automaker will be forced to file for bankruptcy court protection within the next five days. The bondholders were not satisfied with the prospect of owning only 10% of the company when the U.S. government would own nearly 70% and a union-controlled trust fund up to 20%. The bondholders own $27 billion in corporate notes. GM (GM, Fortune 500) needed owners of 90% of those bonds to accept stock in return for the debt in order to reduce its interest expenses to a more manageable level. – From CNN
GM, UAW reach accord
The United Auto Workers said today it has reached a tentative agreement with General Motors Corp. and federal officials to modify its labor contract with the automaker, removing a major hurdle to GM’s government-mandated restructuring. The UAW did not release details of the agreement because it has not been ratified by its members at GM. The union said it was in the process of scheduling a ratification vote. The “tentative understanding” contains modifications to the UAW’s labor deal and GM’s obligations to fund a trust to pay retiree healthcare benefits, the union said. – From LA Times
GM axes 1,100 dealers
General Motors notified 1,100 of its 6,000 dealerships Friday that it is terminating their contracts with the struggling automaker, the first step in an even deeper 40% cut in its retail network. GM spokeswoman Susan Garontakos said that the dealers receiving notice Friday are being told that their contracts will not be renewed in October 2010. Many of them are expected to close shop this year. The company has told the Obama administration that it plans to cut its network down to 3,600 dealers by next year. – From CNN Money
GM kills Pontiac, cuts 23,000 jobs
General Motors announced plans to cut 23,000 U.S. jobs by 2011, drop its storied Pontiac brand and slash 40% of its dealer network in its latest bid to stay out of bankruptcy. GM also announced an offer to its bondholders to swap $27 billion of the company’s unsecured debt for stock. GM is offering bondholders 225 shares of its stock for every $1,000 it owes the bondholders in principal. The moves are GM’s latest efforts to cut costs and stem losses that have dogged its North American auto operations since 2005. But Monday’s restructuring announcement goes much further than the viability plan GM unveiled to President Obama’s auto industry task force in February. – From CNN Money
GM & Segway Project P.U.M.A.
Please hold a moment while we check our calendars. Nope, it’s definitely not April 1. That must mean a General Motors tie-up with Segway must be true. The Personal Urban Mobility and Accessibility Project (P.U.M.A. for short) will seek to develop a self balancing two-wheeled vehicle capable of reaching speeds of 35 mph – well above the Segway’s 12 mph top speed — for 35 miles. – from Autoblog
GM CEO Rick Wagoner to get $20 million retirement package
Rick Wagoner will leave his post as CEO of bailed-out General Motors with a $20 million retirement package, the company’s financial filings show. Although the Treasury Department has barred GM from paying severance to Wagoner or any other senior executive, Wagoner is eligible to collect millions in retirement benefits from his former employer, according to the documents reviewed by ABC News. The Obama administration asked for Wagoner to resign Sunday, as part of its restructuring of the auto industry. President Obama said this morning that forcing Wagoner out indicated it was a time for new leadership. Under Wagoner’s leadership, GM lost tens of billions of dollars, took billions in taxpayer-financed aid, and announced plans to cut 47,000 employees by the end of 2009. – From ABC News
GM teetering on the brink of collapse
General Motors Corp. said in a government filing Thursday that its accounting firm has found there is “substantial doubt” about the automaker’s ability to survive. The embattled automaker made the disclosure in a 480-page filing with the Securities & Exchange Commission. GM has sustained large and continuing losses, while saying it needs additional federal loans to remain in business. Thursday’s statement from the company’s auditors presents another hurdle the automaker will have to clear as it makes the case that it deserve additional taxpayer support going forward. – From CNN
Hummer, Saturn and PT Cruiser on Chopping Block
GM and Chrysler are proposing axing numerous brands and models in their viability plan set out yesterday. Amongst those on the line will be Hummer, Saturn and the PT Cruiser. Hummer has reportedly drawn interest from Sichuan Auto in China – but it’s just a rumor. The Hummer simply isn’t profitable as a mainstream brand, but the uniqueness of the brand does offer value to a smaller manufacturer. It will probably survive in some form – likely made overseas. Saturn simply doesn’t have anything unique or iconic to keep around, and the PT Cruiser will simply fade away – and be trotted back out some year when the time right.
General Motors will phase out Saturn by the end of the 2012 model year — the end of the current model life cycle — unless someone comes forward to buy the sales channel. Hummer is as good as gone in 2010, unless GM can close a deal to sell the militaristic SUV maker by this March 31. And GM will cap its financial support for Saab with hopes that it will become an independent business entity by January 1, 2010. GM would be happy to sell technology — which means, sharing existing platforms — with new owners of Saturn, Saab and Hummer in the event that someone with money comes forth to buy them, very soon. – From Motor Trend
In the “viability plan” that Chrysler submitted to the Treasury department the carmaker laid out some more changes to its product line-up. Some of those changes had already been announced shortly after Chrysler’s new owners, Cerberus Capital Management, took over in 2007. The new management team quickly announced that the Chrysler Pacifica crossover, Dodge Magnum wagon and PT Cruiser convertible would be dropped. – From CNN
Sichuan Auto Industry Group Co, a tiny automaker in southwest China, has no interest in buying General Motors’ (GM.N) Hummer unit, a senior company executive said on Wednesday, denying media reports. Sichuan Auto was reported to be in talks with GM to buy its sport-utility vehicle subsidiary and could pay up to $500 million for the deal. “It’s a complete rumour. We have never had discussions with GM, nor are we interested in Hummer,” said the Chinese executive who asked not to be identified. – From Reuters
GM’s $30 billion request; lose 47,000 jobs
General Motors Corp. and Chrysler LLC on Tuesday told the U.S. government it needs even more taxpayer money to survive than originally thought. Meanwhile, the United Auto Workers union said it has reached a tentative agreement with Chrysler, GM and Ford Motor Co. on modifications to existing labor contracts. But discussions were still under way about how the companies would fund union-run trust funds that will take over the companies’ retiree health care obligations starting next year. GM, presenting a dire outlook for the future, said it may need $30 billion in total government financing to weather the economic downturn and would cut 47,000 jobs worldwide and shutter five more U.S. factories in a massive restructuring plan. – From Fox News
Troubled US carmaker Chrysler has asked for another $5bn (£3.5bn) from the US government, saying it plans to axe 3,000 jobs and cut three car models. The moves form part of its restructuring plan submitted to the Treasury Department on Tuesday. Meanwhile General Motors has said it would try to borrow up to $16.6bn more from the government, on top of the $13.4bn it has already received. Its plan includes cutting 47,000 jobs and closing five more US factories. – From BBC News
The price tag for bailing out General Motors and Chrysler jumped by another $14 billion Tuesday, to $39 billion, with the two automakers saying they would need the additional aid from the federal government to remain solvent. In return, the two companies also promised to make further drastic cuts to all parts of their operations, in the hope that they can eventually strike a balance between their bloated cost structures and a dismal market for new car sales. – From NY Times
GM to cut 10,000 salaried jobs
Don’t be surprised if another round of cuts to salaried staff happens sooner than later. This company has death written on it, and people are afraid to buy their cars. They need to survive the next 6-12 months and restore some confidence that they’ll be around for the long haul.
General Motors Corp (GM.N) said it would cut its global salaried workforce to about 63,000 from 73,000 during 2009 and impose pay cuts for the remainder of its salaried workforce. The job cuts are the latest step the struggling automaker is taking to pare down its operations ahead of a presenting a restructuring plan to the U.S. government on Feb. 17. – From Reuters
General Motors announced Tuesday it is cutting 10,000 workers, or 14% of its salaried jobs worldwide. A third of those job losses will be in the United States. The troubled automaker also said it will cut the pay for its remaining U.S. salaried staff. GM (GM, Fortune 500), which is preparing to present a long-term viability plan to the Treasury Department next week, said the cutbacks are part of the restructuring plan it submitted to Congress on Dec. 2 when it was first asking Washington for federal assistance. – From CNN Money
General Motors Corp., the largest U.S. automaker, will cut 10,000 salaried jobs globally and reduce pay for other U.S. white-collar workers by as much as 10 percent to slash costs and keep $13.4 billion in government loans. About 3,400 of GM’s 29,500 U.S. salaried jobs will be cut by May 1, the company said. The Detroit-based automaker said in a statement it will cut pay temporarily by 10 percent for U.S. executives and by 3 percent to 7 percent for many other U.S. salaried employees. GM is reviewing salaried worker pay and benefits in other countries. GM needs to accelerate cost-cutting plans after the automaker’s U.S. auto sales fell 49 percent in January. GM and Chrysler LLC must submit progress reports by Feb. 17 on their efforts to restructure their businesses. – From Bloomberg
George Bush: Auto Bailout Is the ‘responsible’ Move
Outgoing President George W. Bush used his weekly radio address to defend and explain why he decided to give U.S. automakers $17.4 billion in emergency loans.
George Bush Approves $17.4 Billion Auto Bailout
Well, outgoing president George Bush has come to the rescue of the auto industry. So what does this mean for our kids? No bridges or books in year 2020… Where’s my shoe!?
President Bush on Friday announced $13.4 billion in emergency loans to prevent the collapse of General Motors and Chrysler, and another $4 billion available for the hobbled automakers in February with the entire bailout conditioned on the companies undertaking sweeping reorganizations to show that they can return to profitability. – from NYTimes
The White House announced a $17.4 billion rescue package for the troubled Detroit auto makers that allows them to avoid bankruptcy and leaves many of the big decisions for the incoming Obama administration. Speaking from the White House, President George W. Bush said the administration decided against forcing a bankruptcy to compel cost-cutting, in order to avoid the risk that consumers would desert one or more of the companies and touch off an industry collapse, deepening the current economic downturn. “In the midst of a financial crisis…allowing the U.S. auto industry to collapse is not a responsible course of action,” Mr. Bush said. – from WSJ
Bush “Very Close” on bailing out Big Auto
White House Press Secretary, Dana Perino told reporters that Bush would not allow a “disorderly collapse” of the failing US auto companies and that the administration is “very close” and “nearing a conclusion” on their response.
George Bush Vows Auto Bailout
The White House may reverse course and spend part of the $700B bailout to save the auto industry after the UAW was blamed for the failure of Congress to pass a bill, reports Sharyl Attkisson.
Auto Bailout Collapses
Analysis by Lan Xue, Citigroup MD & Head of China Research
Bid to Save GM, Chrysler Loans Dies in Senate
No soup for you, Detroit!
Senators voted down a bill to rescue Detroit automakers after a last-ditch attempt to renegotiate the deal died. The Senate voted 52-35 on a shell bill that would have contained language that had the endorsement of the White House and was similar to a version that passed the House of Representatives. The 52 votes in favor of the shell bill were short of 60 needed for passage. – From ABC News
Senate Democrats and the White House failed to find 60 votes to end debate on a $14 billion auto bailout bill and bring it to a vote Thursday night, killing the measure for the year. The 52-35 vote followed the collapse of negotiations between Senate Democrats and Republicans seeking a compromise. – From CNN.com
Auto Bailout Halted in Senate by Republicans
The prospects of a $14 billion government rescue of the American auto industry seemed to vaporize Thursday as the Senate Republican leader, Mitch McConnell of Kentucky, spoke out forcefully against the bill, effectively ending its chances despite the urgings of the White House.
In a speech on the Senate floor, Mr. McConnell said he and other Republicans had drawn a clear distinction between the Treasury’s $700 billion economic stabilization, which they helped pass in October, and the proposal to aid the American automakers, which he said raised questions about which industries or individuals deserve help.
“A lot of struggling Americans are wondering where their bailout is,” Mr. McConnell declared. Although Mr. McConnell voiced support of an alternative plan that was developed by Senator Bob Corker, Republican of Tennessee, it seemed unlikely that there was any possibility of compromise at this late point in the year. But some Congressional aides still expressed hope and said talks would continue.
- from NYTimes
A $14 billion auto industry bailout bill stalled in the Senate on Thursday, and Republicans demanded upfront concessions from the United Auto Workers as the price for support needed for passage.
UAW officials were in talks with key lawmakers, congressional officials said, although it wasn’t clear what, if any, givebacks the union was willing to discuss.
The developments unfolded after Senate Republican leader Mitch McConnell of Kentucky joined other GOP lawmakers in announcing his opposition to a White House-backed bill that was approved by the House on Wednesday.
- from Forbes