Corp. is requesting an additional $12 billion in emergency federal funding and continues to view bankruptcy as a final option.
In a submission required by the U.S. Treasury Dept., which already has indicated the auto maker could receive up to $18 billion if it demonstrates viability, the auto maker outlines cost-cutting measures such as 10,000 additional job reductions and the closure of five plants by 2014.
had previously committed to closing nine plants.
“These actions will significantly reduce our labor costs and improve our competitiveness,” Wagoner tells journalists in a conference call.
Also, the auto maker says it will by 2012 slash its dealer body to 4,700 from 6,200, and again to 4,100 by 2014.
In addition, GM says its Saab Automobile operations will undergo bankruptcy proceedings in Sweden, if the auto maker is unable to find or buyer or transition it into a stand-along company with aid from the Swedish government. GM says it would be willing to supplying an independent Saab with technology “at an arm’s length basis.”
The auto maker also says it will reach a decision on selling or phasing out its beleaguered Hummer SUV brand by March 31.
Meanwhile, the Saturn brand will be phased out after 2011. Between now and then GM will continue to consider plans to spin off the operation into an independent retailer, but it will not continue to support the brand after 2011 when its current product lineup runs its course.
Wagoner blames the industry downturn for Saturn’s demise.
“It’s unfortunate,” he says, adding the brand is “loaded up” with superior products.
Adding updated models to its core Chevrolet brand and targeting niche markets with Pontiac products “leaves us with a very, very good appropriately comprehensive (lineup),” he adds.
As for the prospect of bankruptcy, Wagoner says the scenario was studied at the request of the Treasury Dept., but GM has concluded the option represents a “last resort.”
Adds Chief Operating Officer Fritz Henderson: “There is absolutely no way we could finance the business while in bankruptcy.”
Wagoner praises GM stakeholders for helping the auto maker compile its report, which is based on continued market weakness. In particular, he singles out the United Auto Workers which has reached a tentative agreement to restructure its contract in a bid to reduce GM’s labor costs.
Those same measures, which require ratification within the union, are being extended toLLC and Motor Co. in keeping with the UAW’s practice of pattern bargaining.
The viability plans now face the scrutiny of a new auto industry task force assembled by President Obama, but a timetable for feedback to the auto makers has not been established.
Douglas Bernstein, a managing partner in the bankruptcy unit of Plunkett Cooney, expresses some reservations over the establishment of a task force to oversee restructuring at GM and.
“A task force would have both its good points and its bad points,” Bernstein tells Ward’s. “One thing, you’re going to have multiple heads considering (the plans). In a formal bankruptcy, you make the argument to one person.”
A final plan for long-term viability with sign-offs for concessions from key stakeholder is due to the Treasury and Obama’s task force by March 31.
The government initially provided GM with $9.4 billion in taxpayer loans and an additional $4 billion was received today after handing in the latest viability plan. Chrysler, which in its viability plan earlier today called for action such as a reduction in its total employment of 3,000 people and the axing of three models, has borrowed $4 billion and is seeking another $5 billion. Chrysler Chairman and CEO Robert Nardelli warned his company would face liquidation without additional loans.