GM, Chrysler Submit Survival Plans
The surprise, and a negative one we might add, was that the two manufacturers seem in bigger trouble than previously thought. Based on their survival plans, the companies are asking a whooping overall aid of $21.5 billion. GM needs $16.6 billion, while the rest are required by Chrysler.
GM's plea for money include a $7.5 billion credit line to be used in case the situation further deteriorates and a $9.1 billion aid in new loans, Associated Press reports. Without the money, GM officials say the company could run out of funds by March. The manufacturer claims it could become profitable in the next two years and repay the loan by 2017.
GM' plan stipulates a 47,000 worldwide jobs cut, the largest personnel scale back made by a US company since the beginning of the crisis, and the closure of five more US based factories. The job cuts amount for 19 percent of the company's global workforce.
General Motors CEO Rick Wagoner motivated the harshness of the plan by blaming the deterioration of the economic climate in the past two months. "Today's plan is significantly more aggressive because it has to be," Wagoner was quoted as saying by the aforementioned source. "We have taken stronger actions, we needed to."
Both recipients of the loans are required by the Government to reach agreements with both United Auto Workers (UAW) and the bondholders. UAW representatives said that the union-run trust fund that will be set up at the beginning of next year is still under discussion. GM's CFO Ray Young said the company hopes to exchange two-thirds of the $28 billion in unsecured bonds by the end of March.
As for Chrysler, the company's restructuring plan includes cutting 3,000 jobs and scrapping the Dodge Aspen, Durango, and Chrysler PT cruiser models.