US Prepares to Send GM into Bankruptcy
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According to a report by the Washington Post, this would translate into tens of billions dollars to be injected in the American company which is planning a similar strategy as Chrysler: to step under Chapter 11 protection and revive as a newer and cleaner company that would be capable to remain competitive without government support.
Although not confirmed, it appears General Motors is expected to receive around $30 billion in additional state aid, raising the total funds approved by the government to $45 billion. Earlier media reports indicated that the Obama administration is again eying several places in the "new" General Motors board, similar to Chrysler in which the government names four of the nine directors. Additionally, the state would take around 50 percent of the revived General Motors while the United Auto Workers (UAW) is expected to take control of a 39 percent stake.
General Motors is currently undergoing a massive restructuring process, with several cost-cutting measures applied in almost every single area. The company last week announced it plans to manufacture some of the products sold in the United States in plants overseas, in a move supposed to reduce labor and production costs.
Additionally, the American manufacturer said it will reduce the number of local dealerships by ending contracts with approximately 1,100 dealers across the country.
“We have said from the beginning that our dealers are not a problem but an asset for General Motors,” said Mark LaNeve, GM Vice President of Sales Service and Marketing. “However it is imperative that a healthy, viable GM have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient."
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