GM Seeks Up to $16.6 Billion More in Aid, Plans 47,000 Job Cuts

General Motors Corp. said it needs as much as $16.6 billion in new U.S. loans, more than doubling the aid to date, and must get some of the cash next month to survive. GM plans 47,000 more job cuts worldwide this year.
Chrysler LLC, propped up like GM with federal assistance, said it’s seeking $5 billion more from the government and will shed 3,000 more positions.
The automakers met a deadline today to report progress in revamping their operations with $17.4 billion in loans granted so far. Along with Ford Motor Co., they got a boost when the United Auto Workers said it reached tentative agreements to help trim labor expenses.
GM’s retrenchment includes closing an additional 5 U.S. plants by 2012. GM said it examined three bankruptcy scenarios, with price tags of as much as $100 billion, and that all were less-favorable options than a rescue.
GM said it needs at least $9.1 billion more in aid, or as much as $16.6 billion should the economy worsen. The biggest U.S. automaker has received $13.4 billion since December and, along with Chrysler, must show by March 31 how it will return to profit or risk having the U.S. Treasury Department recall the loans.
Production of Saturn cars would stop in 2011, if the brand hasn’t been sold, GM said. Should dealers or other investors present a proposal, GM “would be open” to a spinoff or sale of the unit, according to the Detroit-based automaker’s viability plan.
Chrysler’s Needs
Chrysler said it needs an additional $5 billion March 31 after receiving an initial installment of $4 billion. The new job cuts at the third-largest U.S. automaker would be in addition to 32,000 shed through the end of last year.
House Speaker Nancy Pelosi said she hopes the plans lead to “the transformation of our domestic automobile industry.”
President Barack Obama’s administration will determine whether the shared sacrifices required will bring about “reasonably restructured corporations,” Pelosi, a California Democrat, added in a statement.
Earlier, White House press secretary Robert Gibbs said a restructuring through bankruptcy for GM and Chrysler can’t be ruled out, while adding the industry is “tremendously important” to the economy.
“I wouldn’t preclude policy choices, particularly since we haven’t seen details,” Gibbs told reporters traveling with the president to Colorado. The auto companies “represent a huge part of our manufacturing base, and to have a strong and viable auto industry is tremendously important for the future.”
Rebuffing Bankruptcy
GM and Chrysler rebuffed that idea again today.
“All research indicates bankruptcy would have a dramatic impact on GM sales and revenue,” GM said in its 117-page plan, citing a study that concluded 80 percent of consumers wouldn’t buy a car from a bankrupt company. “A restructuring process outside of bankruptcy is highly preferable,” GM’s report said.
Bankruptcy “would create unbearable stress not only for our suppliers, but also the suppliers of other automakers,” Chrysler Chief Executive Officer Robert Nardelli in a briefing with reporters. “It would have a cataclysmic effect on the entire auto industry.”
Liquidating the Auburn Hills, Michigan-based automaker might cost 2 million to 3 million jobs, according to Chrysler’s plan.
GM fell 3.7 percent to $2.10 at 4:51 p.m. after regular New York Stock Exchange composite trading. Earlier, the shares sank 32 cents, or 13 percent, to $2.18, extending their decline over the past year to 92 percent. Chrysler is controlled by Cerberus Capital Management LP.
Talks With UAW
To meet loan requirements, GM and Chrysler have been trying to persuade the UAW to accept equity instead of cash for half of next year’s scheduled payments into union-run retiree health- care funds.
Discussions are continuing over how the companies will finance those trusts, the UAW said in an e-mailed statement announcing the preliminary agreement on other contract terms. Lower-cost labor contracts would help GM, Chrysler and Ford trim expenses amid the worst U.S. auto market since the early 1980s.
Chrysler President Tom LaSorda said the labor savings are enough to keep the federal loans.
The accord lowers labor costs to “competitive parity” with expenses at the U.S. factories of overseas automakers, Joe Hinrichs, Ford’s group vice president for manufacturing and labor affairs, said in a statement.
GM also is required by the government to cut two-thirds of its $27.5 billion in unsecured public debt to $9.2 billion, and the company has been in talks with bondholders.
GM’s 8.375 percent bonds due in July 2033 slid 0.63 cent to 15.13 cents on the dollar, yielding 55.1 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.