G.M.'s headquarters in downtown Detroit.
The New York Times - DETROIT — 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.
G.M., for example, said it would cut 47,000 more of its 244,000 workers worldwide; close five more plants in North America, leaving it with 33; and cut its lineup of brands in half, to just four: Chevrolet, Cadillac, GMC and Buick.
The Pontiac brand will have a much smaller role, if any, in G.M.’s future, and the company also said it would phase out its Saturn brand, which it once hoped would build small cars to counter the best of the Japanese brands.
G.M. also said it had made progress in discussions with the United Automobile Workers union and its bondholders to reduce its costs further.
The cash crisis will require fast action by the administration’s new cabinet-level Presidential Task Force on Autos, which is overseeing the reorganization of G.M. and Chrysler.
The deteriorating finances of the two companies present the Obama administration with two options, neither of them appealing.
It can provide the money in the hopes that the companies will stabilize, and no longer have to keep pushing workers into a growing pool of people without jobs. But there are no guarantees, as the Treasury Department learned on Tuesday when the automakers filed updates on their restructuring plans, that they might not be forced to come back again with requests for more money.
But if the federal government balks at the automakers’ requests, that would mean the two companies probably would have no choice but to file for bankruptcy protection, because they are losing hundreds of millions of dollars each month.
And the car companies said on Tuesday that the cost of a bankruptcy reorganization, with the government providing financing to help it through that process, would be far greater than their latest loan requests. Without such help, the companies would have to liquidate, creating staggering new job losses.
In a statement, the administration said Tuesday night that its task force would be reviewing the carmakers’ reports in coming days, adding that “more will be required from everyone involved — creditors, suppliers, dealers, labor and auto executives themselves — to ensure the viability of these companies going forward.”
The third Detroit auto company, Ford Motor, has not received federal assistance and has no requests pending.http://www.nytimes.com/2009/02/18/business/18auto.html
- Broadcast TV Faces Struggle to Stay Viable
- Ads Now in Soap Opera Scripts; Products Plugged on...
- Rocky Mountain News Shuts Down Amid Ad Slump
- Pressure to Re-evaluate Dow Index
- Bankruptcy Funding Solicited for Car Makers
- Murdoch Hasn't Given Up on Print or Newspapers
- What's in a Wall Street Bonus Figure? Not Accuracy...
- Economy Dreadful, But Worse Elsewhere
- After Losses, a Move to Reclaim Executives’ Pay
- When Consumers Cut Back: A Lesson From Japan
- Journal Register seeks bankruptcy protection
- Banks May Need to Be Nationalized
- Dow's Lineup of Companies Changing
- Nationwide's CEO dumped - Columbus Dispatch Aslee...
- New York TImes Stock Drops Below $4 Per Share
- A Swiss Bank Is Set to Open Its Secret Files
- Business Writing 492 - Agenda
- I Dream of Denver - South, West Gain, Midwest Lose...
- Starbucks Coffee, Now in Instant
- SEC Accuses Texas Financier of 'Massive' $8 Billio...
- Local Web-Ad Market Cools Down
- Automakers Seek $14 Billion More in Aid
- Bailout Likely to Focus on Most Afflicted Homeowne...
- Business Stories Featured in George Polk Awards
- Stocks Slide in Asia, Europe on concerns about U.S...
- Nearly broke California faces fiscal crisis - $41 ...
- Brokerages Tighten Hedge Fund Financing
- Will Stimulus Bill Be A Waste of Money?
- Auto Maker Bankruptcy Looms
- Economists' U.S. Outlook Dims
- Got A Journalism Degree and No Job? The Strip Club...
- Chicken Price Slump , Leaves Farmers Wanting to Fl...
- Icing the Culprit in Continental Flight 3407 Crash...
- GM Offers U.S. Two Choices: More Aid or Bankruptcy...
- Bailout Needs Some Strings Attached to Limit Pay
- Will the Stimulus Package Work?
- The Real Stimulus Burden - We Will Be Paying For ...
- Sirius Seeks To Fend Off Takeover, Bankruptcy
- Bank Chieftains Appear Before Congress
- Congress Strikes $789 Billion Stimulus Deal
- Big Grocer Pulls Unilever Items Over Pricing
- Market Pans Economic Stimulus
- Geithner Swings and Misses
- Why Analysts Keep Telling Investors to Buy
- The Death of Local TV Stations
- Retailers Stop Making Sales Forecasts
- Scrambling to Clear Debt, Sirius Talks to EchoStar...
- Lewis Puts Money Where Mouth Is
- Recession Job Losses Surpass Three Million
- Obama Lays Out Limits on Executive Pay
- Wall St. Pay Is Cyclical. Guess Where We Are Now.
- Senate Adds Homebuyer Tax Credit to Stimulus Bill
- EchoStar Amasses Sirius XM Debt
- Madoff Client List Is Disclosed in Filing
- Costco Leads Expected String of Retail Warnings
- Consumers Keep Recovery at Bay
- CEOs Sent Packing in Record Numbers
- China's Migrants See Jobless Ranks Soar
- Macy's to Shed 7,000 Jobs, Cut Payout by 62%
- Sirius Faces Debt Payment in Test of Its Viability...
- The Chill of Protectionism
- Things So Bad at Magazines - Even Conde Nast in Re...
- Gloom For Glossies - Suffering Magazines
- ▼ February (63)
- ► 2008 (45)