
GM tonight along with Chrysler submitted plans to the newly formed Government Auto Task Force explaining how they will achieve viability. GM’s 117-page plan spells out in detail the methods they plan on using to achieve viability, or net positive value, that they promised they would in exchange for $13.4 billion in loans they’ve already received. The last $4 billion payment from that in fact came today.
The Auto Task Force will have 6 weeks, until March 31st, to decide if the methods described by GM are adequate to allow the company to continue to operate or if the loans will be called back and the company forced into bankruptcy.
GM has broken their plan down into the following areas, and bases it on a projected 11.5 -12 million units of vehicles sold per year:
1. Dealerships and brands will be reduced. It was noted that Hummer and Saturn will either be sold or phased out, with Hummer potentially gone by March 31, and Saturn by the end of 2011. Saab will be sold with support from the Swedish government. Pontiac will become a niche brand. Total dealerships will be reduced from 6,246 in 2008 to 4,700 by 2012, and to 4,100 by 2014
2. Every car and crossover GM will produce from 2009 to 2012 will be fuel efficient. Building the Volt pack assembly plant and advanced battery lab are also part of the plan.
3. They will close an additional 14 assembly plants by 2012. 47,000 jobs will be eliminated in 2009.
4. The Jobs Bank has been eliminated and additional agreements have been achieved and will be ongoing in negotiations with the UAW.
5. Debt reduction from $28 billion to $9 billion will be achieved, with bondholders by the end of March and with the UAW by the end of May. At this point however a deal has not yet been struck.
6. GM is requesting an additional $16.6 billion in government loans by 2011 in addition to the $13.4 they have already received, for a grand total of $30 billion in government loans. Additional funds will be sought from Canada, Germany, and Sweden.
7. Bankruptcy is considered as an option per the government’s request but GM considers it to be a “too risky costly, and time-consuming” alternative per CEO Rick Wagoner. It was suggested that bankruptcy would cost $100 billion.
READ THE PLAN HERE
GM said it needs $2 billion in March, $2.6 billion in April, $4.5 billion to replace a credit line by 2011, and if conditions worsen, a $7.5-billion credit line.