The GM bailout plan: Fewer jobs, fewer cars, fewer plants, fewer nameplates, more loans

Automaker seeks another $9.1 billion, but is it good money after bad?

02/10/2009


The turnaround plan proposed by General Motors to Treasury Department officials Tuesday for an additional $9.1 billion in loans to keep the struggling automaker out of bankruptcy. That would bring the current loan requests to more than $17 billion, and some experts believe the number will have to climb to $30 billion before GM is done.

Other than the specific number, however, there was little in the way of new plans for fixing the fundamental issues at GM.

The plans calls for closing five more U.S. auto plants, bringing that total to 17 since the first GM announcement in December. It calls for selling or shuttering the Saturn, Saab and Hummer lines of cars, Jobs cuts are also part of the deal, with GM saying it would eliminate 50,000 jobs by 2012.

Some analysts see little in the announcement that is cause for much optimism. "When consumers refuse to buy your product, that's the economy telling you you're bankrupt," said Rich Yamarone, director of research at Argus Research, told CNN .

The issue of labor concessions will continue to be a hot topic for negotiators. Chrysler, which is seeking an additional $5 billion in federal money, said Tuesday it has already received concessions from the United Auto Workers and other creditors.

Workers told TV station WLNS in Lansing, MI that Tuesday announcement by GM did little to alleviate their fears. Michigan State University professor Robert Wiseman, told the station, "Because they have long term commitments with both plants and labor unions, and they're hard to get out of those commitments. It's very costly to shut down plants. It's very difficult to eliminate labor agreements."

Bloomberg reported Wednesday the domestic struggles for GM improves the position for GM’s Daewoo subsidiary in South Korea. “GM Daewoo is the future for GM,” said Lee Jin Sik , a Seoul-based analyst at CSM Worldwide Inc. told Bloomberg. “The carmaker isn’t capable of building small cars efficiently in the U.S.”





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Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

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