Addressing Congressional leaders today, GM President Fritz Henderson laid out a scenario for teh GM of 2012 vastly changed from teh GM of 2008. As this is most current news and since we have beat the subject to death this post will be for information only.
GM offers cuts in brands, salaries, debt, payroll
December 2, 2008 - 3:17 pm ET
WASHINGTON -- The General Motors of 2012 will have fewer brands and nameplates, thousands fewer dealers and employees, and much less debt on its balance sheet, under a restructuring plan GM gave Congress today.
GM will focus on its "core brands" of Chevrolet, Buick, GMC and Cadillac, the plan says. GM will sell Saab, shrink Pontiac to a niche brand and consider selling or closing Saturn, GM President Fritz Henderson told reporters at a briefing today.
GM also plans to trim its U.S. dealerships from today's 6,450 to about 4,700, Henderson said. It will cut about one-third of the nameplates from its vehicle lineup.
GM executives say the plan will enable the company to be profitable even if the U.S. new-vehicle market makes only a modest recovery.
GM, like Ford Motor Co. and Chrysler LLC, submitted its plan in an effort to persuade Congress and the Bush administration to approve $25 billion in emergency loans to the Detroit 3 this month.
In the starkest acknowledgment GM has made of its financial condition, the company says it needs $4 billion in federal aid by the end of the month.
Henderson, in a briefing with reporters today, refused to say what would happen if GM does not get the immediate aid it seeks. But without government support, he warned, "the company cannot fund its operations."
Request: $18 billion
GM's plan asks Congress for $12 billion in loans by the end of March. It seeks another $6 billion in revolving credit if market conditions don't turn around.
The total request is higher than the $10 billion to $12 billion that GM CEO Rick Wagoner requested of lawmakers during congressional hearings two weeks ago.
Henderson called the GM plan "a blueprint for creating a new General Motors -- one that is leaner, profitable, self-sustaining and fully competitive." Among its key features:
• Reducing the number of GM brands and nameplates, a step GM critics have demanded for years.
Henderson said GM will seek a buyer for Saab. Pontiac will be shrunk to a "specialty, niche" brand, Henderson said. GM already has put Hummer up for sale.
Under its franchise agreement with Saturn dealers, GM will seek a new course for that brand, Henderson said. Asked whether GM would sell or fold Saturn, he said he would not eliminate any options.
The brand "is just not successful," Henderson said.
The number of GM nameplates would drop from 63 today to about 40 by 2012, Henderson added.
• Trimming GM's 6,450 U.S. dealerships to about 4,700.
Most reductions would occur in metropolitan areas, Henderson said.
• Reopening talks with the UAW to cut manufacturing costs further.
Henderson declined to identify the additional concessions GM will seek. But he said GM expects to be fully competitive in labor costs with Toyota Motor Corp. by 2012.
Henderson estimated GM's total U.S. head count would drop from today's 96,000 employees to between 65,000 and 75,000.
• Negotiating with lenders and bondholders to remove about $35.6 billion in debt from GM's books. At the end of September, the company owed $66 billion. Henderson said that debt load is too heavy.
GM aims to achieve through negotiation the kind of debt reduction that otherwise might occur in bankruptcy, Henderson said. The plan probably will involve some exchange of debt for stock.
Breakeven: 13 million sales
Under its plan, GM would break even if U.S. light-vehicle sales recover to just 12.5 million to 13 million cars and trucks a year, Henderson said. Over the past few months, the annualized U.S. sales rate has been less than 11 million units. From 1999 to 2007, the industry sold more than 16 million new cars and trucks each year.
In its plan, GM also agreed to have a government oversight board monitor use of the federal money. Taxpayers would get a stake in the company in exchange for the loans.
After last month's congressional hearings, House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., chastised the Detroit 3 CEOs for failing to make an adequate case for federal aid.
The leaders demanded that the Detroit 3 tell Congress in detail how they would use federal loans and how they would make themselves viable for the long term.
Reacting to lawmakers' complaints that the companies' CEOs came to Washington last month in separate corporate jets, Wagoner is scheduled to return to the capital this week in a Chevrolet Malibu Hybrid.
Wagoner has agreed to accept a salary of $1 next year. The GM plan includes cuts in pay for other senior executives, and the company says it is ceasing use of its jets.
Committee hearings on the Detroit 3 loan requests are set for Thursday in the Senate and Friday in the House. As they did last month, the Detroit 3 CEOs and UAW President Ron Gettelfinger are expected to testify.
Reid and Pelosi have promised to call Congress back into session next week to consider the companies' aid pleas if the viability plans are acceptable.