GM Backtracks, Admits To Possibly Needing More Than $13.4 Billion

January 12, 2009

It seems we spoke to soon in claming that GM would not ask for more than the $13.4 billion it's been granted in Federal assistance (from a recent post about Chrysler's request for an additional $3 billion). Today, GM COO Fritz Henderson "presented a worst-case scenario" to Congress, according to Detroit News, in which it would need even more money than the loans it was granted by the Federal government in December. Whether the new number will approach the $18 billion mark that GM asked for in December remains to be seen.

Currently, GM is working on amending their labor contract with the UAW as stipulated by the loan terms set by the U.S. government. One of the requirements is bringing overall pay rate for workers in domestic auto factories down to the level of U.S. auto factories that produce foreign makes. But this particular criteria is being contested by the likes of UAW President Ron Gettelfinger and Representative Barney Frank of Massachusetts.

Henderson is confident that GM will iron out its differences with the UAW in time for the February deadline. Other items at issue are payments and benefits to workers who have been laid off. Notably, the UAW has agreed to end the maligned jobs bank program, in which auto workers could receive approximately 95 percent of their pay and benefits for years after elimination of their positions.--Colin Mathews

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