GM Files Chapter 11 Bankruptcy: Follow It Live Page 2

June 1, 2009

General Motors Renaissance Center, Detroit, Michigan

In conjunction with today's filing, GM has announced the closure or idling of an additional 14 assembly and parts facilities across North America as it rapidly reconfigures its manufacturing capacity to match the new focus on four brands: Chevrolet, Cadillac, Buick and GMC. Some 21,000 jobs will be cut as a result, about a third of GM's current workforce.

The plants being closed or idled include GM's Orion, Mich., plant and Spring Hill, Tenn., plant, which will be put on standby until GM either reassigns product to them or brokers a deal to sell them. Spring Hill could be packaged with the Saturn brand, for example, while the Orion plant could be closed eventually after the next-generation Chevrolet Malibu bows. The Malibu is built in Orion, where GM also built the Pontiac G6; production could move to Fairfax, Kan., where GM will also build the 2010 Buick LaCrosse. GM's plan refers to an additional plant closure in 2012, which would coordinate with a replacement for the Malibu, which was new in 2008.

To date, there is no decision on the future of the HUMMER/Colorado plant in Sheveport, La. It is expected that production of the Chevrolet Traverse will move to Delta Township, Mich., from Spring Hill, Tenn.

GM Chapter 11: The Union's Take

The additional UAW job cuts that will come at General Motors are the result of cooperation with the company and the government, says UAW president Ron Gettelfinger"We've done everything we possibly could," he noted on a televised interview, and pointed a finger at critics who claim the bankruptcies of GM and Chrysler are largely due to union demands.

"Are the people that are pointing fingers at the UAW also giving us credit for what's going on at the Ford Motor Company?" Gettelfinger asked.

Gettelfinger expects UAW blue-collar employment levels to settle out at around 38,000-40,000 workers at GM; at Chrysler, less than 20,000 UAW workers will have jobs after restructuring. Gettelfinger noted the uncertainty in the union's trade of pension dollars it's owed for GM stock: "There are a lot of retirees out there who are wholly dependent on the VEBA surviving," he noted.

Gettelfinger also indicated the UAW's new stake in Chrysler could be sold to Fiat in the future.

These sacrifices by organized labor won't be the last. President Obama said in a press conference that today's auto workers are "making a sacrifice for the next your children and all our children can grow up in an America that still makes things." 

GM Chapter 11: What's Next

The restructuring will leave General Motors largely in the hands of the U.S. government and taxpayers; their 60-percent stake in the company will be flanked by the UAW's 17-percent stake; bondholders will get roughly 10 percent in the new company, with warrants to purchase another 10 percent. The government will supply GM with an additional $30 billion to complete the restructuring.

GM also is expected to name the winning bid in its auction for the HUMMER brand today in an afternoon press conference held by CEO Fritz Henderson.

As a result of the dealings, GM is expected to emerge from bankruptcy court shorn of its "bad" assets and reconstituted as a smaller company with four brands and $17 billion in debt, plus an additional $9 billion in financial commitments. Analysts estimate it could be years before GM emerges from that new foundation as an independent company.

The "new" GM will be profitable if it maintains its share of a U.S. new-vehicle market of 10 million sales annually--levels which could be reached in June or July, as sales begin to strengthen a bit. 

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