Gm can't even last a little over 100 years and make money while the structures in Rome have been around for thousands and draw more tourists than GM sells car. Doesnt GM know how to market or make a product for the ages?
Plant closures, more job cuts at GM feared
Plants must close, too, experts warn
BY JUSTIN HYDE and JEWEL GOPWANI • FREE PRESS BUSINESS WRITERS • February 7, 2009 General Motors Corp. must close plants and announce deeper job cuts as part of the cost-cutting plans it and Chrysler LLC are to submit to the U.S. Treasury in 10 days, industry experts say, but continued deterioration in the economy could still drive the automakers into bankruptcy. The possibility of a U.S. automaker going bankrupt has led the Obama administration to hire two law firms and an investment bank with extensive backgrounds in corporate restructuring to advise it on strategies for dealing with GM, Chrysler and the rest of the industry. The advisers also would help protect the government's $17.4 billion in loans to the two companies. "The decision has been made that they can just as well deal with their autoworkers and wages and benefits outside of bankruptcy," said John Jerome, a bankruptcy attorney and partner at Saul Ewing LLP. "It may come to a point where that not's possible." GM and Chrysler maintain that a bankruptcy would likely mean the dissolution of both companies and thousands of lost jobs because a bankrupt automaker would be hard pressed to generate the cash needed to pay suppliers, build cars and finance dealers. The decline of the U.S. auto industry has already led to 200,000 job cuts in the past year, according to federal jobs data released Friday. But with U.S. auto sales not expected to top 10 million vehicles this year, experts and industry officials worry that Chrysler may not have the resources to survive, while GM could be forced to bankruptcy court in order to win deep concessions from bondholders.
Plants at riskWith the deadline for the cost-cutting plan approaching, GM has not settled on the scale of any plant closures, but the slack U.S. sales pace and decision to shed the Hummer, Saturn and Saab brands while shrinking Pontiac has left it with expensive unused plant capacity. The automaker has also said it would continue to reduce its workforce over the next few years, and has offered buyouts to thousands of UAW members. "In the long run, I don't think they're going to need as much capacity as they do right now," said Haig Stoddard, auto analyst at IHS Global Insight. "Even after they get through this quarter and take some more hard hits on their revenue, I think it will lead to more announcements of plant cuts to reduce costs." Stoddard predicts that GM, Chrysler and Ford Motor Co. -- which has not received loans but has requested a credit line for possible use -- would need to each close two assembly plants, including one pickup or SUV factory. Stoddard said GM's Pontiac truck plant, where the automaker builds the Chevrolet Silverado, is at most risk, along with its Orion Assembly, where the Pontiac G6 midsize car is built. For Chrysler, the automaker's St. Louis pickup plant is most likely to be at risk, along with crossover and midsize sedan plants in Belvidere, Ill., and Sterling Heights. At most risk at Ford are Wayne Assembly, as Ford Focus production is shifted to nearby Michigan Truck assembly plant, and the Ford Escape plant in Kansas City, Mo. Spokespeople for GM and Chrysler said they closely monitor the market, but would not say if their plans include plant closures.
Advice from law firms
While the Obama administration has yet to appoint a so-called car czar to oversee the industry, it does have officials at the White House and the Treasury Department in contact with automakers and parts suppliers on a regular basis. To aid its efforts, the Treasury has hired two law firms with extensive backgrounds in bankruptcy. Cadwalader, Wickersham & Taft LLP in New York and Sonnenschein Nath & Rosenthal LLP in Chicago were hired to advise on the automotive rescues, spokespeople for the two firms said Friday. The administration also has hired investment bank Rothschild Inc. for advice.
Feb. 17 deadlineThe Obama administration declined Friday to discuss any details of how it will approach the Feb. 17 plans. "We look forward to the autos' presentation of their plans," said White House spokesman Robert Gibbs. The plans are to include outlines for cuts in debt, supplier costs and labor, namely setting a target for UAW members to match the pay and benefits of workers at foreign-owned plants in the United States. Yet the agreements with the Bush administration gave the industry and the UAW some room to offer alternatives. It would be up to the czar to rule on whether those alternatives go far enough. Steven Rattner, a New York financier, remains the leading candidate, but his appointment has lingered on a to-do list for some time. The UAW has opposed some of the loan terms, contending it took major sacrifices under its 2007 contract. "The fundamental premise is all the stakeholders have to be at the table. We think having a car czar team in place would be very helpful," said Alan Reuther, the UAW's legislative director. "We sort of feel we're the only ones who've stepped forward, and we want to see other stakeholders to be part of the process." Ford has said it's not seeking government aid but would be forced to do so should GM or Chrysler declare bankruptcy, fearing the collapse of key suppliers. +Contact JUSTIN HYDE at 202-906-8204 or firstname.lastname@example.org.+