GM's Last-Ditch Plan to Avoid Bankruptcy: Close Pontiac and Shed 21,000 Jobs
With bankruptcy looming and the Obama administration demanding a new viability plan before giving any more federal aid, General Motors released a restructuring plan this morning that goes much farther than February's outline but that also claims a number of casualties—including 21,000 jobs, 13 plants, and the Pontiac brand.
"We are taking tough but necessary actions that are critical to GM's long-term viability," President and CEO Fritz Henderson said in a statement this morning. Those actions include slashing the number of dealers that GM works with by 42 percent, from 6,246 in 2008 to 3,605 by the end of 2010, and closing 13 plants. By next year, the company said, it will cut 21,000 jobs, reducing the current workforce by 34 percent.
The Pontiac brand also will be phased out by the end of next year as the company focuses on its four core brands—Chevrolet, Cadillac, Buick, and GMC. GM doesn't expect to build more Saabs, Saturns, or Hummers after the end of this year, the company said.
Although the auto giant has received $15.4 billion in federal loans, it has said that it needs an additional $11.6 billion in order to survive. It also said that it planned to file for bankruptcy protection unless the debt for equity swap that it announced this morning is successful. In the planned swap, GM would give bondholders 225 company shares in exchange for $1,000 of bondholder debt. The company is urging bondholders to make the exchange speedily, saying the bonds may be worth less if GM has to go to court. In order to avoid bankruptcy, the company said, at least 90 percent of its bondholders must agree to the swap by May 26.
The company has until June 1 to submit a stronger viability plan and come to agreements with both bondholders and the United Automobile Workers union. Talks with the UAW are continuing.
Reader Comments
Reply to "SDT"
SDT,
The post you were referring to by Greg Roberts was actually written fabulously and thoughtfully. It is a shame that you cannot differentiate between a typo (ie not I was...I was not) and poor sentence structure.
Regards,
JAK
Goodbye to the Firebird
As A Pontiac Firebird enthusiast for over 20 years, I found this decision very discouraging but not I was surprised. One of the main reasons that I have been a Firebird owner has been to show my patriotism and support of one of the main industries that we have been blessed to have for many years. It has been a very difficult decision for me to stick with over the years. I have had over a dozen of the 80’s and 90’s models of Firebird and have spent a fortune on repair costs. I have driven almost a million miles in these cars and have endured the relentless attack from law enforcement who love to single out these sport cars to make examples of the traffic laws which so many others ignore. After all the tickets and costly breakdowns, I am left holding a vintage vehicle with only scrap value. The depreciation of these models over time has made them the worst money pits.
It is one of my beliefs that we learn our best lessons through our failures. The decision to outsource the component parts and even our production of these cars was one of our greatest failures. The poor engineering and design that went into choosing the materials and processes for these models also contributed to their premature failure. Even my experience with the sales and customers service side has been a failure. With arrogant salesmen and over priced repair parts and service only available during rigid business hours, who would blame Americans for turning to the foreign cars.
Pontiac Firebird was a symbol of the great Phoenix, which rose from the ashes to triumph. I had hopes that a new model of the Firebird would be released in 2012, but that does not seem to be a possibility. Unfortunately it would have also been burdened with the same poor decisions that have plagued the last two models. There is nothing like the sound of a V-8 Pontiac engine to turn the heads of men and women alike. We will still hear those sounds from our classics, but the Phoenix will not rise this time. Along with it dies some hope of having the American dream fulfilled with a good job and a healthy economy.
Closing plants and phasing out Pontiac may seem like the only decision GM has to save the company now, but it was series of bad decisions from the past that have left them with no choice.
Pontiac GM throwing sporty out the door.
Whomesoever you are that wrote this - learn how to spell, learn to write and learn how to present your views in an erudite manner - it is very difficult to take your badly writen & constructed views seriously when you can not even spell a 4 letter work correctly.
Regards,
SDT.
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