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CHICAGO: General Motors said Tuesday it will slash up to 31,500 jobs and cut back its brands as it urged lawmakers to provide up to US$18 billion in loans so it can survive the current economic downturn.
GM, which has warned that it could run out of cash as soon as January, presented a restructuring plan to Congress which it said would allow it to achieve "long-term viability."
The Big Three US car companies - GM, Ford and Chrysler - all put forward proposals Tuesday to trim fat and revitalise their companies to face economic challenges ahead.
GM said it plans to radically slash operating costs, increase the production of fuel-efficient vehicles and offered lawmakers several symbolic concessions including paying its chief executive officer a salary of just US$1 and selling its corporate jets.
The company said it will cut the number of its US plants to 38 in 2012 from 47 in 2008 while US employment will be reduced from the current level of 96,537 people to between 65,000 and 75,000 salaried and unionised workers by 2012.
GM said it expects to be "fully competitive" with Toyota on US labour costs for "both current workers and new hires" by 2012 due to "additional changes to be negotiated" with its main union, productivity improvements, turnover rates and the planned job cuts.
The largest US automaker said it would need US$12 billion to cover operating costs through the end of 2009 and also requested a revolving credit line of US$6 billion to "provide liquidity should a severe market downturn persist."
GM vowed to repay the US$12 billion loan by 2012 should overall US auto sales remain at or above 12 million vehicles a year. The plan will allow the company "to operate profitably at industry volumes between 12.5 and 13 million vehicles."
"This is substantially below the 17 million industry levels averaged over the last nine years, so it is considered to be a reasonably conservative assumption for gauging liquidity needs," GM said in a statement accompanying the plan.
The plan also calls for "shared sacrifice, including further reduction in the number of executives and total compensation paid to senior leadership," GM said.
"The plan also requires further changes in existing labour agreements, including job security provisions, paid time-off, and post-retirement health-care obligations," GM said.
Common stock dividends will remain suspended during the life of the loans, GM said.
The carmaker will also "review" the future of its Saab and Saturn brands as it focuses its product development and marketing efforts in the United States on four core brands - Chevrolet, Cadillac, Buick and GMC.
"As part of the plan, the company also will accelerate discussions with the Saturn retailers, consistent with their unique relationship, to explore alternatives for the Saturn brand," GM said.
Pontiac will become a "specialty brand with reduced product offerings," GM said, adding it will "immediately undertake a global strategic review of the Saab brand" and has already begun exploring the sale of its hulking Hummer brand.
GM said it will cut the number of vehicle types it offers in the United States to 40 in 2012 from 51 in 2000 and also will slash its dealer network to 4,700 in 2012 from 8,138 in 2000.
GM currently sells 48 different vehicles at 6,450 dealers in the United States.
The automaker also plans to "substantially change" its product mix and "launch predominantly high mileage, energy efficient cars and crossovers."
GM said it will invest US$2.9 billion in alternative fuels and advanced technologies to improve fuel economy.
It plans to increase the number of hybrid vehicles it offers to 15 in 2012 from six in 2008 and introduce its Chevy Volt extended-range electric vehicle by 2010.
It will also continue to invest in hydrogen fuel cell technology and will build 55 per cent of its vehicles with the capacity to run on ethanol by 2012.
- AFP/yb
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