April 28, 2009 2:29 AM
- Text
GM To Shed 21,000 Jobs, Pontiac Brand
(CBS/AP)
The storied Pontiac brand is dead and more car factories and jobs are about to disappear - the latest casualties of a massive restructuring plan that GM is counting on to help it stave off bankruptcy protection.
The struggling automaker was to announce details of its plan at 9 a.m. EDT Monday as it makes an offer to its bondholders to swap debt for company stock. The plan was to include losing the Pontiac brand by 2010 and slashing 21,000 hourly jobs in the U.S., the company confirmed Monday, before the official announcement.
GM owes $28 billion to large and small bondholders, and under Securities and Exchange Commission rules, it must disclose its operational plans when it makes an exchange offer.
The Presidential Task Force on the Auto Industry released a statement Monday saying the Obama administration "has made no final decision regarding the treatment of its current loan to GM or with respect to any future investments in the company."
"Today's bond exchange filing represents an important step in GM's effort to restructure its company. The interim plan that GM laid out in this filing reflects the work GM has done since March 30 to chart a new path to financial viability. We will continue to work with GM's management as it refines and finalizes this plan and with all of GM's stakeholders to help GM restructure consistent with the President's commitment to a strong, vibrant American auto industry," read the statement from the White House.
Pontiac, brand of the Trans Am sports car, had been selling cars for 83 years. Within three years, half a million Pontiacs were sold, and the brand quickly grew in popularity, from early models like the Chief and the Master Six Coupe, to the Bonneville convertible, to the GTO - one of America's first muscle cars and so popular it inspired Ronny and the Daytonas to immortalize it in song.
But efforts in the last few years to market Pontiac as performance-oriented brand failed. The company had said it wanted to keep Pontiac as a niche brand with one or two models, but is buckling under tremendous government pressure to consolidate its eight brands, several of which lose money.
The company also has decided to close more factories than the five it announced in February, the two people said, asking not to be identified because the plan has not yet been made public. But the locations of the doomed factories will not be identified Monday.
One of the people said GM will list specific numbers of blue-collar job cuts, and announce another round of U.S. salaried job cuts beyond the 3,400 completed last week.
Chief Executive Fritz Henderson has said the company will go further and faster in making its cost cuts to reduce the number of cars and trucks it needs to sell to break even.
The sources said GM won't have much new information on Hummer, Saturn or other brands, including Europe's Opel. GM has indicated it wants to focus on four core brands, Chevrolet, Cadillac, GMC and Buick.
Also to be announced Monday will be a target number for dealer reduction, as well as details of GM's bond exchange offer. Exact numbers were not available Sunday night.
The news conference will include Chief Executive Fritz Henderson, Chief Financial Officer Ray Young, North American President Troy Clarke and Mark LaNeve, vice president of North American sales and marketing.
GM is living on $15.4 billion in government loans and faces a government-imposed June 1 deadline to restructure or go into bankruptcy protection.
The government's restructuring demands include swapping at least two thirds of GM's unsecured bond debt for equity in the company. Such a move would help GM straighten out its debt-laden balance sheet.
Chrysler LLC, which is living on $4 billion in government loans and is expected to get $500 million more, faces a Thursday deadline to restructure and ink an alliance deal with Italian automaker Fiat SpA. The government also wants Chrysler to exchange much of its $6.9 billion in debt for equity in the company, but with the deadline fast approaching, Chrysler and its secured debtholders remain far apart.
Both GM and Chrysler also must win concessions from the United Auto Workers union.
The UAW said late Sunday it reached agreement on concessions with Chrysler, Fiat and the U.S. government. Fiat CEO Sergio Marchionne was in the U.S. as talks continued for the automaker to take a 20 percent stake in Chrysler in exchange for its small-car technology.
The struggling automaker was to announce details of its plan at 9 a.m. EDT Monday as it makes an offer to its bondholders to swap debt for company stock. The plan was to include losing the Pontiac brand by 2010 and slashing 21,000 hourly jobs in the U.S., the company confirmed Monday, before the official announcement.
GM owes $28 billion to large and small bondholders, and under Securities and Exchange Commission rules, it must disclose its operational plans when it makes an exchange offer.
The Presidential Task Force on the Auto Industry released a statement Monday saying the Obama administration "has made no final decision regarding the treatment of its current loan to GM or with respect to any future investments in the company."
"Today's bond exchange filing represents an important step in GM's effort to restructure its company. The interim plan that GM laid out in this filing reflects the work GM has done since March 30 to chart a new path to financial viability. We will continue to work with GM's management as it refines and finalizes this plan and with all of GM's stakeholders to help GM restructure consistent with the President's commitment to a strong, vibrant American auto industry," read the statement from the White House.
Pontiac, brand of the Trans Am sports car, had been selling cars for 83 years. Within three years, half a million Pontiacs were sold, and the brand quickly grew in popularity, from early models like the Chief and the Master Six Coupe, to the Bonneville convertible, to the GTO - one of America's first muscle cars and so popular it inspired Ronny and the Daytonas to immortalize it in song.
But efforts in the last few years to market Pontiac as performance-oriented brand failed. The company had said it wanted to keep Pontiac as a niche brand with one or two models, but is buckling under tremendous government pressure to consolidate its eight brands, several of which lose money.
The company also has decided to close more factories than the five it announced in February, the two people said, asking not to be identified because the plan has not yet been made public. But the locations of the doomed factories will not be identified Monday.
One of the people said GM will list specific numbers of blue-collar job cuts, and announce another round of U.S. salaried job cuts beyond the 3,400 completed last week.
Chief Executive Fritz Henderson has said the company will go further and faster in making its cost cuts to reduce the number of cars and trucks it needs to sell to break even.
The sources said GM won't have much new information on Hummer, Saturn or other brands, including Europe's Opel. GM has indicated it wants to focus on four core brands, Chevrolet, Cadillac, GMC and Buick.
Also to be announced Monday will be a target number for dealer reduction, as well as details of GM's bond exchange offer. Exact numbers were not available Sunday night.
The news conference will include Chief Executive Fritz Henderson, Chief Financial Officer Ray Young, North American President Troy Clarke and Mark LaNeve, vice president of North American sales and marketing.
GM is living on $15.4 billion in government loans and faces a government-imposed June 1 deadline to restructure or go into bankruptcy protection.
The government's restructuring demands include swapping at least two thirds of GM's unsecured bond debt for equity in the company. Such a move would help GM straighten out its debt-laden balance sheet.
Chrysler LLC, which is living on $4 billion in government loans and is expected to get $500 million more, faces a Thursday deadline to restructure and ink an alliance deal with Italian automaker Fiat SpA. The government also wants Chrysler to exchange much of its $6.9 billion in debt for equity in the company, but with the deadline fast approaching, Chrysler and its secured debtholders remain far apart.
Both GM and Chrysler also must win concessions from the United Auto Workers union.
The UAW said late Sunday it reached agreement on concessions with Chrysler, Fiat and the U.S. government. Fiat CEO Sergio Marchionne was in the U.S. as talks continued for the automaker to take a 20 percent stake in Chrysler in exchange for its small-car technology.
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